The markets rallied about 4.1 pc on a surfeit of good news. Let us check where the markets are headed next. There was good news globally as well as locally.
Fundamentals:
1. The hike in Diesel prices was long welcome.More than cutting under-recoveries by about Rs 5 per liter, this will discourage the sell of Diesel cars. The break even point for Diesel cars will now be around 50000 kilometers. This will increasingly influence people to buy Petrol cars which will mean that there will be no under-recoveries as Petrol is DE-regulated.
2. The cap of 6 cylinders per family every year is another welcome step as a cylinder costing about Rs 750 was subsidized to cost about Rs 350 only. Anyone using more than 6 cylinders does not need a subsidy in any case.
3. FDI in aviation and retail is more than welcome. Airlines need capital to remove competitive. Even in Retail, it is all about consumers getting the best price. The prices which we get stuff at malls and big outlets are much superior to the Kirana outlets. Ultimately, the Kirana stores will have to match the prices to survive. The opposition to FDI comes from the trader community which has vested interests.
4. The QE-3 announced by US means that liquidity will continue to gush in for few more quarters. All asset classes will gain. Be it gold, equities.
5. If Gold closes above 1800 USD, then it has given a bullish breakout and I will buy on all dips.
Technicals:
1. The Leg 3 of C commenced from 5032. It has currently traversed about 371 points.
C3 -1 was 5032 - 5448
C3-2 was 5448-5216
C3-3 was 5216 and ongoing (5587)
The target for C3 should be minimum 5631. After a small correction of about 200-250 points we should hit new highs.
The target now is buy on all dips. It would be prudent to book profits around the previous high of 5629 and re-enter at slightly lower levels. For fresh investments, one should wait for dips to enter.
Fundamentals:
1. The hike in Diesel prices was long welcome.More than cutting under-recoveries by about Rs 5 per liter, this will discourage the sell of Diesel cars. The break even point for Diesel cars will now be around 50000 kilometers. This will increasingly influence people to buy Petrol cars which will mean that there will be no under-recoveries as Petrol is DE-regulated.
2. The cap of 6 cylinders per family every year is another welcome step as a cylinder costing about Rs 750 was subsidized to cost about Rs 350 only. Anyone using more than 6 cylinders does not need a subsidy in any case.
3. FDI in aviation and retail is more than welcome. Airlines need capital to remove competitive. Even in Retail, it is all about consumers getting the best price. The prices which we get stuff at malls and big outlets are much superior to the Kirana outlets. Ultimately, the Kirana stores will have to match the prices to survive. The opposition to FDI comes from the trader community which has vested interests.
4. The QE-3 announced by US means that liquidity will continue to gush in for few more quarters. All asset classes will gain. Be it gold, equities.
5. If Gold closes above 1800 USD, then it has given a bullish breakout and I will buy on all dips.
Technicals:
1. The Leg 3 of C commenced from 5032. It has currently traversed about 371 points.
C3 -1 was 5032 - 5448
C3-2 was 5448-5216
C3-3 was 5216 and ongoing (5587)
The target for C3 should be minimum 5631. After a small correction of about 200-250 points we should hit new highs.
The target now is buy on all dips. It would be prudent to book profits around the previous high of 5629 and re-enter at slightly lower levels. For fresh investments, one should wait for dips to enter.
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