Markets await the RBI policy on the 29th January

The markets came back strongly on Friday to gain 0.2 pc for the week. Let us look at the road map for the coming week and also what the markets may do in the month of February.

1. The good results have been pouring in. This week saw Maruti post fantastic results. The results are priced in at a price of 6000 +.

2. Our range for the month of January was 5830 to 6130. The markets may test the upper end of the range in the last trading week for this month.

3. A 25 basis points cut is factored in the prices. Anything more and the markets will rally. At these levels, it is better to enter the front line stocks rather than the mid caps.

4. The tanking of mid caps last weeks underlines the hazards of buying mid caps. When the tide turns there is no safety net.

5. The pre-budget rally should commence with minor falls of 200-300 points on the Nifty.

6. The FIIs have continued buying all through January and based on this, I expect the previous peaks of 2008 and 2010 of 6350+ to be tested once.

7. How the markets behave after the testing of the peak remains to be seen. There could be a small correction after that before we test higher levels or the markets may correct more.

8. In the posts in February, I will demonstrate why February is the best time to sell based on statistical data.

9. The Nifty is currently trading at a Price to Earning multiple of 18.77. The market usually does not peak out at these levels but around levels of 23. The Nifty corresponding value comes to 7500.

7500 may be far off right now, but I would use every dip to accumulate good quality stocks.