Sunday, April 7, 2013

All eyes on the Results Season

The markets continued on their journey south. They lost another 2.3 pc to close at 5553, a crucial support level. Let us try and see what can influence the markets in the next few days.

1. FIIs have also started selling and that led the markets to go down further. The FII selling is only in small quantities but the support being provided to the markets so far is absent. Further selling by the FIIs can lead to the markets tanking further.

2. The commodities are also correcting.Crude and Gold, 2 of India's biggest imports are also falling down.The seeds of the next bull run can be seen in these falling commodity prices.

3. The Government continues to act on the Reform front.Sugar price decontrol was a long over due reform.

4. The Budget session is in recess and the Parliament will reconvene only on April 22nd. The Result season will also be kicked off on next Friday. If there are o global cues, then I expect the next week to be a week of subdued trading.

5. Technically, the markets have breached the 200 DMA and 200 EMA averages. These are long term support levels and the difference between a bull market and a bear market. The indices need to be remain under these levels for another few days to be sure we are entering into a bear market.

6. The main problem the markets have is that the sentiment is spoilt. Talk of elections is making people nervous. This uncertainty is driving the markets lower.

7. My strategy remain buying quality stocks on dips. Some of the stocks are at almost December 2011 levels. PSU banks offer a very good dividend yield and strong PSU Banks can be targeted for buying.

8.Gold is at important support levels and fresh buying should be avoided till the trend is clear. I would buy Gold only if it closes above 1620 levels in dollar terms for at least 1 week.

The bottom line is to be very careful with our stock purchases and to stick to Quality Stocks.

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