Sunday, June 9, 2013

Monsoons and RBI Policy next triggers for the markets

The Nifty lost 1.8 pc to close at 5881. The markets have completed 3 weeks since hitting the top of 6229. If this is just a small correction it should get completed in the next week. Let us look at the next triggers for the markets.

Fundamentals:

1. The Monsoons have set in well. Thus, 1 major negative trigger is out of the way.Any signs of a delay in monsoons would have led to the markets falling.

2. A good monsoon also sets the earliest timeline of elections as November 2013. The Govermet would like the money from the good harvests to be in people's pockets before voting.

3. Good monsoons can lead to lower inflation and lower rates by the RBI. The RBI policy on June 17th is 1 key trigger in the short term.

4. The corporate Results will start around 10th of July as also the Parliament will be in season post 15th of July. Till then there are no major triggers in terms of policy for the Government.

5. FII flows continue to flow in to India. The markets will continue to rally as long as liquidity is there.

Technicals:

1. 5850 is a very key level. It is a confluence of many supports and +- 20 points from here the markets can rally.

2. If 5850 is breached convincingly, then expect a drop of another points before the next support.

The Strategy remains to buy on All Dips.


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