Sunday, April 27, 2014

Range Breakout likely

It was another flat week for the markets. The markets have gained a mere 6 points on the Nifty since April 11th on a closing basis. The range bound trading will lead to a breakout or a breakdown in the coming week.

1. The coming week is another truncated week of trading with may 1st being a holiday.

2. The markets seem to be stalling in the 6800-6850 band of trading. since, 6350 is a multi year breakout, the markets will be positive till they hold this area.

3. The FII buying continues but at a much reduced pace. The corporate results are also in and there are no major triggers till the election results.

4. April was predicted to be a range bound month and it has proved to be so.

5. The supports remain the same as mentioned last week, 6610, 6480, 6380 and the markets will be firm sustaining above 6819. This week, the markets could not sustain fresh highs and therefore tanked towards the end of the week.

6. Nothing much is happening in the markets and it is time to be patient waiting for the results of the elections.

7. If a poor monsoon materialized, the sugar stocks could be in focus. my favorite is KCP sugar trading around Rs 19 and giving a dividend of 70 paise. This has been a regular dividend paying company for past several years.

The trick would be to focus on strong dividend paying companies, so that you can hold on, if the markets tank post the results. Live on the dividends and average out the stocks at lower prices.

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