Sunday, May 25, 2014

Broad based rally in the markets

The markets gained 2.3 pc for the week. this was not the real story, it was the action in the mid caps and small caps which was where the real action took place. Let us now look at the possibilities ahead.

1. There seems unlikely to be a real correction now in the markets, it has become a buy on dips markets. The FIIs were sellers for 3 days in the markets, but they made up for it on Friday.

2. Above 7400 and 7477, we are headed to new highs in the markets. This is a good time to remove all dead stocks from the portfolio and move into quality stocks.

3. The next week, markets will cheer the Cabinet formation and the next significant event will be the Union Budget in mid July. Unless, the monsoons are a total washout, they will not affect the markets.

4. Infrastructure, Power, roads are the themes which can be looked on.There are several reasons for it. this is likely to be the thrust of the new Government and also these stocks have been badly beaten down.

5. All corrections from hereon are buying opportunities. The market has changed from sell on rises market to a buy on dips market.

6. Gold prices have come down on import relaxation. Gold as an investment class should not be a option now. Gold works when there is fear in the world and uncertainty is there.

7. One must book profits at regular intervals, else when the crash comes, all is lost. The profit can be locked in fixed income or real estate.

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