Sunday, June 29, 2014

Buy the Dip Continues

The markets ended flat for the week. The markets are consolidating at support levels waiting for cues from the Union Budget which is just about 10 days away. Let us explore what could happen in the near future.

1. The Union Budget is 10 days away and the countdown has begun. I expect a budget which is reform oriented, signalling further its intent with a lot of push on Infrastructure. I do not expect the tax slabs to be rejigged more but the exemption for investing in PPF under section 80 could see an upward revision.

2. The Rail budget will give a clue what is coming. The fare hike has been identified and now the Budget should have Infra announcements. The markets could start rallying around the time of rail budget or even earlier.

. The FIIs are taking a cautious stand and the markets are not falling much. This means that the domestic players have jumped in to absorb the mild selling.

4. The monsoons are delayed and while they will catch up in terms of the quantity of rainfall, the distribution in terms of time will take a hit. This will impact agriculture growth. In 2009, we had poor monsoons, the markets had rallied on the UPA victory. The markets had corrected about 13 pc from the top. This time we have corrected about 6 pc from the top. We could either correct to 6700 or 7200 levels.

This would be the buying opportunity, the last chance to get in and watch the fruits grow. as per the 8 year rule, the markets should peak sometime in early 2016. We are about 18 months away from it and I expect a blow out rally to take place.

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  1. Isn't it the market should "PEAK" sometime in early 2016 and not "PICK?" The words depict entirely different meanings.

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