Sunday, June 22, 2014

Buy the dip

The markets corrected around 0.4 pc to close at 7511. It was a range bound market with markets making a lower top at 7663. What next in the expiry week?

1. The FIIs have sold in the last week for 3 days out of 5. Small quantities but the buying support has gone.

2. The Monsoon seems to have slowed down. It will be a delayed monsoon for sure now, the rainfall quatity may not change but the timing will affect sowing.

3. The rail fare hike will most likely ensure a gap up on Monday. The medicine may be bitter but if the Indian economy has to improve, bitter medicine has to be taken. Please read my guest piece on Subhankar blog next week for detailed analysis on Subsidy Raj.

4. Iraq situation has raised brent crude prices. Past experiences show that such shocks subside suddenly. Syria when markets a low of 5118 is 1 example.

5. The supports are holding, which means expect a breakout ay time.

6. Next week is expiry, so the real game begins after Tuesday and Wednesday.

7. It is time to buy the dip. Accumulate quality stocks. The Modi era has begun on the right foot and if the same continues, just buy stocks and forget for next 5 years.

8. Key Indicators to watch:

a. The Budget will give the signals on the road map of the Government.

b. Further reduction of subsidies bode well in the long term.

Everyone is waiting for the budget. So, expect either a pre-budget or post-budget rally. 8100 is coming, before or after the Budget I do not know. Before hitting 7200 or straightaway I do not know. But, in the next 1 year we will surely hit both these points at least once.

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