Sunday, July 20, 2014

Cues Turn Positive

The markets have digested the budget and had a rally of 2.7 pc. The Q1 results are in the process of being declared.Let us look at the key factors influencing the markets.

1. The monsoon worries have abated and it is raining in most part of the country. The deficit has gone down to -15 pc from -43 pc. We may have a deficient monsoon but definitely not a severe drought as feared.

2. The FIIs were net buyers to a tune of 2000 crores last week thus being the major drivers for the markets.

3. The IIP numbers have improved. There is a change in sentiment in the markets. The mood of the people is upbeat. Often, it is the change in sentiment which drives economic activity. If people feel optimistic about the future then they spend money and consumption drives growth. It is a cycle and we may just have hit the bottom in terms of sentiment in early 2014 and moving up.

4. Auto sales for the month of June were good. These are early indicators of economic activity picking up and trends for the next few months needs to be monitored.

5. Globally, the Iraqi situation has stabilized and Brent crude prices are down. The Government is losing just Rs 2.5 over diesel and if this trend continues by the end of the year, the subsidy on Diesel should end. Diesel and Petrol being subsidy free, who would have thought about 4 years ago, when Petrol was made free from the subsidy regime in June 2010.

6. The Nifty is at a critical level between 7650-700 and a close above these levels would indicate further upsides.

7. Projected targets could be range from 8100 to 8400 levels.

8. The Results of companies have been fairly good. Reliance beat expectations yesterday and so did TCS.

Time to stay invested and reap the benefits of long term investing.

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