Sunday, September 28, 2014

FIIs turn Sellers

The markets closed down almost 2 pc for the week and a notable fact was that the FIIs turned sellers for almost every day of the week. Also, on Friday India received a ratings upgrade. Let us see the future course of the markets.

1. FIIs selling is a key factor. They are 1 of the most vital components that keep the markets. Typically, the Indian markets are dependent on FII money, Domestic funds out of which LIC is a key component and the Retail and the HNI component of the market.
The Domestic funds are mostly a defensive option as such they buy when FIIs sell, and markets bottoms can be identified when Domestic funds are net buyers for a couple of weeks to a month. The FIIs are the steroids on which the markets go up. the Retail and the HNIs are bit players in this whole game.

2. Now, with huge issues of divestment coming up, LIC will divert money out there and so will those FIIs betting on the long-term India story.

3. The markets are likely to consolidate in the next few weeks and months. the long-term picture remains intact. This would be a good opportunity to accumulate quality stocks rather than selling stocks at lower levels.

4. The markets closed at 7968 after testing 7841. The markets have already corrected about 4 pc from the top. It could happen that the markets test 7400 also.

5. Globally, usually the markets tend to be slow around this time of the year. It could happen that we correct now and set the stage for November to February rally.

6. The next 3 weeks also will see the Maharashtra elections happening. BJP has lost the edge in the elections and I see it extremely rare to see a BJP CM at the helm after the elections. It could still happen that there is a BJP CM but with a tie-up with NCP.

Now, is neither the time to buy or sell but to wait and watch. Buy around 7400-7500 or sell between 8200-8500.


Monday, September 22, 2014

Wait and Watch Continues

The markets gained 0.2 pc for the week but what was most impressive was the recovery after the Fed announcement of interest rates not rising for a considerable period of time. Let us see what has changed in the past week.

1. The options for the markets are making fresh highs and making a short term top between now and Diwali. This possibility gets confirmed on the break of previous top of 8181.
The second option is consolidating till the Haryana and Maharashtra elections results on October 19th and then correcting or making a top in euphoria.
The third one is that the top is already made and we are going to have a 10-20 pc bull market correction now.

2. The Maharashtra Alliance picture gets murkier by the day and everyone has been pushed to the brink. The last date for filing nominations is this Saturday and the picture will be clear by this weekend.

3. If everyone fights separately, it will be a free for all and post poll there could be a BJP NCP tie up as well.

4. The FII purchases have dipped during this past 1 week.

5. Gold continues to decline and should be avoided for the moment.

The best course of action right is keep part booking of profits and not to exit completely from any stock. If the markets go down add the same stocks back.
Finally, the money taken out from the markets is profits earned and not notional profits.

Sunday, September 14, 2014

October 19th is the Date to watch

The markets continued to meander while the mid-caps kept up with their upward trajectory. The Election Commission has announced the dates for elections for Maharashtra and Haryana and also the dates for the counting of votes.

1. 15th October is the date when Maharashtra and Haryana goto polls and October 19th is the date when the Results will be out. with J&K polls likely to be postponed to ext year due to the floods, these become key elections.

2. Maharashtra has been under the rule of NCP - Congress for the past 15 years. with the political capital being lost in May, a setback for Congress here would strengthen the hands of BJP. At the same time if NCP Congress pull it off, then there would be a fightback against Modi Government and policies.

3. The FIIs continue to be buyers. Also, Disinvestment is planned in a big way in September October which could mute the rise of the markets.

4. The Markets should peak out between 8200-8500 sometime in the months of October and November.there could be a correction of 10-15 % from the top which would be a buying opportunity.

5. Many mid caps, at least the ones which I hold have doubled or tripled from the cost price. Such stocks it could time to book profits hold on to remainder and enjoy the dividends.

6. We could see some dip to 7900-8000 followed by a rise up towards Diwali. what is significant is the broader markets continue to move up.

7. Diesel prices may actually be cut this month followed by further reduction in Petrol prices. All this bodes well for car sales.August car sales rose on the back of Ganapati festival demand, whereas September and October would be driven by Diwali and Dassera.

Now would not be the time to add fresh stock positions but wait patiently to book profits and await for some correction to jump in.

Sunday, September 7, 2014

Upmove continues; FII flows continue

The markets gained another 1.7 pc. The markets continue to make a steady upmove with minor corrections on the way. Let us see if  this week has brought any development in the current move.

1. The GDP numbers and auto car sales which were excellent aided the up move to new all time highs. markets are all about sentiments and sentiments continue to improve.

2. FII were huge buyers in the first week of September almost buying 5000 crores worth of shares. As long they continue buying, corrections would be short lived.

3. Another key development during the week was that under recovery on Diesel has come down to 8 paisa or almost disappeared. This means the Government burden of subsidies on Diesel and Petrol stand removed. This will help in meeting the fiscal deficit targets.

4. The next week surely will have the announcement of the election schedules in key States. Maharashtra is economically very important as the funding comes from Maharashtra.

5. Technically, the markets look to hit 8200-8400 before any significant correction. Another key feature of this rally is that the mid caps are now flying. As mentioned, its all about sentiment and I would not be surprised if we hit all time highs around Diwali before forming a short term top.

6. What does an Investor do now? Invest in quality Stocks which are not overpriced. else one may again get stuck with overpriced penny stocks as in every bull run.

Overall, its time to consolidate and look at part booking of profits., Finally money earned is not notional profits but the money taken home.