Sunday, November 2, 2014

Breakout by the Markets

The Markets closed much above their all time highs on a weekly basis on back of stimulus by the Bank of Japan. The markets have given a breakout and should continue their momentum upwards for some time. the markets have a lot going in their favour at the moment.

1. The Diesel price cut brings diesel down by Rs 6.3 in past 10 days in Mumbai. That is almost a 10 pc cut and this will cool inflation down. This can result in a rate cut and Gilt funds are making merry with Interest Rates declining. Gilt funds make money when interest rates fall.

2. The Bank of Japan stimulus may lead to more money coming to India. close ties between Shinzo Abe and Narendra Modi, Softbank investments in Indian companies all point to more focus on India by the Japanese investment community.

3. The political winds blowing in favour of the BJP has already led to some bold economic decisions being taken. It looks like modi is walking the talk.

4. The FIIs bought almost Rs 3750 crores worth of shares in the last 3 trading days of October. If the  trend continues, the markets will continue to rise.

5. The Indices have moved to all time new highs and now the second line of stocks will start moving up. Minimum targets from the current levels of 8322 are 8450-8500.

6. At higher levels again part profits can be booked, remember the money taken out from the markets is money earned.

I expect the rally to continue for next 2-3 weeks at least till the Winter session of Parliament commencing on November 24th.

After that what happens in parliament will determine the course of events.

No comments:

Post a Comment