Sunday, November 16, 2014

Markets Continue Making new Highs

The markets continued making new highs on the back of FII inflows, weak oil prices and low inflation. The markets look set for for 8450-8650 range in the coming weeks. Let us look at the developments of the last week.

1. The oil prices corrected further last week and the Government instead of reducing the prices very smartly increased the excise duty on petrol and diesel. What this will do is increase revenue by 6000 crores in the remaining months of this fiscal year. Also, tomorrow when the oil prices rise, the Government can shield the Indian public by rolling back the excise hike instead of increasing the prices.

2. The FII flows have continued unabated. the first 2 weeks of November have led to an inflow of about 7500 crores. As long as the money flows in, the markets will continue to rise.

3. The next major trigger for the markets will be the Winter session of the Parliament which begins from November 24th. The passage of key bills will set the tone for the markets.

4. The RBI policy is in early December and it remains to be seen if the RBI will cut interest rates.

5. Gilt funds have shown a smart rally and returned about 10-12 pc in the past 6 months.

6. Profit booking can be done at slightly higher levels. If the markets rise by another say 200 points on the Nifty this week, I would suggest partial booking of profits.

Everything looks hunky dory at the moment ad it is safe to book profits in the markets. remember the markets have risen from 7724, a rise of 691 points ad a breather may be round the corner.

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