Sunday, December 21, 2014

Action Packed truncated week ahead

The markets hit a short term bottom at 7961 before retracing rapidly. The first round of fall may be over and now there would be some relief rallies. The coming week is truncated due to Christmas and has 2 events lined up. Let us see how the markets react to these events.

1. The markets closed flat for the week but that only tells part of the story. There was a dip of 3.2 pc in the early part of the week which was retraced in the latter part of the week. This could mean 1 leg of the fall is complete and we may see a flat to sideways markets for the rest of 2014 with a positive bias.

2. Targets on the upside come to 8294, 8373, 8451 and 8493. Only a decisive close above 8500 will tell us that this fall is over.

3. The Reform agenda has got stuck in Parliament and will be stuck if nothing happens in the next 2 days.

4. The FIIs have consistently sold in the last 8 trading sessions.The markets have not tanked completely because of DII support.

5. The crude oil prices continue to be around 60 dollars, the Russian Rouble has crashed from 30 to a dollar to about 60 to a dollar.

6. The G - Sec yields spiked up showing uncertainty and hesitancy about rate cuts.

7. On Tuesday, we have the results for Jharkhand and J&K. The BJP is expected to sweep Jharkhand but the same cannot be said of J&K. In case they perform well in both States, then the markets may rise.

8. On Wednesday is the F&O expiry. Owing to these 2 events, the markets may remain volatile.

The Strategy remains the same. Buy on dips only.

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