Sunday, January 11, 2015

Big Moves Ahead

True to form, the markets kicked off January with violent moves in both the directions. For the week, the markets ended down 1.3 pc on the Nifty. Let us look at the coming weeks.

1. Infy with excellent results, gave a late fillip to the markets on Friday. With the rupee having depreciated, the IT stocks stand to gain. Infy maintained guidance even in dollar terms. What will now happen, is that the difference in P/E between TCS and Infosys will narrow. In the past few years TCS had ran well ahead of Infy and now that will decrease.

2. The FIIs were net sellers the entire of last week and have sold 2600 crores worth of stocks for the month of Jan. This is a worrying trend as without FII participation, the markets will not rise.

3. We are again at the key resistance levels of 8300-8400. For the markets to make new highs, they will have to sustain above 8400-8500 region convincingly.

4. Globally, crude oil has fallen below the 50 dollar mark and we should now see some amount of bounce. A sustained period of low crude oil prices bodes well for the Indian economy.

5. The next week should see more corporate results come in. Usually, the results are more or less factored in the prices.

6. There are no real triggers for the markets to go up and sustain there. The major trigger would be the Union Budget which is still 45-50 days away.

The markets usually display 2 kind of trends. They either go up before or after the budget. Very rarely do they go up both times. This time the Budget is highly anticipated as the first full year budget of the new Modi Government.

If the market go up then book profits and if they fall to 7700-7900 levels then fresh stocks can be added. buying now, is sort of buying in no-man's land. The Risk will be high and the reward will be lesser.

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