Sunday, July 26, 2015

Lower Crude Prices a positive trigger

The markets were down 1 pc for the week. All the commodity prices took a big beating and that is a big positive for the Indian economy. Let us see the factors for the coming week.

1. The fall in metal and crude prices augers well for the Indian economy. The massive infrastructure spend lined up will get done at much lower rates.

2. The FII s have started buying and started buying big time. This bodes well for the markets.

3. The monsoons have picked up again and with almost half the monsoons gone by, the deficit is only 5 pc. For the met forecast of a deficit of 12 pc to come true, the next half of the monsoons should be almost 20 pc below normal which is very rare.

4. Reliance came up with very good set of numbers which should help the markets move higher.

5. The Parliament logjam continues and this is bad news for the markets. This is the only negative trigger for the markets currently,

6. The expiry is on Thursday and markets can be volatile till then.

7. The correction can take us to 8300-8400 levels which would be a good buying opportunity.

8. The PFC FPO opens tomorrow and which is a good buying opportunity as a discount of 5 % is being offered to retail investors.

All in all the markets seem to be in a good shape and the correction which started in March and lasted amost 5 months seems to be coming to an end.

Sunday, July 19, 2015

Time for some correction

The markets have been rallying since hitting 7940 and it is time for the markets to take a small breather. Let us see what can be the triggers for the correction.

1. The markets broke through the falling channel which had a height of about 600 points. Technically, the markets should rally up to 8900-8950 levels considering the breakout from the channel at about 8350.

2. The FIIs have turned positive and become net buyers for the past entire week.

3. The Parliament session begins on Tuesday and is expected  to be stormy with Vyapam and the Lalit Modi issue hogging the limelight. The land bill is most likely postponed to the winter session and the GST Bill if it is passed is a big positive.

4. The monsoons have turned into a deficit and are at a minus 6 pc level. Still, the things are not  too alarming.

5. In the very short term, the expiry is cose by and usually the markets cool off before expiry if they have been  bullish earlier.

6. A correction of about 200-300 points is very likely and most welcome before the markets try for 8800-8900.

7. If the markets continue to rally from here, the rise would be unsustainable and may lead to a sharp fall.

There are now 2 options before us:

1. The markets rally to 9300-9500 and make a new high or

2. Rally till 8800-8900 and then fall to 7500.

In case of either of the options, it does not make sense to buy now but wait for some minor correction to buy.

8300-8400 level would be a somewhat safe level to add positions.

All the positives have already been factored and we may see an intra day rally before some correction.

Sunday, July 12, 2015

What next for the markets?

The Greece referendum has come and gone. There is no clear solution and the markets went down by 1.5 pc. Let us see what the markets  have in store for us now.

1. The EU Finance Ministers are meeting this week and let us see if any solution emerges out of it. The Greece scenario seems to have been factored in by the markets.

2. The Crude oil prices have fallen by about 10 pc due  to this crisis and that will help India.

3. The Monsoons are slowing down and we are not slightly in deficit. The next 2 weeks become key for the Monsoons.

4. The Results season is upon us and TCS declared just about ok results.

5. The Monsoon session will start in about 10 days time and is expected to be stormy. I expect the markets to remain range bound.

6. The FIIs continued  to sell. After about 12000 crores worth of stocks sold in last 2 months, they are marginal buyers of about 100 crores.

7. Technically, the markets have to cross the strong resistance of 8500-8600. Till then it will remain in a trading band.

8. There are no major triggers for the markets to go up or down. In such a scenario, the markets will remain in a trading range for some time to come.

The current levels offer no safety net for buyers. If the markets correct from here, the next zone would be the 8000-8200 zone.

Sunday, July 5, 2015

Markets at Crossroads both Technically and Fundamentally

The markets closed up by 1.2 pc as the investors awaited the results of the Greek referendum. The markets are at a cross roads now, both technicaly and fundamentally.

1. The Greece referendum is on Sunday and the results will be out before markets open on Monday. If Greece elects to stay within the EU, the markets may rise.

2. The monsoons also have reached a critical juncture. We are in surplus of 16 pc with about 25 pc of monsoons gone by. The next 2 weeks become very critical for the monsoons.

3. The Parliaments opens on July 21st and with the Lalit Modi saga, there are high chances of Parliament getting disrupted.

4. The corporate results will start coming in towards the end of next week and usually during the results season the markets are subdued.

5. Technically 8500-8550 is a very strong resistance zone and a breakout above this level will open the gates for new highs.

6. The FIIs have been net sellers in the months of May and June. Still we have gained about 300 points on the Nifty since the month of April. (April 30th) This selling has been absorbed by the markets.

Now, there are 3 scenarios which can play out:

1. The markets rise on Monday on the back of Greece referendum and then start losing ground. (Most likely). We will go back to the 8000-8500 range for a couple of more months.

2. The markets breakout and we rise to new highs. (Medium possibility)

3. We start falling towards 7500 (least likely but possible)

It would not be a bad idea  to book some profits if the markets open gap up on Monday.