Sunday, August 9, 2015

Markets continue in a Range

The Nifty gained a net 32 points for the week. The markets were range bound whereas the mid caps party continued unabated. The question is will this range continue for how long?

1. The Quarterly Results are out, Parliament session has been washed out. There are no major triggers for move in either direction.

2. The FIIs were net buyers the entire week which is a major positive.

3. Brent crude prices have sunk below 50 USD and this will be a major relief for the Government on the subsidy front. Already, there are talks that on subsidy the Government will save 30000-40000 crores then what was budgeted for and this will be used for Infra projects.

4. Gold will continue to fall and is not an appropriate investment right now.

5. Technically, we are still consolidating between 8300 and 8600. A break of either side would give us a move of 300 points. The targets would then be 8000 or 8900.

6. The markets will continue in their range unless there is a major trigger either locally or globally. A positive trigger could be if the Gvernment is somehow able to pass the GST legislation.

7. RBI may surprise with a rate cut sometime towards end of August or early September. This could be 1 more trigger for the markets.

All in all, better avoid midcaps which have run up and look at large caps like LnT or Coal India which have good long term prospects and be prepared to average at lower levels.

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