Markets: The Week Ahead

It was a rally on D-Street and the Nifty rallied about 5 pc to close the week at 5132. What will the coming week bring ahead. Will the rally continue or will it sputter. Let us try and find out.

1. The October Settlement is a truncated one. The expiry is happening on Tuesday, Oct 25th thanks to Diwali. This gives us about 7 sessions to expiry.

2. The RBI credit policy falls on Oct 25th. So, we will have action packed expiry this time. It will be like a lottery as a 100 point swings can happen.

3. The inflation is still not under control. I expect a 25 basis points hike the this policy meet.Interesting thing is that bond yields have moved significantly higher in the 8.7 - 8.8 pc band. This also implies that government borrowing is taking bond yields higher. Macros suggest a high interest regime to continue.

4. There are a slew of corporate results coming in this week. Usually the early results are the good ones. Reliance just about met expectations thanks to high refining margins,Infosys benefited from a weak rupee. The poorer results should come from the Banks (Treasury losses), Autos (poor sales) and Infrastructure companies.

5. The Nifty is moving towards the critical resistance of 5169 again. It has failed to move in past 2 attempts. After this we have the gaps from 5229 - 5331 to be closed. We are headed towards a cluster of resistances and it should be interesting to watch how the Nifty behaves at slightly higher levels.

6. This could be the 4th wave of C-3. refer earlier posts for exact wave counts. This wave can typically go up to 5350-5400 and then we have the last wave down which can last for 4 months.

7. The layoffs have started in financial institutions. The Petrol prices may be hiked again if the crude prices go up coupled with a weak rupee.

Do look at investing Infrastructure Bonds for tax savings. More in my guest post in Subhankar blog.

Tough times ahead and time to brace up.

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