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Sunday, 8 July 2012

Consolidation after the Up Move

Posted on 06:38 by Unknown
The markets gained 0.7 pc for the week and what was more important was that the markets are consolidating their position before commencing the new up move.The next few week should very bullish for the markets and let us investigate the levels which the markets can reach during this period.

1. On the reforms front, there seems to be a silver lining with the PM showing positive intent. A final decision on the Vodafone tax front case will lead to a rally in the markets.

2. Oil is holding on at lower levels and this is a big positive for the markets like our markets.

3. Technically, we can map this rise as Leg C.
Leg C -1 was from 4770-5190 = 420 points
C-2 was 5190-5042 = 148 points
C-3 ongoing with targets of 5462 or 5721 points.

4. The Sugar sector looks extremely positive. Brazil has seen heavy rainfall which has lead to decrease in sugar output and India is witnessing scanty rainfall. Sugar sector seems to be looking good for next few months.

5. The Q1 results will be out from this week. Usually the results are factored in the prices and unless we see very good or very bad results, the results are usually discounted in the market prices.

6. Considering the rally so far, the indices may take a breather early next week before peaking out for

As I see the interest rates coming down, this will be last chance to lock in high interest rates. I can still several banks giving high interest rates on 3-5 year maturity. Profits from the equities can be locked in these FDs. The Gilt funds which I have been recommending for long have given fantastic returns in the past 2 months. The 10 year bond yield has come down  to almost 8.1 % from the near 9 pc levels.

For those interested in Equity picks, I have Lakshmi and my picks. We are sweetening our Cherry Picks with some sugar picks.
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