The markets dipped by 0.5 pc for the week, thus negating the gain of the first week of December. After 2 weeks of December we are at the same level we were at the end of November. At the beginning of the month, I had predicted a range of 5702-6114. We have thus far covered 5839 - 5965. The range for the first 2 weeks implies that we will not breach the range of 5702 - 6114 in the month of December.
1. The Reserve Bank will decide on the Interest Rates on Tuesday. I expect the rates to remain the same for this month and a cut in January. The reason for this is that inflation is still pretty high though at 10 month low. When Interest Rates are cut more money is available as loans at a cheaper rate of interest leading to more speculation and pushing up of prices.
2. The Gujarat elections results are due to be out on Thursday. Why are these elections so important? If Modi sweeps the elections he will be in the driver's seat for leading the BJP campaign in 2014. The stronger the BJP campaign greater is the chance of Congress getting lesser number of seats. The markets may not like this as they always prefer the party in power to win (The markets reaction post 2004 and 2009 election results is testimony to this). Also, if there is a strong BJP campaign, the Congress may lose seats and the Third Front may win more seats leading to uncertainty.
3. The markets have risen from 5549 to 5965. They are now correcting this entire up move. Considering the time taken from reaching the peak of 5965 and the slow nature of fall implies that a correction is ongoing. This correction has targets of 5806, 5757 and 5708.
4. The oil prices are stable globally and no new crisis seems to be about to erupt on the global front. US has its fiscal cliff issues which I predict will be sorted just in the nick of time leading to a rally in January.
Looking at historical factors, one can safely assume a year end and a ew year rally to at least 6200-6300 levels. Before that I see a small dip before we go up.
Investors can look at booking profits in the rally and moving on to safer investmets.
I strongly feel 2013 will be the year to buy equities for the long term, these will see price appreciation the same as those equities bought in 2002-2003 which are ow almost 5-6 times their acquisition costs.
1. The Reserve Bank will decide on the Interest Rates on Tuesday. I expect the rates to remain the same for this month and a cut in January. The reason for this is that inflation is still pretty high though at 10 month low. When Interest Rates are cut more money is available as loans at a cheaper rate of interest leading to more speculation and pushing up of prices.
2. The Gujarat elections results are due to be out on Thursday. Why are these elections so important? If Modi sweeps the elections he will be in the driver's seat for leading the BJP campaign in 2014. The stronger the BJP campaign greater is the chance of Congress getting lesser number of seats. The markets may not like this as they always prefer the party in power to win (The markets reaction post 2004 and 2009 election results is testimony to this). Also, if there is a strong BJP campaign, the Congress may lose seats and the Third Front may win more seats leading to uncertainty.
3. The markets have risen from 5549 to 5965. They are now correcting this entire up move. Considering the time taken from reaching the peak of 5965 and the slow nature of fall implies that a correction is ongoing. This correction has targets of 5806, 5757 and 5708.
4. The oil prices are stable globally and no new crisis seems to be about to erupt on the global front. US has its fiscal cliff issues which I predict will be sorted just in the nick of time leading to a rally in January.
Looking at historical factors, one can safely assume a year end and a ew year rally to at least 6200-6300 levels. Before that I see a small dip before we go up.
Investors can look at booking profits in the rally and moving on to safer investmets.
I strongly feel 2013 will be the year to buy equities for the long term, these will see price appreciation the same as those equities bought in 2002-2003 which are ow almost 5-6 times their acquisition costs.
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