Last week, we did a quantitative analysis of what can be the range of the markets for the month of January. 9 out of 23 sessions for the month are done with and we are on track with the predicted numbers. Lets take a look at the events which can trigger the expected range. The boundary wall based on statistics was 5850-6100. We have traversed quite a part of the range already.
1. The Results season will be in full swing next week. Infosys with its guidance gave a thumbs up to the IT sector. More than the results, it was the guidance. Remeber, markets move up 6 months ahead of event actually taking place. After watching the TCS results on Monday and Wipro on Friday, the IT sector will have a re-rating.
2. The major private banks like Yes, Axis and HDFC Bank will also declare their results this week. The IT sector has a weight of 13 pc and the Banks 21 pc in the sector. So, by the end of next week, the directions of 2 key sectors will be out of the way. If the Banks continue with their good showing, the rally will continue.
3. The RBI policy on 29th January will lay down another marker for the markets. A rate cut of 25 basis points is factored in. 50 basis points cut and a CRR cut will lead to a rally.
4. Another event which has no fixed date is the Diesel and LPG price hike.If both are hiked, then the oil and gas companies will rally. This sector has another 13 pc share in the Nifty.
So, we have events which can affect 47 pc of the Nifty composition directly and then we have rate sensitives like Financial institutions and auto sector which constitute another 17 pc. Thus, we have 64 pc of stocks in the index which can move because of 3 reasons:
a. Results
b. Diesel price hike
c. Credit policy
Based on the timing of these 3 events and positive or negative factors each play out we can have the markets rallying or falling. The primary trend is up and corrections can and should be bought into. We have a support level at 5920 coming into play from where a decent bounce up can be expected.
1. The Results season will be in full swing next week. Infosys with its guidance gave a thumbs up to the IT sector. More than the results, it was the guidance. Remeber, markets move up 6 months ahead of event actually taking place. After watching the TCS results on Monday and Wipro on Friday, the IT sector will have a re-rating.
2. The major private banks like Yes, Axis and HDFC Bank will also declare their results this week. The IT sector has a weight of 13 pc and the Banks 21 pc in the sector. So, by the end of next week, the directions of 2 key sectors will be out of the way. If the Banks continue with their good showing, the rally will continue.
3. The RBI policy on 29th January will lay down another marker for the markets. A rate cut of 25 basis points is factored in. 50 basis points cut and a CRR cut will lead to a rally.
4. Another event which has no fixed date is the Diesel and LPG price hike.If both are hiked, then the oil and gas companies will rally. This sector has another 13 pc share in the Nifty.
So, we have events which can affect 47 pc of the Nifty composition directly and then we have rate sensitives like Financial institutions and auto sector which constitute another 17 pc. Thus, we have 64 pc of stocks in the index which can move because of 3 reasons:
a. Results
b. Diesel price hike
c. Credit policy
Based on the timing of these 3 events and positive or negative factors each play out we can have the markets rallying or falling. The primary trend is up and corrections can and should be bought into. We have a support level at 5920 coming into play from where a decent bounce up can be expected.
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