Oct 13, 2012

Market Update 13/10/2012

The markets are down 1.20% from the previous week's closing. Technically there has been some consolidation in the markets. 5650 on the Nifty is an important support and should it hold then we could see some up move.

The IIP data for August is seen as positive and should improve investor sentiment. CPI data released yesterday have indicated that inflation is moderating. However, inflation as measured by the WPI, continues to be above the RBI's comfort zone.

US unemployment data has come in at a 4 year low. This could have a positive impact on the markets in the near term. The US elections will be keenly watched and will be one of the key events in the coming weeks.

Going forward, more consolidation is expected in the markets in the near term. Long term technical indicators are still positive and there is also a fundamental case for the markets to move higher in the medium term. The present lull can be viewed as a buying opportunity.

The USD closed the week @52.81 to the INR (close to support of 52.85). The dollar made a strong recovery after the unemployment data was released with investors feeling more confident about the US economy. The dollar is expected to strengthen in the near term. Support of 52.85 could be breached and we could see the INR@53.2.

Gold has seen some weakness in the international markets with investors preferring the dollar and dollar denominated assets. Prices in the local markets have remained steady with gold closing at 3128.2/ gram.

Oct 8, 2012

Market Update 8/10/2012

The markets ended up 1% over the previous week. Some consolidation and profit booking is expected ahead of the results season. Index heavy weights Infosys and HDFC Bank will declare their quarterly results on Friday and that could well set the tone for the remaining season.

The market still looks slightly over bought according to the technical indicators. However the long term trend indicators such as the moving averages suggest that this rally could continue for the near to medium term.

The proposals by the cabinet to allow direct investment by foreign entities in Insurance and Pension Funds has been welcomed by the markets. It shows a commitment by the Govt to stick to reforms and to open up more sectors of the economy. International investors are pumping money in to the markets and that trend is likely to continue.

The Rupee is expected to strengthen further in the days ahead. Currency analysts are expecting the Rupee to find resistance around 50 to the dollar. However for the near term 52.85 looks to be a support and 51.15 a resistance.

Long term bonds continue to rise with the expectation of a rate-cut by the RBI in it's policy review at the end of October. Short-term rates are expected to remain steady and might move lower as the system is flush with funds from abroad.

Gold is expected to stabilize at these levels before moving up again. Gold ended the week at Rs 3118/gram.

Oct 1, 2012

Market Update 1/10/2012

The Nifty ended September with a gain of 6.90% over the month. The important psychological benchmark of 5700 has been breached and the main indices hit their 52 week highs (Nifty 52 Wk H- 5735, Sensex 52 Wk H- 18869) on Friday.

Technically the market continues to look bullish. Some consolidation is expected around these levels in the short term. 5830 is an important long term resistance.

Spain's budget had investors around the world worried with it's burgeoning fiscal deficit problems. However, the Government has gone in for some positive measures that have helped investor confidence worldwide. Campaigning in the US presidential elections go on and the incumbent Obama is expected to win another mandate. This could be seen as a positive for the markets as the Fed will be likely to carry on QE3 with a Democratic White House. A period of consolidation with a slight positive bias is expected in world markets until conformation of the results which can be expected in early November.

The recently launched 'reforms' by the Indian Govt have been welcomed by the domestic markets with both local and foreign investors looking to invest in equities. FII's have been pumping in money in to the markets and as a result the Rupee is appreciating. A stronger Rupee helps to control our current account deficit and is seen as positive for the economy.

The Rupee ended the week at 52.8 to the dollar. Some consolidation is expected at these levels before the Rupee further strengthens.

Most analysts expect a rate cut in the RBI review meet on Oct 30th. Announcements by the RBI top brass have indicated that the central bank is worried about growth and could act to stimulate the same. However, inflationary pressures continue to persist. The Govt has indicated that it will stick to it's borrowing program and not over-shoot. This is seen as giving room for the RBI to maneuver.  The appreciating Rupee also gives the RBI some room to act. The recent revision in diesel prices and the expected surge in global commodity prices due to the surge in global liquidity are expected to keep inflationary pressures high.

Gold continues to remain an attractive asset class and could well be poised for another take-off. Price of gold has fallen from it's most recent highs. But, the factors both domestically (on account of the festival season) and globally (liquidity) suggest that gold could go higher in the near to medium term.