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.

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