Oct 22, 2018

Market Update- 22/10/2018

The equity markets continue to show signs of weakness with the index well below it's 200 DMA. We know that 10,000 on the Nifty is an important support with the index testing this in Dec-17 as well as in March 18. It will be interesting to see if the markets test this support again this time around.

The momentum indicators are recovering from the over-sold territory. We can therefore infer that the corrections may not be as sharp as we've seen them the past month. 

The index PE (Sensex) is currently at 21.9. This is still slightly above the long term average of 18.5. While this still calls for caution we are generally more positive (in asset class weightage) on equity than we were these past months. We will increase our asset allocation if there are further downside corrections in the market.

The 10 year G-Sec continues to hover at around 8%. This is a long term resistance and the markets have been testing these levels for some time now. The long term average for the G-Sec is 7.5%. We therefore believe that yields are reasonably high at this point of time. It would be good to add to debt positions.

The USD:INR seems to have found some resistance at around 74. It seems to be settling around the 73 point at the moment. The support for the INR is at 70 (the previous resistance).

The international price for gold continues to hover at around $1200/oz. This reflects a lot of confidence in the global economy.