Better Late than Never
As discussed during last week as well, Indian Stock Markets have been celebrating too much about low inflation, rather than taking a rational outlook on the broader picture. The global cues have been weak, Europe has been slowing down, US is under pressure, the central banks all across the world have been raising interest rates to cushion their economies from inflation.
As discussed during last week as well, Indian Stock Markets have been celebrating too much about low inflation, rather than taking a rational outlook on the broader picture. The global cues have been weak, Europe has been slowing down, US is under pressure, the central banks all across the world have been raising interest rates to cushion their economies from inflation.
Amidst such negative cues, expectation of Indian Stock Markets outperforming others had been too much of asking? And this was reflected last week as well when Lower Oil, Lower Inflation failed to propel the markets.
Hence, the realistic view at the moment is to “stay caution”. It is better to wait till the clouds of financial turmoil gets clear before one can start investing because days have gone when markets used to give you chances to come out of wrong investments. Now, one wrong investment could be enough to wipe out everything that one has earned over the past few months or at worse, years…
Last Week suggest more pain
The last week started with whole host of positive triggers like Lower Inflation, no major impact of Gustav hurricane on US refineries and good GDP numbers from US. Asian indices traded higher on Monday and Tuesday. US markets which were closed on Monday, hoped to rise on Tuesday. But financial turmoil in US pulled the DOW and NASDAQ down, despite the lower crude. That fall was a clear evidence of the intensity of financial turmoil that US is having at the moment. For the past few times, we have seen that every positive sentiment is quickly wiped out by one of the problems that US financial sector is facing at the moment.
The last week started with whole host of positive triggers like Lower Inflation, no major impact of Gustav hurricane on US refineries and good GDP numbers from US. Asian indices traded higher on Monday and Tuesday. US markets which were closed on Monday, hoped to rise on Tuesday. But financial turmoil in US pulled the DOW and NASDAQ down, despite the lower crude. That fall was a clear evidence of the intensity of financial turmoil that US is having at the moment. For the past few times, we have seen that every positive sentiment is quickly wiped out by one of the problems that US financial sector is facing at the moment.
Indian Equities did get another chance on Friday to regain the lost ground on lower inflation numbers for two consecutive weeks. But weak global cues again played a spoilt sport and markets surrendered meekly in front of them. Bears had a great party on Friday pulling down the Sensex by 500 points and Nifty by over 100 points respectively. Technically though, Nifty had rebounded many a times from 4350 which now look like a strong support levels for the Nifty.
Hence, the last week has suggested that until the US financial sector comes under control, the chances of equities outperforming any other investment class look remote.
NSG Outcome
Nuclear Suppliers Group has finally given its consent to India, which could have a positive impact on Indian economy in a longer term. But its short-term benefit is second to none, hence markets which may rise on Monday on the outcome of the deal, may yet to find a strong base to consolidate. Those who have bought equities last week at lower levels could find Monday as an opportunity to move out with good profits.
Nuclear Suppliers Group has finally given its consent to India, which could have a positive impact on Indian economy in a longer term. But its short-term benefit is second to none, hence markets which may rise on Monday on the outcome of the deal, may yet to find a strong base to consolidate. Those who have bought equities last week at lower levels could find Monday as an opportunity to move out with good profits.
Crude below 100$ could be a strong trigger
The crude oil, which is hovering around 105$ / barrel mark, could go further below 100$ in next 2 weeks. If this actually happens, the markets will have a strong relief rally for sure. Also, government may have a relook at the oil prices and could reduce it to further tame the inflation.
The crude oil, which is hovering around 105$ / barrel mark, could go further below 100$ in next 2 weeks. If this actually happens, the markets will have a strong relief rally for sure. Also, government may have a relook at the oil prices and could reduce it to further tame the inflation.
So, Lower Crude could have a positive multiplier effect on the economy, where it will reduce the operational costs of various industries, and will also help government in taming the inflation.
Trading Ideas of the Week
The next week may see a rally in Power and Infrastructure stocks like REL, NTPC, Reliance Power, DLF, Unitech, etc. Also, one may continue to see good rally in stocks of Oil Marketing companies like BPCL, HPCL, Indian Oil, etc.
The next week may see a rally in Power and Infrastructure stocks like REL, NTPC, Reliance Power, DLF, Unitech, etc. Also, one may continue to see good rally in stocks of Oil Marketing companies like BPCL, HPCL, Indian Oil, etc.
An interesting idea for this week is to buy Nifty Put of 4500, if it goes above 4550. Also, one can buy 4700 Call to hedge the position, somewhat a bit.
Investing Ideas
A stock that currently looks at attractive levels is Vishal Retail. It is currently trading at 400 Rs levels. We must not forget that Vishal Retail is among very few stocks that did not touch their IPO levels, during the meltdown. The company is on expansion spree and plays in the segment that has huge potential i.e., lower and middle class sector of India. Hence, one can buy Vishal Retail around 400-420 levels for 1-2 years perspective.
A stock that currently looks at attractive levels is Vishal Retail. It is currently trading at 400 Rs levels. We must not forget that Vishal Retail is among very few stocks that did not touch their IPO levels, during the meltdown. The company is on expansion spree and plays in the segment that has huge potential i.e., lower and middle class sector of India. Hence, one can buy Vishal Retail around 400-420 levels for 1-2 years perspective.
Besides, some of my old favorites like Karuturi Networks (KNL), Vakrangee Software, DCHL, Balasore Alloys are also at buying levels. One can buy these stocks with 1-2 years perspective.
If you have any views or wish to share your thoughts on the stock market, please feel to write in your comments by clicking Comments link below.
Wishing you a great week of investing!!
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