Indian Stock Markets have shown some strength in last few days, allying fears of double-dip recession and tightening monetary policies. Technically speaking, such correction was quite evident in the first half of this year, as we had seen a massive rally in 2009. Institutions who have been buying throughout the 2009 will surely like to book profits. The investors who were on the sidelines were waiting for such correction to invest their money into Indian equities.
Another thing that have helped markets worldwide is the clarity on the Obama's plan. Yesterday's announcement on 3 trillion $ spending in this fiscal will give markets a confidence that US economy will further improve this year. The GDP data that came on Friday was also good, albeit on lower base. But it has indicated that lower base is now almost created and things should only improve in the near future.
In such scenario, we might see some consistent rally, pre budget. My sense is that Budget will also be industry friendly this year. I feel that if FM can roll back some of fiscal incentive this year on one hand, then it will surely provide some other incentives that will help industries move forward.
Also government is under pressure on inflation front now and we have seen some major steps being taken in last few weeks to curb the inflation. Only Sharad Pawar needs to just "Shut up" its mouth to prevent further fuel the inflation.
Coming back to the markets, I feel that investors can buy "Domestic" theme at this juncture. Consumption based companies should be in demand. The government has also realized that in order to achieve 8-10% GDP, they must support consumption theme. Exports are more suspectible to shocks as global economy is still lagging behind and hence, might not able to contribute significantly in country's growth.
Few sectors that are worth mentioning is "Infrastructure", "Power", "Logistics", "FMCG', "Packaging" and "Auto". Banks can be avoided as tightening of monetary policies will only make things difficult to maintain their Net Profit Margins.
Technically, markets are likely to face some resistance at 4960-4980 levels. It is likely to drop from those levels at-least two times before it can further march to break these levels. On the downside, 4880-4900 becomes a strong base. Hence, for today, one may buy Nifty with target of 4960-4980 before one may go short on it. Please note that this level is likely to get breached and one may see markets again climbing 5100 levels.
Another thing that have helped markets worldwide is the clarity on the Obama's plan. Yesterday's announcement on 3 trillion $ spending in this fiscal will give markets a confidence that US economy will further improve this year. The GDP data that came on Friday was also good, albeit on lower base. But it has indicated that lower base is now almost created and things should only improve in the near future.
In such scenario, we might see some consistent rally, pre budget. My sense is that Budget will also be industry friendly this year. I feel that if FM can roll back some of fiscal incentive this year on one hand, then it will surely provide some other incentives that will help industries move forward.
Also government is under pressure on inflation front now and we have seen some major steps being taken in last few weeks to curb the inflation. Only Sharad Pawar needs to just "Shut up" its mouth to prevent further fuel the inflation.
Coming back to the markets, I feel that investors can buy "Domestic" theme at this juncture. Consumption based companies should be in demand. The government has also realized that in order to achieve 8-10% GDP, they must support consumption theme. Exports are more suspectible to shocks as global economy is still lagging behind and hence, might not able to contribute significantly in country's growth.
Few sectors that are worth mentioning is "Infrastructure", "Power", "Logistics", "FMCG', "Packaging" and "Auto". Banks can be avoided as tightening of monetary policies will only make things difficult to maintain their Net Profit Margins.
Technically, markets are likely to face some resistance at 4960-4980 levels. It is likely to drop from those levels at-least two times before it can further march to break these levels. On the downside, 4880-4900 becomes a strong base. Hence, for today, one may buy Nifty with target of 4960-4980 before one may go short on it. Please note that this level is likely to get breached and one may see markets again climbing 5100 levels.
Option traders can buy 4900 Nifty Call and Sell one 5100 Call and two 5200 Calls and one 5300 Call. This strategy will give profit till Nifty breaches 5300, which is a significant jump for this expiry.
Wishing you a great week of trading...
Wishing you a great week of trading...
