Consolidation before the next run

US Markets closed flat after a volatile session yesterday. New home sales dropped 32.7 percent from a month earlier to 300,000 in May, raising the prospect of an economic recovery slowdown. We expect the economic data to take a toll on the US Markets.

Indian markets are exhibiting excellent strength when compared with its global peers. We see a decoupling sooner but we expect another phase of consolidation. Midcaps along with small caps are looking to run again.

We are bullish on Power and Textiles in the next 2 year period especially power sector is ready to go miles as many plants are in the commisioning phase.
The rupee strengthened on optimism fund inflows would increase as overseas investors step up purchases of the nation’s assets to benefit from India’s economic growth.

We expected the mamouth rally to start in August. But it appears Indian markets might take off a little early. Stay invested and add on downsides.

Gloom re-appears

Wolrd markets followed the US markets today after poor home sales data hit the market resulting in what can be called a trend changer. We clearly mentioned yesterday that this time S&P might break the so called support level at 1045. At the same time we do not expect markets to tank like they did in May. The pain will be slow and steady. US Economic daa will be keenly watched.

Indian markets are displaying immense strength but the current rally might fizzle out as they ran into major resistances. Small and midcap stocks continued their upward journey.

We are expecting a dull month going forward with a negative bias. Stay invested but save some cash for a rainy day. There might be thunderstorms ready to hit the markets soon

Yuan rally fades....

Chinese currency story faded yesterday after Wall Street closed in the red. Asian markets witnessed a stunning rally courtesy Yuan de-pegging news.

China lowered its U.S. dollar central parity rate to 6.7980 yuan on Tuesday from 6.8275 yuan the previous day after allowing the local currency to sharply appreciate in the spot market on Monday. The news sparked a quick pull back in global equities from the lows of the day. But we still believe the rally has little room top move up.

Current situation can be best termed as lower upside chances and more of a downside though markets are behaving the other way. The bullish sentiment being injected will fade sooner than later.

Indian equities might decouple from global scenario given the situation. More and more inflows are expected as ULIP news will add fuel to the fire.

Stay invested and add on declines. We still do not buy the theory of bull run in the short term in the current scenario

Yuan de-pegging likely to trigger bull run, F&O expiry to keep a check

China's loosening stance on the yuan is likely to boost currency values across Asia while relieving upward pressure on Asian interest rates. China's stock and bond markets will likely rally in reaction to Beijing's pledge Saturday to increase the currency's flexibility after nearly two years of keeping it pegged against the dollar.

Indian Rupee too will appreciate as a follow up to the above mentioned positive news. F&O expiry might keep a check on the Nifty upmove. Euro concerns seems to have disappeared atleast for now. It is amazing how the S&P tested the support level third time and bounced back. One should keep in mind if there is any downturn in the US market this week it would signal a death blow again for bulls. We are catiously optimistic after being bearish for the last 2-3 months. Indian markets are denying any raids by the bears courtesy the strength of the economy.

Interest rate hike is inevitable and avoid rate sensitive sectors like Auto, Realty for the short term. Concentrate on small caps and midcaps for now as large cap valuations are inline for the short term. Expect Nifty to trade in the band of 5200-5300 for the expiry week unless another leg of downturn unveils.

Nifty levels

Intraday views for 18/06/10
NIFTY INTRADAY RES....5290....5320....5355....5​380.....5410

SUPPORTS....5265....5250...5230.​..5200...5170...5140

ALL THE BEST

BUY JET AIRWAYS IN CASH AROUND 515 SL 505 TGT 524-532

Markets likely to cool off

After a rapid climb over the last 10 days, equity markets across the globe are likely to cool off. Despite of negative home sales numbers the impact was minimal on Wall Street.

Rate hike checked the market rally in Indian markets yesterday. Nifty is trying to consolidate before the next move. While many predict an upmove we still believe the current rally as a head fake rally extended from oversold levels. The current pull back rally has very limited chances of getting converted into a full blown rally.

RBI might surprise the market with a rate hike this week end or some time in the next week. Inflation will keep the government on the edge.

Junk stocks are moving up again. Do not fall prey to operator games

Bullish Momentum to continue...

Weak US Inflation data stoked a rally in the US Markets yesterday and is likely to propel a rally in Asian marktes today including India.D-Street is likely to open up continuing the last 5 day winning streak today. Midcaps continued to spring in major surprise with ADAG stocks jumping all over the place with RNRL leading from the front, taking over the baton from Reliance Communications.Our bearish view on Nifty has taken a beating but we are still not comfortable given the current economic situation. Inflation is a major concern while Euro crisis is not over yet according to us.

We would wait for 5250 for Nifty on a closing basis before taking a bullish stance. Things are definitely uncertain still though many brokerage houses changed their stance suddenly. Keep a catious view on the market but as we always said a long term investor can continue to hold and add on any declines.

Nifty 5300 is what most of the analysts are pegging the resistance. Better safe than sorry.