We continue to remain cautiously optimistic about the markets. The reason we are cautious is because during such phases which markets are into, there are times when “price” specific correction extends beyond usual volatility levels. Hence, it becomes imperative for one to protect capital. Overall, things are moving towards markets being attractive on a longer term basis and there is no need to panic at this stage. On short term basis, though we continue to remain technically weak, if 4950 is assumed to be the low of this correction, then markets have the potential to rally upto 5400 + levels in next few weeks.
Sector wise, Banking, Cap Goods, FMCG, Health Care, Consumer Durables continue to remain robust. On the other hand, I.T., Metals, Realty and Infra continue to drag the markets lower. It is quite likely that RBI will hike interest rate one more time during the September 16th policy meet. The decision to do so will largely rest on the way commodity prices move during this period. In case U.S. & Europe markets begin to show signs of stabilization, there is a high probability that we will face more rate hikes by the RBI. As it is at this stage, rate hike is rightly being priced into the Rate sensitive sectors and unless RBI hikes the rate more than expected, market reaction on the same will be muted.
Globally, we do expect things to largely stabilize. There has been significant amount of price correction in recent days and the current set of negative news largely remains discounted in the markets. Unless S&P down grades some of the European counterparts, the volatility levels should subsidize in coming weeks. Traders and Investors should look to buy into selective stocks from the sectors mentioned above. In the current scenario, keeping stops is absolutely pivotal and in any case this should be followed.
Technical Outlook - Continue to Remain Weak
Can you do a video session on the intelink between cash, commodity, forex and bond markets etc and also interlink between the Indian and Foreign stock markets (That is, the reason for correlation). Can be quite informative
If not a video session, even a text article would do the job.
Prudvi, At some point will definitely do it.
What you are asking for is “Intermarket Analysis” and I will post one for Indian Markets.