The indices continued their rally upward and more short covering was witnessed in the later hours of the trade with the nifty managing to close above 5000 levels.
Technically the indices have given a good closing and if the global cues are supportive , we can witness the continuation of the rally with some supply coming near to 5050 levels on the nifty front , which would provide a short term resistance to the markets.
However one must not get over confident as the nifty still needs to manage a close above 5125 levels for a good breakout.
On the lower levels 4940 is a major support zone and would provide cushion to any falls and it must be assumed that the markets are up as long as these levels are held.
From a trading point of view one must keep in view the support zones and resistances and pick good high beta stocks as we have been continuously saying that its an opportunity for stock pickers and it looks the same.
Looking forward what can we look at –
Lets have a look at strong economic fundamentals , massive infrastructure development , strong rupee , demographic dividend , retial participation , implementation of gst .
The Indian policy makers have managed the the economic slowdown quite well in past 2 years , while in FY10 government consumption cushioned the downside and if we anticipate FY11 that domestic consumption from public and private capex will help provide the cushion – well this can just be an anticipation.
The recasting of personal income tax slabs in budget 2010- 2011 which will increase disposable income upto 56,000 rupees in hands of over 3 crore taxpayers which will give consumption a boost – well another optimistic anticipation.
We live in a world of anticipations and try to give premium to edge to it based on it.
The evolving medium – term trajectory for growth is strong with strong economic fundamentals , massive infrastructure development , strong rupee , demographic dividend , retial participation , implementation of gst .
Now coming to indices sensex is trading at a fair valuation of 16x FY11E earnings. Equity inflows from Fiis are expected to be strong and phenomenal in FY11, given the easy liquidity environment globally , Fiis are expected to invest over US$ 20 billion in equities in FY11 , additionally , domestic diis may also add US$ 14 billion.
These are some of the optimistic anticipation we are looking at , now if we come at the negative or pessimistic point of view there are few concerns in the short term which will dampen market sentiments and keep markets and investors in a cautious mood.
Rising core inflation with monsoon pressure can be a worry , but according to the met department the monsoons are likely to be normal this year so the food inflation will sublime and add to the positive side.
Another factor which needs to be looked at is the rising crude oil pressure which adds to the fiscal deficit , an average price of 85$ /bbl increases fiscal deficit by almost rs 100,000 crores.
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Yesterday’s calls sent via sms and messenger
Nifty – buy at cmp 4904 sl 4881 targets 4980 , went 5004.45
Dena bank – buy at cmp 83.40 sl 83 targets 85 , went 86.50
Indusind bank – buy at cmp 181.90 sl 180.50 targets 184 , went 187.50
Nifty 4900 ce – buy at cmp 23.50 sl 17 targets 35 , went 99.65
Tisco 480 ca – buy at cmp 4 sl 3.50 targets 6.50 , went 13.60
Billionaire Drum Tisco – buy at cmp 478 sl x targets x – holding
Billionaire Drum Itc – buy at cmp 271 sl x targets x - holding
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