Markets shakes at higher levels, still in caution Zone

Q1 Results on watch-list, Monsoon disappoints, UPA allies play spoilsport
The sensex closed at 10510 down 99 points over previous week. And this has a message for Investors. Markets are yet not confident enough to take this rally forward and every rise in sensex is followed by bouts of profit booking activity.

Let’s look at some facts which would help us indicate the future corse of action :
FII’s & MF’s were net buyers !
Over the last week FII’s were net buyers to the tune of Rs. 8.5 Billion while the Mutual funds bought about Rs. 3 Billion.

Photobucket - Video and Image Hosting
Monsoon disappoints !

Markets had built hopes of timely arrival of monsoon. However, the rain gods have shown delay and this had disappointed the markets. The IMD ( India Meteorological Department) lowered its forecast of the southwest monsoon to 92 percent of long period average (LPA) from the earlier expectation of 93 percent. It however expressed bountiful rainfall in the month of July. The IMD annually gives two projections - an advanced forecast in April followed by another in the first week of July. The projections are important as July is a crucial month for agriculture sowing, particularly for crops like rice with two-thirds of the farm land dependent on rainfed irrigation.

UPA allies play spoilsport
Manmohan singh's government is coming under continous presuure from its allies specially over the disinvestment issues. The government has recently planned to put the divestment plans into cold storage, thanks to the rising clout of leaders like karunanidhi. The Neyveli Lignite drama was an example to this. There are rumors going around suggesting threats to stability of the UPA government. However, this seems unlikley.

Q1 Results to unfold
With companies lined to announce their quarterly results, the stock specific action is expected in thier counters. However, results of companies like infosys would act as a short term trigger for technology pack as a whole.

Going technical
I was just having a look at the technical chart of the sensex for the 6 month period and the results were sending a caution signal.
Photobucket - Video and Image Hosting
The Senxes is trading below the 200 as well as 100 day moving average which is not a good sign for the markets. This suggests that the pattern is still bearish at the macro level.

To summarise the above discussion, the markets are expected to be volatile in coming week with stock specific action. The broad indicators are showing downwards trend which means that every rise would result in profit taking and would stop indices from marching ahead. Large caps will continue to outperform their midcap counterparts for some more time. Hence Invetsors are advised to stick to fundamentally strong stocks.

In coming posts , I would talk about some mid cap stocks which look good investment opportunity with long term perspective.

Happy Investing!!

8 comments:

ashish said...

Hello rajesh,

I was thinking that again you are lost somewhere.But you came out with a great and in depth analysis of the prevailing state of the markets.We small investors will be eagerly waiting for those mid cap ideas that you would have very well researched.

BEST rEgards,
Ashish.

Rajesh Soni said...

ERRATA : The chart pattern shows that markets re ruling a inch above the 200 days moving average (my post says above) and below its 100 days moving average. we would need to watch that pattern and any movement towards the 200 day line would signal bearish trends. 100 Day moving average indicates short term bearish signals. Conslusion remains same.

Anonymous said...

Hi rajesh
I hold 25 shares of Infosys bought at the rate of Rs. 2850. The current market price is 3180. please suggest if I should book profits or keep a hold ?

thanks
ravi

insider said...

Markets to test 9800 levels within a month. Sell at every rise.

Anonymous said...

At least 90 persons were killed and scores of others wounded in a series of seven terror blasts in first class compartments of suburban trains around 6 p.m. during the peak hour traffic in Mumbai on Tuesday.
As the blasts ripped apart train compartments, mangled bodies of passengers were hurled out and survivors, many of them bleeding profusely, jostled to come out leading to chaotic scenes.

The blasts occurred between 6 p.m. and 6.30 p.m. at Mahim, Bandra, Matunga, Borivili, Mira Road, Jogeshwari and Khar.

Fifty bodies were brought to Bhaba hospital in Bandra, 20 to Sion in central Mumbai and ten each to KEM and V N Desai hospitals.
A high alert has been sounded and security beefed up in public places and markets across the capital on Tuesday in the wake of serial grenade attacks in Srinagar and blasts in Mumbai.
Besides deploying additional police personnel across the capital, check posts have been set up at all major points in the city, including railway and bus stations, cinema halls and busy market places.

Barricades had been put up at all entry and exit points of the capital to keep a vigil and checking of vehicles had been stepped up, additional commissioner of police Deependra Pathak said.

Rajesh Soni said...

Hi Ashish

No sure if this is a compliment or a complain :)

I try to be more regular but then the work prevails over my blog and I have to live with this fact.

Rajesh Soni said...

Hi Ravi
You ahve done a good deal on infosys. If you are a long term investor I would advice you to hold on. This is the best pick in tech sector.

However. If you wanna trade on this , you can book profits at 3500 levels and reenter when profit booking happens on the counter. I would prefer to hold.

Manmohan Singh said...

hi rajesh
singh here from jaipur. want to meet a career adviser. just log on to freeadvice.com.googlepages.com
my new site yar.why u not connect me since long.well look out this site and tell me u r advice.
manu