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Thursday, August 16, 2012

Middle of the Road for Indian Equities in July&August

I have not felt like writing about the Indian markets since last month as they have meandered aimlessly in a narrow range.My prediction was for either 4600 or 5400 on the nifty and today it is 5400...!!Those who followed my reccomendation of buying 5200 Aug call and a 5000 Aug Put have made a 50% return with less risk.

Every month data from the US and Europe shows some uptrends and some downsides,its definite that Europe is in recession.I see a lot of solid companies trading below their book value(BV).The S&P has doubled in value from the low of 666 in 2009 where Europe is below their lows.

Will the Hedge/PE Funds get in and buy in Europe or wait for more clarity before moving?Till then the emerging markets,especially India,have enjoyed unexpected inflows and this liquidity has kept markets high.

The monsoon has been very unevenly distributed,inflation is stable around 6-7%levels as we head into the festive season.The consumer stocks look overbought,nothing much happening in infrastructure or cement stocks.Looks like the markets have a positive bias and every dip will be bought into.After the infamous 'Blackout'and the grid collapse in North and East India,the Government methinks will focus on power distribution cos as well as providing incentives for more generation.

Its a trader's market for the moment,keep tight Stop Losses and book profits whereever you get them.The Futures segment on NSE is at a six year low in terms of volumes but do not let such things frazzle you.