Sunday, 10 May 2015

Market Brief (11th May 2015)

Markets ended the day on Friday on positive note, although the week ended on flat note after a throwback rally. Weakness in rupee and firm oil prices kept the markets nervous and indecisive. Going forward with a strong rally  in  the US markets would see a higher opening on Monday but it won't be sustainable and durable, at best the rally on the Nifty could test 8350 to 8400 and in best case 8500 from where the sell off would see lower levels coming. Domestic issues are looming large, below expected corporate result and higher expectation build-up in stocks and misperception are the major reasons for the ongoing correction. Going forward unless there is a remarkable improvement on policy front in terms of further reforms and implementations, the markets will find hard to progress. At best it may remain in the range between 8000 and 8500, however in case of further deterioration on the macro front and poor monsoon would be detrimental for the markets and the markets would drift below 8000 and that would be dreadful and markets would in that case see a sharp selloff to 7500 to 7700 on the Nifty, and we may expected a protracted and prolong correction period in the markets.

Investors should restrain from buying into this markets as of now and in fact use rally to exit from fundamentally weak stocks, at the same time one can continue to hold  outperforming stocks, particularly  those companies reported improved results sequentially year on year and are having least debt burden and good governance. This is a good portfolio restructuring time.

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