Markets on the backdrop of Union Budget 2016 rebounded
sharply during last week to finish the week on robust note, up above almost 7
percent. This was one of the highest weekly gains since past many years. The
rally was mainly led by banking stocks and battered down metal stocks. The
Union Budget, although was a neutral budget, but it projected a fiscal deficit
target of 3.5 percent as a part of fiscal consolidation, and announcement of
INR 25,000 crores infusion of capital to give flip to banking sector stocks, as
well as talks about merging PSU banks gave a boost to the banking stocks.
Moreover the firm metal prices globally saw improvement in the metal stocks.
One more point which went in the favour of the markets were the strong rumours,
that of increase in capital gains tax on investment in the markets, which
eventually did not happen, and markets took the news cheerfully. Although the markets gave a smart recovery,
the worst is still not behind us. It needs to be seen whether RBI reduces the
interest rate, how the forthcoming quarterly results of companies turn out to
be, and how the monsoon factor plays out. Global economic markets will also be
watched closely.
Technically, the markets being oversold and having maintained
the support of 6960, recovered sharply on the back of bear covering and in
anticipation of better things to come. Where levels are concerned, the market
is poised against the key resistance of 7600, and likely to react from thereon
to test lower levels. On the lower side, there are multiple supports right from
7200 to 7400. As long as the markets are above 7200, it is in the firm hands of
the Bulls, and markets are likely to see higher levels in times to come. The
broader term range for the market is 7200 to 7600, and the short term range is
between 7300 and 7500.
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