Week Ending 5 February 2016

Dear Patrons, welcome to yet another edition of the weekly blog. We saw extreme volatility in the course of the week gone by, however we believe volatility will very much be a part of our markets in the foreseeable future. Increase in volatility in our markets is more due to global peers than local events.

Nifty started the week around 7600 and slid down to 7350 and regained most of the ground on the last two trading sessions closing at 7489. During the fall mid caps were the victims. Some of the mid cap stocks were brutalized in the last fall.

Nifty should find support around 7350 to act as base for some more up move. Barring a negative news on the global front, we should see a relatively stable market here on wards. This being the budget month the event risk remains in the market. We do not rule out a pre budget rally in our markets though. 

Last week both, the US Fed and the RBI held status quo in the interest rates. The Fed talk was pretty dovish and suggested no increase in interest rates in March. This resulted in the USD falling against other global currencies. The INR also gained some of the lost ground during the last two trading sessions. The RBI also held the rates constant. We have seen 125 beeps cut this fiscal and do not see any more cut in FY16. 

The results season is by and large over. There have been some extremely good results and some dampeners, however, we like to believe that the Indian economy is in very good shape and we should see improvement in the GDP in FY17. The GoI thrust on infrastructure spending augurs well for the industry as a whole along with Make In India campaign, which in all likelihood will result in India becoming a manufacturing hub, creating more jobs and expendable income, which in turn should push the growth rate higher. (Boeing is said to be in talks with GoI for their first manufacturing unit outside the US)

As seen above, should Nifty hold 7350, we are likely to see 7580-7700 levels in the near future. Many of the good quality stocks have been hammered out of shape in last one year. We strongly recommend to add good quality stocks to the portfolio in this period for long term.

Stay Invested. Happy Investing!