The week ahead – Riding on a short term bull …

From the start of this calendar year, the benchmarks Sensex and the Nifty has been on a roll registering almost 10% growth. This has taken the indices close to the 2016 highs and now, the discussion that’s doing rounds is all about the bullish targets possible from hereon. The RBI stance on interest rates was surprisingly ignored by the markets and the corporate earnings so far showed less impact on account of demonetization. The front line stocks have recorded a growth of approximately 7% and the mid cap and small cap sections have clocked a growth of more than 12% in the current year till date. Given the scenario, it only natural that the bullish sentiments are back.

Going ahead, there are some points that the investors should be cautious about. The impact of demonetization is a story that’s just half written. The financial impact of demonetization although did not reflect in the current quarterly results, will definitely show up in the next quarterly results. The GDP numbers for FY 2018 is pegged lower and logically that means the growth prospects of the companies will also be affected. Internationally, although the markets are on a roll, the uncertainties regarding Fed interest rate hike and the brexit remains. The surge in stock markets is also due to the tactical move of presenting the budget on Feb 1st.

So a better idea would be not to get carried away the present show. Some caution is required around 9000 levels (nifty) and 29000 levels (Sensex) since there is every possibility for the markets to be volatile as it inches towards the previous highs. The previous peaks were 9119 and 30025 for the nifty and the Sensex respectively. For the week ahead we expect the markets to trade in a range of 27750-28850 for the Sensex and 8600-8950 for the Nifty. The short term trend is definitely up.

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