Its not a long back where all the Stock Market Players and Investors are expecting Nifty to be at all time high, and now its a time when no one is thinking for such high but may be afraid of making new low soon…!!
Is this due to the volatility of dollar and Overseas economy alone or any other factors are participating in this move?
One of the main reasons for this Down side volatility shown in market in last few weeks is unceratinity from the ned of government policies and measures which RBI is taking. Due to the unchanged rate policy by RBI in the current policy, investors and FIIs are really afraid and worried weather measures to grow economy is supposed to be taken or it is in paper and media only?
Even standing at 5% GDP growth (In fact we are looking for 9% growth soon..:P) and Indian Ruppes value at 61 for USD, many of the Industrial houses are still encouraging the asset quality of the specified industries Stock and not denying to have the gem time to enter in that Stock now. but the question is weather FII, DII, or retail investors are ready to invest their fund at this stage of time when….. There is no certainity about the stability of government, No significant measures taken by the RBI, average results for the 1st QTR, 2012-13 by the leading companies of India, Even after measures taken by RBI ; both preventive and corrective; NPAs of the Public sector banks not improving upto level. This is really a tough questions to answer..! Only the lower prices of Stocks as compared to its hilarious Past can not be the reason of entering market.
As of now, as per our belief there is no strong reason for the market to boom unexpectedly for the very short term. (Speculations are always the exception.!) Still if the Domestic Governing Issues with the Industries are end up with Positive outcome and with the Support of Global Market, we may see again the levels till 6000 in nifty. However, more probability still stands for the Nifty to range from 5300-5650 which is also sound support and resistance level from technical point of view also.
For the Investors, we advise to keep away from the market till next breakout by 8-10% from current level. For Traders we advise to Short options which are quoting at very high premium due to uncertainty in market.
CA Nirav Doshi