Last week, domestic stock
market continued to show upward momentum with Nifty posting gains of 2.7%. The
strong performance is mainly on the back of global surge in liquidity and
supported by Monetary easing from US to Japan. Favorable data in US too
supported the sentiment with the benchmark moving to life time high levels for
developed markets like US & Europe. FII buying topped $ 1.5 bn in last two
weeks. 4QFY13 result season too has been broadly in line with the expectations
with no major disappointment.
Next week, all eyes will be
on the Q1 GDP data from US and Europe. Locally monthly inflation numbers will be
out next week. It’s trajectory will be keenly watched. Key results to watch out
next week are Bajaj Auto, ITC, Nestle, Bank of Baroda and Reliance Infra.
The summer session of Parliament was totally washed-out,
with no major bills being passed. With the elections round the corner, the time
seems to be running out for the government which is mired in plethora of
controversies. Investors will keep an eye on reforms to be taken by the
government including efforts to bring back economy on accelerated growth path.
With the Global economic data weak enough to warrant continued stimulus, we
believe the flow of money in the EM in general and India in particular is likely
to continue. We recommend continued accumulation of quality blue chip stocks and
selective midcaps with medium to long term perspective. Cyclical sectors like
Banks and Auto continue to see buying interest from institutions, on the hopes
of revival in consumer demand in medium term and selective buying can be done
here. Despite stretched valuation, defensives like Pharma, IT and FMCG continue
to inch upward and hence any correction should be bought
into.
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