May 2013

forgot to post "weekly take" last weekend ---- i had some personal engagement on 11th may weekend so it was not prepared.

WEEKLY TAKE ....

Trading levels --- 20th / 24th May 2013

5th consecutive up-week and market has gained whopping 700 points. This pace is clearly un-sustainable and we should be nearing a correction. When the correction will happen is entirely a function of FII inflows as there is no change in macro outlook and political scenario has in fact worsened.

In the month of April, we had slightly better CPI and WPI inflation figures …. Thanks to cut in petrol prices and deferment of diesel price hike due to Karnataka elections. But we have had double dose of diesel price hike in May. May CPI and WPI figures should be out before June RBI policy meet.

I am not too sanguine about rate cut in June meeting as the banks did not pass on benefits of May rate cut to industry. I think RBI will wait for one more meeting as that will give them enough time to see the effect of May rate cut.

However market has turned euphoric again about June rate cut and cheered in a big way pushing 6200 levels on nifty. Bank nifty is just about 45 points away from all time high and if we get about 6,000 / 7,000 crores FII money in next week, we may have scaled an all time high on nifty as well.

I wrote two weeks ago…. Don’t look at technicals or fundamentals as this is a liquidity driven rally and ride it with appropriate stop losses as long as you can. I will recommend 2 to 3 % stop loss on nifty and about 3 to 4 % stop loss on individual stocks