"Putting all speculation to halt, RBI Governor Dr.Y.V.Reddy, announced that all the key rates left unchanged while reviewing the monetary situation domestically, and global uncertainity, and preferred to act instantaneously, without linking to monetary policy meetings which are scheduled every quarter, to manage the liquidity in our economy."
Number of analysts, and market players were hoping that RBI will follow suit, after US has cut 75 basis points cut a head of FOMC meeting which began on 29th. One needs to appreciate that every country, has its economy and the regulator has to take steps to meet the requirement of their economy and not ape US in these times of decoupling of economies. Our markets shall react and move, to the global news from here on as almost all important news and events are over for the month. Derivatives settlement on 31.01.2008, shall have the volatility based on the decision of FOMC meeting today (which will be known to us by late night) and FIIs behaviour shall indicate the direction of our markets.
Our markets will be in consolidation phase till budget time, and a pre budget rally can be expected after 11th february, as the money blocked in Reliance Power IPO will be in the hands of retail investors and HNIs by that time, as well as listing will be completed. This quarter shall be turbulent, and stability to global markets can return in April/May based on the Q1 performance of US companies, and confirmation of slowing down or recession of US economy.
While India, Hongkong are looking strong Nikkie, Dow Jones and Nasdaq are trading below their 200DSMAs which gives rise to greater volatility. The correction of 30% happened to Nifty, in very short time, leaves room for some consolidation before the next upmove begins, which might take a month or two, in our estimation.
Nifty is taking support at 5021.35(Sept closing) on closing basis in this turmoil during this month, hence any weakness in the markets should be utilised to purchase blue chips around 5050 levels for substantial returns by year end.
Strategy for the Day: Buy 5000 calls on weakness and 5500 puts on rallies for quick returns in today's trading.
1 comment:
As settlement is nearing (tomorrow), and we have a very important Fed event tonight. One can be sure that the market will either shoot up or down viciuosly tomorrow.
In this scenario, would you suggest going long on a straddle?
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