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Tuesday, January 8, 2008

Happy new Year 2008 - "Out look for the Year"

At the outset a happy new year to all viewers of the blog! 2008 shall be a tough year for equity and financial markets, as inflation, raising commodity prices, Elections for US president, and last budget from UPA, certainly aiming at the early elections in 2009; would bring in huge volatility on indices world over, including Indian Markets.

In any market performance of individual stocks, with supporting track record and growth story and performance on track, inspite of any external conditions, would continue to out perform. 2007 has closed on very strong positive note, unexpected by many analysts, as far as our markets are concerned inspite of good amount of selling by FIIs at every raise of indices. It shows that the domestic money is showing its power and belief on india's GDP and corporate performance, which is being confirmed with the huge subscription to NFOs of mutual funds, while the indices are at all time highs.

Events to watch from now shall be: Infosys results on 11th will give cue about the effect of slowing of US economy, and its possible impact on tech sector for 2008; The other sectors should post good results, if the advance tax payments made on 15th December are to be considered as indication. Once, the results are out, expectations of Union Budget 2008-2009, will play their part on sectors and markets. Already few sectors like sugar, fertilizer, FMCG are showing some front running on expectation of some sops and tax cuts, as FM indicated the compliance is to be rewarded with cuts which shall induce more compliance, thus more revenue.

Forex reserves, balance of payments position are quite comfortable, while strengthening of Indian rupee against US $ is causing sleeplessness for the regulators, as it is hurting exports, and sectors who solely depend on it, and not having the capacity to have effective forex management (hedging) as large corporates can afford to.

Strategy for the Day: Buy 6000 calls on weakness and 6400 puts on rallies in January series, for quick returns.

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