Nifty struggling to hold 5000 level in past 5 trading sessions and Sensex being far away from 17000, inspite of some outstanding corporate results, indicate formation of short term top and fatigue in the bull camp. Dow has become more volatile in the recent past moving 100 points + / - range of 10000 level. Volatilityin the movement of US Dollar, make matters worse for all markets and all asset classes in the near short term, since it is the defacto global medium of exchange. Crucial RBI Monetary Policy Statement scheduled for announcement today, shall give indication of interest rate movement, inflation tackling measures and liquidity situation which are anxiously awaited by market players, especially FIIs.
FIIs or Domestic corporates and infact every investor and participant, wishes stability in Exchange Rate, and predictability of its range over short to medium term for planning investments in the economy. SEBI has cleared the proposal to allow Stock Exchanges to extend trading hours from 09.00 a.m. to 05.00 p.m., after ensuring the necessary related infrastructure issues are in place, is a welcome measure for FIIs, who need longer trading hours for proper hedging the investments across globe. Indian Banking and the Clearing agents and Depositories etc., need to tune their working hours too to suite this proposal, for implementation of the new system.
Positive Features: Investing in stock markets, commodity markets, forex markets etc., will invite more players and participation which raises volumes on bourses. Extended hours will necessitate for shift operations for front and back office staff, which creates more job opportunities in the field. Since complexities raise as markets take cues on economy, exchange rate apart from performance of corporates, opportunities for Port folio Manager, Investment Advisors, Analysts, Private Equity Players, Venture Capitalists and Merchant Bankers will increase.
Since markets are becoming top heavy, Strategy of Sell on rallies to increase levels to 25% of investments is not a bad idea, as there will ample opportunities to purchase the same blue chip stocks at much lower prices in the weeks/months to come. The Monetary Policy Statement and analysis of its effect on markets shall be posted after its announcement separately.
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