Uncertainty, still far from over. ::Anand Rathi

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Uncertainty, still far from over.

NIFTY

Nifty has breached 200 day moving average at 5114 and closed below that on a 3 consecutive days which is very negative, till 5300 on the higher side is not crossed 4800-4500 could be the possible levels. Nifty crossing 5300 then re-testing 5600 can not be ruled out. Nifty rally from 4531 to 5629 for which 61.8% retracement comes to 4950 and closing below it negativity would be very high.

Nifty below 4800 only weakness would start till then range bound market is expected with Textile, FMCG, Paint and Pharma stocks showing strength.

SENSEX

SENSEX- has closed 3 trading days below 200 DMA 16959 and 200 WMA is 16020. It has broken down from a falling wedge formation and now 15950 would be very strong support breaching with 15135 which is lowest since Sep 2009, can be re tested and previous data points that when ever Sensex has breached previous years low 20% correction has always happened. Till Sensex doesn't cross 17200 on the higher side there is always a risk of market correcting and normally May - June have traditionally being negative months on even years.

Sell in May and Go Away.??

Ø  This proverb has a supportive history for US markets, but it has not worked all the time and for all the countries or Emerging markets as such. It has worked best in 5 years of (1992, 1998, 2002, 2008 and 2011) but it has failed in the years (2003, 2005, 2007 and 2009) globally.

Ø  So do India also follow the same league, in the past it has but with a difference it has corrected every two years in the month of May.Till now it has corrected almost 5% till now.

Depreciating rupee is adding ot the woes.

Ø  Rupee has been very volatile for some time now. In the last year rupee has corrected almost 15% (April-March).  

Ø  On the other hand rupee depreciation is helping the export oriented companies like textiles - Raymond, Arvind), IT companies ( Wipro, TCS) and select Pharma companies (Glenmark, IPCA, SUNPHARMA).

Ø  Imports are facing the brunt especially the Oil imports which is hurting our economy.

SIP is the best approach.

We like NBCC, ARVIND, NALCO, PFIZER, STANCHARTDR, RALLISINDIA and PIRAMALGLASS

Thanks & Regards