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Hello everyone and welcome to this week's
The Week Ahead and this is going to be a 5 minute
wrap-up for this weekend 10th of March to
14th of March 2014 now
in this discussion we'll be talking about three major things.
The Nifty and Sensex hit an all-time high
we'll be talking about the IT sector and the impact of the Rupee
appreciation and the third thing is a political view
of what will happen if the MDA gets selected. My name
is Prateek Singh, and as always let's get started.
Markets hit an all-time high last week
and it was a stairway to heaven right through the week
even intraday, on Friday, we crossed
21,900; will we see 22,000
is a matter of time. But this stairway to heaven was also during Friday.
We moved up to swiftly strong and closed
very very well. Now I will be showing you the daily charts in a moment
but first let'st talk about the fundamental aspect. To aid the
bullishness market sentiment, the Current Account Deficit
which is exports minus the imports of the country,
has seen a drop to 4.7
billion dollars which is about 0.9 percent of GDP
now updraft has got tailwinds
and is aiding the positive movement along with a positive
expectancy for the following week on the inflation
front. It is due to be released this
Thursday. there are three major reasons experts perceive market bulishness
to be based on. So this is a retrospective remember. One
is anticipating the new supporting government favoring business
and a positive growth on the economy. The second
is finally the corporate earnings
stabilizing and third, the prospects for the economy
improving over the next quarter. Now it is widely accepted in the financial
community
now, that any rally from here, say 200 points on the Nifty, will be discounting 300+ seats
due to the NDA government.
The opinion polls indicate that
a Modi win may be on the cards for the upcoming election.
Now an opinion poll by the BSE broker and NSE broker forum
feels that markets that likely to hit the upper circuit
if Modi comes to power. The BJP government
is perceived to be more business-friendly
so if you do you see an NDA government come out
the are chances of us seeing a upper circuit hit.
Now as traders, all this information is a great
but how can we strategize and make money
on the upcoming election? One thing is certain: we don't know
who is going to be elected but what we do know for sure
is that there is going to be volatility. Now if volatility
is there, what and what you can do is have an options strangle.
So let's say the Nifty is trading at 6500
We buy a Put, we buy a Call sorry, we buy a Call
at 6600, which is 100 points away
and a Put, which is 100 points away lower
than 6500 so a strike price of Rs. 6400
Now what this does is if there is a gap up
one of the options that is your Put will expire almost worthless will
the call would have gone up several-fold. Now you can
think about this and strategize something around this strategy
let's see what you can come up with share with us in the comments.
Also I wanted to cover what the charts look like. So let's have a quick look
on the Nifty
now the Nifty, this is a daily chart, and you will see that we hit that
resistance point where that trend line is sloping
now when we hit that point, that is also a round figure,
trendline point which is why we expected some selling to come
and it did; however, the next day we almost gapped up
and straightaway closed above that line.
What happens in such situations is that the market goes for a runaway rally
which we have seen. Now let's look at the
IT sector. The IT sector and the Pharma sector
are the only two sectors which have not performed the last week.
People have been very concerned especially on the fundamental side
for the IT sector. The Rupee has appreciated
and it's come down to 61 levels
which will have a dent on the profit loss statement but hey
aren't we forgetting something very fundamental?
If you look at the price charts or if you remember our last videos the IT sector
and Pharma where the only performers when the stocks were falling. Now
this defensive sector now is in a corrective mode. Remember
all the major stocks: Infosys, HCL,
and even TDCS are still on uptrends.
So the stock is still in an uptrend in the sector is still in an uptrend and you still
get some selling
that's not bad news. This is not catastrophic. So the IT and Pharma
may be falling now but the IT sector is definitely on an uptrend
on the technical charts, however we do have concerns over the
appreciating rupee. And finally on the 12th of march we have the IIP
January figures releasing, along with the inflation.
On the 14th of March we have the
release of advance tax numbers and
WPI as well you might went to have a look
at what these figures are and how we are expecting the numbers to soften this time.
That's all for this week. I, Prateek Singh,
wish you a fantastic week ahead .See you again.