Modi Premium Returns – Economy Accelerates
Modi Premium Returns – Economy Accelerates
Market opened the week with positive sentiments, rested a while and then again resumed its upward accent. Nifty50 gained strength rejoicing the accelerated growth of the economy in the last quarter in particular at 7.9% while full year growth registered was at 7.6%. Previous year growth was 7.2%, clearly indicating that the economy is racing ahead to take the crown of the fastest growing large economy in the world. The growth was lead by consumption and not by private sector investments. Electricity consumption, personal loans and cement consumption grew by 10-12%. Investors should thus invest in consumption, power utilities, micro financiers; NBFC’s and cement related stocks aggressively. For the month of May automobiles also posted encouraging numbers, four wheelers grew by 10% and two wheelers by 3%. Overall there is traction in the economy, and going forward it is going to get better and better, investors should not wait but aggressively allocate funds in equities or ETF’s to generate superior inflation adjusted returns.
Key events of the week: Coal India hikes prices by 6% and increased its incremental output targets by 14% making the stock a value pick for long term investors. HUL to split food and refreshment businesses in order to capitalize on the growth prospects better. OPEC finally did not commit on output limits giving relief to the consuming countries that prices may not rise significantly from the current levels in the near term.
Technical Outlook: NIFTY50 is redrawing its bull market trajectory by challenging the bears from all sides, nothing is stopping the bulls for now, off course it will correct every now and then but it will not completely reverse the trend. The sequence of higher tops and higher bottoms is crystal clear leaving no doubts in the mind that bull market has resumed. The railway track of bears has been decisively breached by the bulls. Wide ranging days of the previous week indicate that the momentum is very strong. Traders should focus on long only trades or can consider writing puts.
Expectations for the week:
Correction seldom comes when people wait for it, but comes suddenly when no one is prepared to receive it. Sharp surge in the indices across the board along with rise in the commodity prices point to huge inflationary rallies across asset classes. However increase in US FED rate if any in June may disrupt the rally for the short term. The fiscal deficit is on the target at 3.9% and hence will give enough freedom to RBI to reduce the interest rates, but realistically, the rate cut is expected post monsoon rains. Market will await RBI action to take short term clues next week. Investors should be overweight on equities and accumulate good quality shares while traders should go long at all levels, however conservative traders can buy on dips.
Nifty 50 ended the week up by 0.71% and closed at 8215.5.
