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BW Businessworld

Nifty At 7600

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In my last week's column ‘Interest Rates and The Markets,’  I had mentioned that the markets are unlikely to react to the RBI announcement on 3 June since the ‘no change’ in key interest rates was already priced in. June 3 and 4 proved to be very dull days with barely any movement as expected. Howver, with almost no trigger, markets rallied in the last two days of the week. This took me by surprise. I had expected and traded with a ‘target’ of 7450 for the Nifty but It rallied almost till 7600.

Recommendations So Far
There is a popular saying in the markets that amateurs want to be right. Professionals want to make money, we did make money last week (about +0.8 per cent profit in Lupin, still open) despite the surprise move up. I have been wrong on several occasions but because I tend to follow my plan to the tee with discipline and I always come out with a winner.

I have been writing for BusinessWorld for almost 7 months now and we have seen a return of 60 per cent (cumulative) in this period, if we were to divide our capital into 3 parts then that’s a return on about 20 per cent before brokerage and taxes in this period. There have been a lot of mistakes on the way and a lot of changes in the markets, we have seen euphoric and even bearish times, but one thing remained – we always stuck to one method, that’s the Newton Method. Consistency is king, discipline is a trader’s lifeblood.

The Week Ahead
The Union Budget and the monsoon are the most important macro triggers in the market. The monsoon data will be out on 9 June and the CPI numbers shall be out on 12 June. For April, CPI inflation accelerated to a three-month high of 8.59 per cent, mainly driven by higher food prices compared with 8.31 per cent in March.

Sectors to Watch Out For
Sugar Sector:  The government will explore the possibility to raising the import tax on sugar to support Indian producers said the food minister.

Oil & Gas: These stocks are on fire on news that the government may raise price in the next few weeks. The C Rangarajan panel was set to be effective starting April 1, 2014. However, the matter got delayed due to the general elections.

Realty: The Realty space expecting some tax reforms on Realty Investment Trusts in the union Budget.

Insurance Stocks: Shares in insurance companies surge on hopes that the new government may raise foreign direct investment limit in the sector to 49 pe rcent from 26 per cent.

Recommendations Last Week
Lupin: Still holding long positions.

Recommendation This Week
Wipro (NSE: WIPRO)
Action: Buy (limit order) at 520, stop loss to be placed at 506. Target for this trade is 540.
Timeframe: 4-6days

Glenmark (NSE: Glenmark)
Action: Buy (limit order) at 561, stop loss to be placed at 551. Target for this trade is 573.
Timeframe: 4-6days

Prateek Singh is CEO, MarketScientist