Monday, June 17, 2013

Media: Ashish Kyal market outlook in The Economic Times section of Navbharat Times

English Transcript of the above article:

For Indian equity markets May and June so far have been tough months from both trading and investment perspective as Sensex has moved by more than 300 points in single day on almost 8 occasions.

We think Indian equity market is moving in a big range and since start of 2013 Sensex is moving between 20300 and 18100 levels. From medium term perspective, prices have to break above or below this range for a clear direction to emerge.

Over near term, Sensex showed a smart pullback on Friday and recovered by more than 350 points in single day. This indicates that we can see some positivity in this week. All eyes will be on RBI monetary policy announcement today which can trigger the short term direction. We do not expect repo rate cut since the complete impact of previous rate cuts is yet to be seen in the economy. Also the widening Current Account deficit and fall in Rupee will be a major factor to be considered that might prevent RBI from lowering policy rates.

Rupee has been one of the major concerns over past few months. INR depreciated not only against US Dollar but against major currency pairs like GBP, JPY, EURO. Since start of May Rupee against US Dollar has depreciated from 54 levels to near 59 seen on 11th June 2013. Increase in Gold imports has been one of the factors responsible to increase the Current Account Deficit and in turn putting pressure on Rupee. Government has taken corrective measures last week by increasing the import duty on Gold from 6% to 8%. This should result into stabilization in Rupee and we can already see some appreciation in INR over past few days. Also the reform announcements and positive assurance from Finance Minister will lead to short term stability in equity and currency markets.

Defensive sectors like FMCG and Healthcare should outperform over near to medium term. One should avoid investing in smallcap and midcap sectors as they look vulnerable in current fall. The other sectors like Oil & Gas, Capital Goods, Technology are in months long consolidation and sectors like Metals, Realty, Power are in strong downtrend. From investment perspective during tough time defensive strategy should be adopted and so FMCG, Healthcare looks promising.

In this week we can expect some positive movement and Sensex can move towards 19500 to 19700 levels as prices have managed to close back above 200 days Moving Average. On downside 18900 should act as important support. Please remember we are living in challenging times and prudent risk management along with money management is the key to be a successful trader or investor!  

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