UNPREDITABLE

                                                       Next week (May 23rd To 28th)

Dear Investors

 Week gone by was choppy, barring last two days when

Nifty moved to some strength on short covering. There was

No signs of fresh buying except in some stocks like Land T

In all Month of May has produced ‘Shivers’ in the minds of

Traders and investors

It looks that the upside is capped while market is trying to

Search the ‘Bottom’. Result season is coming to an end on

A discouraging note, There is no FII, DII and Retail participation

And sentiment is getting dampened,

Though Nifty has taken support at 5400, it is to be seen how

Long it holds or how far does Nifty moves on the back of

 Last two days ‘bounce’? Even though it moves to few more

Points….say up to 5550/5600…..

The main question is…….

Why this apathy? What is bothering investors?

 Even though…

Every Bad News ……..

Rising Inflation

Rate Hike

Petrol Hike

Below average results of SBI/INFOSYS/Etc.

RIL Gas production problem

2G SPECTRUM CASES

And other minor things

Is factored in valuations, still market is struggling, why?

Number of good things ……….

FDI in Retail sanctioned

State election results favorable to Govt

Good results by L and T and some cos.

Falling Commodity prices

Crude below 100

Strong consumption growth

Have happened, still we are struggling, why?

So what is bothering investors?

FII out flow

Relative under performance of India in comparison to other EM

Possible drop in   growth projections, GDP,

 Though there is

Consumption growth, there is no incremental growth

European downgrade and economic problem

Chinese Monitory tightening

Likely postponement of disinvestment program

Government’s Indifference in policy decisions

Environmental and Land acquisition problems for projects

What can change the situation? Answer is

If ………

Monsoon is good

Inflation drops

Increased capital spending

Sanctioning of mega projects

Government acts on important reforms like

Land acquisition and Environmental sanctioning

Oil and Gas rate deregulation

Fertilizer rate decontrol

Financial regulation

Insurance and banking reforms

Control on Govt. borrowing

Looking at all ‘Ifs and Buts’, one can come to the conclusion that

Fundamentally we can not change in near future, it may take

Months for----

Inflation to ease,

Rates getting stabilized

Easy and cheap capitol availability

Pending bills getting sanctioned and so on

All this leads to one simple conclusion that near term looks

Gloomy for Indian stock markets because all those positive

Triggers will take some time to have its reflections in

Balance sheet , earning of companies and their stock prices

Till that time

Either market get ‘Consolidated’ at some range’

Or ‘Drift down’ passively till there is change in

Out look retail investors and FII perspective

The best strategy in such a scenario is

Trade according to trend

Do not follow Index

Follow individual stocks on their merits

Do long term investments at every fall in

Selective stocks and sectors (Fundamentally strong)

Or

Try to generate cash whenever possible

Along with all these ‘Macro’ economic problems, some events

During this week will have some bearing on market?

-Results of industry majors like

   BHEL, GAIL,Tata Motors, Tata Steel

-EGoM meets for Oil and Gas policy

-Expiry of May series

-US housing data

-UK/ Europe GDP number

Technically

There is every possibility that the ‘Friday’s’ bounce may extend

Up to 5550 or even up to 5605, beyond that it looks difficult.

Every higher level will bring selling pressure from those traders

Who are stuck at higher levels and fresh shorts will get added.

For a change in ‘Trend’ to occur (Down to Up) Nifty has to move above

200 Day Exponential average @ 5595 and continue to move beyond

200 DMA @ 5755

 As long as Nifty is moving below 200 DMA it will face the risk

Of ‘Drifting’ down passively towards support levels of

5400/5330,

Once the level of 5330/5310 is broken then chances of Nifty

 Moving below 5177 and 5050 will increase to a great extent

As we are heading for expiry, there will be increased ‘Volatility’

Leading to intraday wield swings.

Resistance at: 5500/5550/5605

Support at: 5420/5380/5310

In such ‘Unpredictable’ conditions investors and traders

 Should be cautious in initiating any type of trade, long,

Short or Investment trades

Thanks

Dr. Vasant Bele

Read market for Monday as a separate article

All the views are personal, invest with caution and after

Consulting experts