Monday, September 1, 2014

Outlook For September 2014

So August series closed on a firm note again and this trend should continue towards the 1st week of September as well. An interim top may form around 7980-8025 levels from where a profit booking round towards 7800 may come through. However, that does not imply rushing to shorts; the first hint to create shorts will be when Nifty closes below 7925 levels. Technical indicators are in over-bought territory for almost 2 weeks now but trending markets defy these which reflects the underlying bullishness

For the longer term investments, this is the time to periodically book some profits and move to fixed income markets. From current levels till Diwali, more than 5% upside seems unlikely. Valuations for a lot of stocks are now excessive and correction seems inevitable. It is not a question of 'whether it will happen' but 'when will it happen'. Unfortunately I do not have a crystal ball with me to answer this question. We will have to wait for market action to unfurl the same.

For Nifty, the 7200-7400 band seems a pretty firm support for September series and 7800 can provide interim support. Since Nifty is now in uncharted territory, if it goes beyond 8025, it can go anywhere

BankNifty has closed above the swing high of May. Volumes are low but pretty soon it may scale 16500 levels. 14800 is a pretty good support and BankNifty may just retest this once before it begins its next leg up.

Gold in all likelihood has found its bottom in rupee terms. It entered its lower trajectory last year in dollar terms and correction is still on-going in dollar terms. In 3 years time, we can expect gold to move upwards of 45k in rupee terms.

Silver too may have found its bottom but technically, there is a possibility of visiting 35k once before resuming its uptrend. This too in 3 years time, may scale upwards of 60k

Crude in dollar terms will find support around the 90 dollars per barrel mark and move towards 100 dollars per barrel again. Hence in rupee terms, the 5600-5700 band will be strong bounce back zone for target 5950-6000 levels.

Some potential stock opportunities in the small and mid-cap space that look attractive

Zee Learn: It has broken a multi-month range on the upside

3i Infotech: It seems a value buy at current levels

Disclosure: I do have holdings in these counters

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