Markets pregnant
with hope
The Vikram Samvat 2071 begins on a positive note. The government
appears in full control of the situation. Unlike past five years, no one is
talking about paralysis, non-governance and corruption.
The macroeconomic indicators are stable and look poised to
improve over next couple of years. Despite poor monsoon, the government has
been able to reign food prices within controllable limits.
The measures taken by the incumbent government in past five
months indicate clearly that a large part of the problem was perhaps
administrative in nature. An assertive leadership with a decisive mandate
and progressive strategy ensures that administrative efficiencies are improved
materially.
The government so far has taken a non-confrontationist approach to
legislative hindrances. However, recent electoral victories should embolden it
to pursue legislative agenda aggressively.
No normal delivery this time also
Some women have this tendency of difficult deliveries. They
usually face problems like abnormal BP, Swelling on face and feet, elevated
level of blood sugar, nausea, piles, etc. and a cesarean section is required
for delivering the child. Whereas many others have a perfectly normal pregnancy
period and a normal delivery.
My experience is that our Mother India falls in the first
category.
The entire development and growth process in India is usually
chaotic, unpredictable and painful. Save for some exceptional projects like
Mars Mission, the final delivery is often delayed and does not conform to set quality
standards.
I do not see any change in the general trend this time also.
Nevertheless, I am confident that a normal healthy child will be delivered in
time.
In the meantime, the external environment will cause volatility
and mood swings. Investors should better factor in these more likely problems
in their investment strategy. Energy price volatility may remain a serious
concern.
Market outlook
Near
Term (3 months)
I expect market to remain volatile in near term. Nifty may move
in a large range of 7650-8250 for next three months.
At present ~8000 level the risk reward appear marginally
adverse. However any correction below 7850 level could be used to take long
trading positions.
I would strongly suggest avoiding any short positions in Indian
market over next couple of years.
Short
term (3-6 months)
I expect Nifty to remain volatile with a marginal positive bias
over next six months period. Global events like European crisis and monetary
stimulus would materially influence the day to day market movements.
Domestic events including budget for FY16 would prove to be
positive for the market.
Save for a drastic global event like Lehman collapse (not
improbable), Nifty should move closer to 8500 on upper side and should not fall
below 7420 level.
Strong buying opportunities will emerge closer to 7700 Nifty
level.
Mid-term
(6-24 months)
I expect Nifty to make a strong positive move over next two year
with upper bound at 10800. The risk reward at present from this perspective is
positive.
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