Market Outlook for the month of June

June 4, 2012   ·   0 Comments

Weekly Strategy for Nifty:

 The global financial uncertainty and rupee depreciation is proving to be extremely detrimental for our markets. Despite a positive beginning for http://stockssavvy.comthe last week, indices eventually tumbled lower to close almost at the lowest point of the week. Broadly speaking, last week, markets traded in a range of 16545 to 15933 / 5020 to 4841. Going forward, last week’s high would act as strong resistance level. We are of the opinion that traders who intend to trade with a positive bias should enter the market only if indices sustain and close above the weekly high of 16545 / 5020.

 Conversely, we reiterate our view that the recent swing low of 15809 / 4789 now holds as a key support level for the market. A violation of this level would increase the current negative momentum and as a result indices may slide towards 15678 – 15135/ 4695 – 4530 levels.

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FII’s were net sellers in cash market segment; they were net sellers’ worth of 220/- cr. On derivatives front they were net sellers in index futures with good amount of buildup in open interest indicating some shorts buildup by them, while in index options they were net buyers and here also we have observed significant amount of buildup in open interest by them.

 On options front 5000-5100 call option have seen good amount of buildup, while in put option 4200 strike price have seen maximum buildup in open interest followed by 4500-4700 strike price in Friday’s trading session.

Market outlook for June is extremely negative. Last month we anticipated Nifty to touch 4800 and it came exactly to 4800 before a bounce back. Now market is again on the same levels. This time, bears are ruling the roost.

Right now, 4500 Puts have highest open interest which shows bears are expecting to take the markets to that level. 4500 should act as strong support for the market. Similarly, 5000 Calls have the highest open interest which shows the resistance for this series. One should deploy at least 10-15% of their money at present levels.

Markets will give a good opportunity this month for some long term picks at excellent valuations. There is no doubt that the picture is gloomy specifically from Euro front. Whether Greece will remain a part of Eurozone or not is a trivial and tricky question which is catching eye of all the global investors.  In fact, if Greece does opt out, one can see bloodbath in whole of the global markets. One can see even 12,000 on Sensex. That is exactly the reason why you should be ready with your cash. Any significant falls should be bought into. Remember, there is always shine after a gloomy day. This gloom will wither in few months and when investors will realize it markets will be much higher even from the current levels.

One should be ready to deploy 50% of their assets if Nifty do reaches the level of 4500. Two things which investors should take care of in this fall:

1)      They should not keep on waiting of some specific levels to enter. Keep buying in small chunks on every fall below 4800 levels.  Lot of time people keep hovering and anticipating some Sensex levels to enter which rarely comes and when markets rally, they are taken by negative surprise that why they didn’t bought the dip and why they kept on fearing when they should be lil bold to buy.

2)      Enter blue chips stocks rather than buying on some mid-caps or small caps. Names such as HDFC, HDFC Bank, Reliance, Sesagoa, Jindal Steel & Power, IL&FS Investments, L&T, TCS are some of the names which should be the first picks in your portfolio. Let us know what stocks you feel are at excellent valuations now which are worth a buy.

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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