Posted By : Kishore B.S
The markets witnessed and benefited from the resolve of the debt ceiling with Nifty ending just a bit close to 6200 levels. The US government has a short term breather for the debt ceiling up till 15th Jan but has no permanent solution. As of now this crisis seems to be over.
The next big event will be the RBI policy which is on Oct 27 2013. RBI has made it a clear point that controlling inflation is its first agenda. It firmed this with a surprise REPO rate hike. This month too the inflation number didn’t point at any slowdown. So, the RBI can surprise us with a repo or CRR hike.
The current result season has surprised everyone. Most of the biggies like Infy, Reliance, TCS etc have posted better than expected results. This has taken Nifty to astronomically high levels.
A correction is very likely in near future. This correction must not require any negative news flow. Many times corrections at such high levels happen on account of profit booking. In our last article also we had said that this is not the right time to enter the market and we still want to say the same that its not the right time to enter the market. Let the market top out. Once signs of weakness are shown we can initiate new shorts. Many analysts say that the rally will continue but its law of nature that whatever goes up has to come down. Nifty is entering uncharted territory now. So, we don’t know whether it will turn back after 50 points,100 points or 200 points. But we know for sure that it will turn back.
So, the best strategy would be to wait for this rally to fizzle out. The wave has passed and there is no point trying to ride a passed wave. Have calmness and patience and wait for the next opportunity.