Markets are on a roll and continue to trade in unchartered territory. The elusive correction which is most wanted simply does not happen a there is plenty of news flow to keep the juggernaut going. The pace of change or the rate of change has slowed down considerably and in the last fortnight which saw eight trading sessions the BSESENSEX has gained 181 point and NIFTY 67 points indicating that the going is getting tough. In the US the Dow Jones is also at a lifetime high but even there one gets an impression that the markets are struggling to keep afloat. This is not to suggest that they will crash but the momentum seems to be losing and once the markets move into consolidation mode they could spend some time there.
The news flow during the week was great. First we had the US President and Indian Prime Minister agreeing on the matter of food security and the President agreeing totally to the view that you have to consider the requirements of the people. Second economic data on CPI, WPI and IIP was positive and encouraging. It will now boost the demand for rate cut when RBI governor Raghuram Rajan meets for the monetary review on 2nd December. Parliament’s winter session begins next week on the 24th November and the data will be handy to prove the point of turn around. Secondly the first round of voting for states of J&K and Jharkhand begin on 25th November.
Maharashtra politics have taken the ticket and bickering and flip flop have baffled all pundits. The stacks against a permanent breakup seem illogical and who blinks first with three municipal corporations at stake is to be seen. The message is loud and clear that days of blackmail and pressure tactics are over.
Coming to the markets, they are certainly tired and need to consolidate before the next move. How soon and how much they correct is the question. Because markets can go down one should not be looking at trying to short this market but buying puts as insurance makes sense. Expiry of November series is not too far and around that time we could see the much awaited correction. Take some money of the table and await better prices when the market does fall.
Enjoy a great week ahead.
