Will Gujrat election results be the trigger – 18th December

The market made upward progress gaining on all five days and registering a net gain of about one percent. The BSESENSEX was up 336.44 points or 1.00% to close at 33,679.24 points. NIFTY gained 106.10 points or 1.02% to close at 10,389.70 points. While the all time is less than a percent away and just about one day away it does not seem to be happening in a hurry.

The market is caught in a band and seems to be waiting for an event before it achieves the target or a milestone. Gujrat elections would be held in two phases with the first on the 9th of December and the second on 14th of December. Results for the same along with Himachal Pradesh would be declared on Monday the 18th of December. Markets have not reacted to elections as of now. There could be a sharp reaction where a ruling party win could result in the euphoria and blow-of leading to the top and subsequent correction. Alternatively, a loss or poor showing could lead to a sell-off and the correction beginning right away. In either case the election results could be the trend changer in the markets as of now.

The week ahead sees November series futures expire on Thursday the 30th. Currently the series has a gain of 45.90 points or 0.44%. This is too small to be of any significance with four trading sessions to go before expiry. The series could go in any direction. If one were to look at the movement within the month it’s been quite a straight forward month. The high was made on 7th November at 10,490, from where it fell and made a bottom at 10,090 on the 15th of November. From there the market has been rising steadily and has reached a level of 10,390. It is now in no man’s land and could go anywhere.

The primary market is by and large quiet and seems to have downed its shutters for the current calendar year 2017. The only issue that happened last week was the issue from Bharat 22 the ETF (exchange traded fund) which raised Rs 14,500 crs against the targeted amount of Rs 8,000 crs. With this ETF the funds raised through divestment in the current financial year have reached Rs 52,000 crs so far against the target set of Rs 72,500 crs. The government still has four months in the current financial year left. This figure itself is the highest amount raised ever through divestment.

Its tough going in the markets currently and the bulls are not willing to let go. Valuations have become even more expensive after the second quarter results which have failed to live up to expectations. While liquidity through mutual fund SIP’s was a big driver and continues to be one, sanity in terms of valuation is likely to hit the market sooner than later. One needs to be cautious

The coming week would be volatile and has expiry as another important event. Trade cautiously and wait patiently for sharp moves to buy or sell.

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