Medium Term Outlook for Nifty, June 2, 2016 | Stocks and Commodities

June 2, 2016
Time: 8.20 am

Medium Term Outlook for Nifty:

1. Till last week I was very bullish about medium term outlook for Nifty.
2. Not only me, everyone was bullish.
3. Even today MS said by March 2017, BSE Sensex minimum target is 27500 and maximum 30000.
4. Evey analyst was bullish and saying that Nifty is likely to scale new all time high in the next 6 months to 12 months.
5. But I am turning slightly not that bullish now.
6. The recent developments made me to change the ultra bullish view slightly.
7. First, monsoon, though there was reports of good rainfall, so far IMD has not announced the 'onset' of monsoon.
8. This rain may not be due to monsoon, may be due to some other factors.
9. So monsoon has become uncertainty.
10. Second, Manufacturing data from most countries are showing tht the world economy is still struggling.
11. So the global cues supporting our markets is another uncertainty.
12. Third, suddenly this RBI Governor issue, due to the commotion created by Subramaniam Swamy, now RBI Governor does not want to continue.
13. As per a report, his family has already left India.
14. Rupee fell yesterday afternoon due to this news, despite the dollar weakness.
15. So the Rupee market and Bond Market will react negatively.
16. Most FIIs prefer the present Governor.
17. When Rupee depreciates, FII flow will be less and that will affect the markets.
18. A recent opinion poll in UK says that 'Yes' is gaining momentum in the 'Brexit' issue.
19. That is a very big negative for the world markets.
20. Another big issue, is the inclusion of China shares in MSCI.
21. This will force FIIs to sell US$ 1.5 billion worth of Indian shares.
22. But there are two things, one China shares will be included in MSCI in a phased manner, not one go.
23. Second, there will be about 6 months to one year time for funds to adjust to these changes.
24. So if market sentiment is good, this US$ 1.5 billion of sale will not affect the markets.
25. Yesterday auto sales data that came is that that impressive.
26. Going forward, auto stocks will be under pressure if market sentiment is not good.
27. So I decided to reduce my long positions and hedge the remaining positions.
28. I am selling Nifty December expiry 9000 Call and 9500 Call.
29. Bank Nifty positions can be hedged using Weekly options.
30. Next week RBI policy, following week Fed meeting, following week Brexit all will make June series very volatile.