S&P CNX Nifty 2925.70 -8.80 (-0.3%)
Dow 7915.24 +26.36 (0.33%)
It’s encouraging to see the out performance S&P CNX Nifty has had over Dow. While Dow is just a few hundred points away from its 10-year support, S&P CNX Nifty hasn’t yet broken its 3-year support! For Nifty, I see another leg of fall dragging down to the 5-year support level. So far, Nifty has been defying every bearish analyst and has outperformed the Dow and some global markets during the last couple of weeks. While there is so much uncertainty in the US, the exuberant bailout package should be more than a respite. News reports suggest the size of global bailout package to be greater than the size of Indian economy! Indian GDP which derives more than 50% from services would slow down as global economies pump in money locally. Its not the best of the times for export driven economies and in specific export driven companies. We are certainly going to see some more pain in sectors like IT, autos and auto components and metals. For now, I see PSU banks and FMCG as defensive bets in the current scenario. Its encouraging to see some stellar performances from defensive's like McDonald's Corp in the US. While the Dow took a severe beating over the year, McDonald's has shelved only 15% from its 52-week high!
The first growth signals and the strongest should emerge from the US and Europe. The first rise and probably the most rewarding ones would come from sectors which are heavily beaten down in the turmoil. It’s probably one of the better times(if not the best) to part-invest in US equities. Finally a note - "When investing, always keep the return constant and not the time frame of investment".
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