In my article dated 20th Jan 2016 (Click Here) I had mentioned that Sensex should bottom at 22300 levels and dollar Bull Run is now close to completion and should reverse from 70 levels. On the Budget day we saw Sensex making an intraday low at 22493 levels and dollar made a high at 68.91 levels.
My view on the Sensex is that we have seen a faster retracement and Sensex has started showing green shoots and dollar is weakening against the INR. This could be positive for our markets at least for 2016.
Midcap and small cap index may continue to go sideways or downwards which time can say at the moment does not look that attractive.
Brent has taken support at 26$ which is 61.8% retracement of the 1998 to 2008 rally and should continue to go up to 45$ to test the 200 days Moving average which if broken upside can still go up.
Sectors which continue to look good are Private Banks, Auto Ancillaries, Autos, Rural Finance companies, Pharma sector, Farm and Engineering Equipments, I.T Sector, Cement, Departmental Stores, Consumer Durables and Logistics Sector
Multibagger stock opportunities would be difficult to find in such market since they need time to consolidate.
Domestic investors flow towards equities started after June 2014 just after the BJP government was elected when the Sensex was at 25500 levels. After 2 years Sensex is still below those levels and Mutual Fund equity investments are at the peak. In my next article, I will try and look at how mutual fund investors can invest differently, to make the most from equity markets.
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