1. Indian stock market has not been able to adjust to inflation figure touching more than double figure as market was anticipating a figure of 10% whereas in actuality it has turned out to be slightly more than 11%. The biggest culprit is petroleum products price hike. It is expected that inflation will ease by fourth quarter.
2. Now Nifty crucial support at 4400 has been breached and now it is upto the market to determine its support which can occur at 4200. Market has fallen to new lows in the year.
3. If one is a long term investor thanone can accumulate blue chip stocks between 14,300 and 13,800 on the Sensex. One will be seeing a bounce back from these levels in high probability. I think this is the right time to churn the portfolio and remove the dud stocks. One can buy fundamental stocks recommended at stock-market-tip.blogspot.com.
4. Presently one should avoid banks, real estate and infrastructure stocks and the reason for the same is that RBI will be tightening the noose around the banks by virtue of CRR hike and thus liquidty will further decrease. As a net effect realty companies will be seeing a decline in their margins and NAVs. It is being anticipated that RBI will hike repo rates to 8.75% by the end of the year and further a 50 bps hike in the CRR (Cash Reserve Ratio) is expected spread over the balance of year.
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