The Week ahead: Exercise  caution:

Beware of high volatility – Hedge your positions.

The Political and economic environment prevailing at present world over and particularly in India sends mixed signals leading to another chaotic canvass often misleading the investors in taking firm decisions on investments. While the tussle between India and China which slowly getting ironed out apparently with constant dialogues, the relationship between U S A and China  is getting hotter day by day. U S A asking China to close down one of their offices in Houston, China retaliated by asking U S A to close down one such office in China- Chengdu. The ugly face of  Pandemic is getting worse day by day world over.  Yet another virus from China is also in news. Many countries including U S are withdrawing their manufacturing units from China. Apple is relocating its manufacturing hub from China to Chennai to make Model 11 with Foxconn.  India’s economic transformation remains as a ‘work in progress’. In U S A institutional investors are gloomy and  going  for hedging their positions heavily, expecting some untoward movements in the financial markets. Added to it is the U S President’s election eve.

In domestic side,the GDP is said to be sliding fast.  The banks are staring at mounting bad loans and the credit off-take has been rather  lukewarm. The steep increase in NPA of  PSBs and their huge wage bill with an increase of  15 % announced effective 2017  are likely to dent the bottom-line of PSBs substantially in the months to come.So be cautious on PSB stocks. Pharma and I.T stocks are in limelight. Gold  and silver soar to new highs. Rupee falls against U S Dollar.

Indices pare losses, trade flat.  But despite all these the Bourses have discounted  all these negative developments.  Benchmark indices pared most of their losses, and trade flat, with Nifty sticking  below 11200. The Sensex was at 38,117.73, down 22.74 points, or 0.06%, while the Nifty was down 0.22% at 11,191.10. About 888 shares advanced, 1502 shares declined, and 112 shares were unchanged.

The week ahead of us is expected to be highly volatile as the Markets face the dichotomy of  the emanating good and bad news simultaneously and hence uncertainty prevails in the minds of investors lacking focus. So importers and exporters will do well do hedge their positions and so also Investors in commodities and F & O segments in NSE/BSE.

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