Sorry guys, havent been writing much lately. Actually have been caught up in other things and well testing certain models so havent had much to change from my previous position of investing in 10% bonds. However its very difficult to be away from trading & I have been working on certain models lets see how they come about.
The view on the markets hasnt changed much. I was net long on the expiry and well had taken a tactical trade, however the markets are in a confused state, but the headwinds seem to be weighing very heavily. The most critical of those being the current state of economy isnt good at all. We seem to be in a overheated economy in which we are actually facing hyperinflation. The real rate of inflation might be showing little by way of numbers, however the actual rate of inflation has different weightage of different articles. E.g. petrol has a major component, and petrol prices have been artificially kept low, however that doesnt mean that high petrol prices wont seep through in the other parts of the economy. One e.g. is the raw material prices of most basic things, e.g. shampoo, soaps, detergents etc which all use petroleum as a raw material. Hence as stated earlier the real rate of inflation for the things we use might be in the range of 15-25%. With this kind of sustained inflation the interest rates are bound to go up to stop the overheating, which will lead to further slowdown.
The results havent been anything great, except for a few such as ICICI etc. However a rate hike would hurt everyone, and the momentum can be broken. So if Nifty breaks below 5700 we are in deep trouble, however if the Nifty crosses 5900 then it should break the old highs of 6300, not because the fundamentals are getting better, but that would be an indication that money would be chasing paper irrespective of the valuations.
Tomo Nifty would be crucial to see, however FII's have already heavily sold the markets & it would be prudent not to go long in this market. I am short, till Nifty crosses 5800
