Nifty Crude update

Nifty has close above the trend line for the second week now. Unable to break the support line of 3750 and a pull back showing further strength. Upside is possible upto 4500 now in coming days. But alot of volatility and profit booking in between will make it tough to trade.

We are lined up with three curcial issues at this point.
1. The UPA to prove its majority. It has now become really important for UPA and for the markets. If UPA manages to prove majority I expect the market to rally in short term. In case it fails to then may be we will see new lows forming.But alot of caution is
2. Crude. As mentioned earlier if crude breaks the level of 128 and closes below that we will see further weakness. Now that seems to be likely again. Crude has closed below its 3 months average and also shows levels of 123$ as of now. But alot of caution is required in crude. Never know what when happens. If crude cools down it would support the stock markets alot. But not to forget even at 118 or 100$ it impacts our economy really hard.
3. Inflation. Inflation as of now looks stabilised around the current range for a while. Personally I feel the infation and IIP numbers are misleading. With 56% weightage of crude on Inflation it is not really justified. Agri commodities and metals are cooling down on the other hand. So the picture of inflation is not clear.

Few more crucial things to keep in mind. Monsoon... no rains in most parts of India. Crops this year may fails drastically. All we can hope for is rains to come soon. Monsoon has always been a sentiment changer. Good monsoon markets gets support. But not to forget monsoon contributed to just about 2-3% to our GDP. Is that really a big impact? Need to study that.

Results not really attractive over all. But companies considering Capex plans with rising interest rates. Some thing surprising and good.

Fed has started talking about raising interest rates early. A very good sign as it will cool down crude further and may be the funds will get diverted to equities. Hope they really do that soon and not wait for august to come.