My analysis suggests that March’12 quarterly results likely to surprise on the upside, India to continue getting a higher share of global flows and indices likely to make new highs within the next two months.
Towards the end of December ‘11, my analysis had suggested that Macro-Technicals point to a possible bottom. We have had a decisive breakout since with the major support of 5050 not even touched till now.
March’12 Quarterlies to show an improvement
Year on Year Sales and profit growth likely to be much better in March’12 quarter compared to Dec’11 quarter. Two key reasons for the same:-
- Manufacturing PMI and Services PMI show a clear improvement in current quarter
- Inflation has continues to come down
Global flows to continue shifting
- The first three months of current year has attracted Rs 40,000 Cr of FII flows, compared to outflow of Rs 26000 Cr during whole of 2011.
- The growth story for India is looking far better than many other economies. Brazil and Japan are the only other major economies showing a steadily rising PMI’s. But the rest of economies are not doing too good
- US recovery is robust but its Indices are close to all time high’s of last decade. Recovery likely to continue at a slow pace, but I doubt US Indices will break its decade old highs
- Euro Indices have shown a handsome rise over past few months, inspite of Greece and and a sputtering recovery. However, that latest PMI numbers indicate that the slowdown is picking up pace, with even Germany in contraction mode in March’12
- China PMI on a clear downtrend. There is unlikely to be a hard landing in China, but neither are there any signs of an economic bottom.
- Russia’s growth rate showing signs of stalling after a robust recovery late last year.
- Japan and Brazil are the only other major economies showing a steady increase in PMI’s.
Technical Show an underlying strengths
- The key level of Nifty 5050 has not even been touched after the breakout in early this year
- MACD in daily and weekly show an underlying bullish strength, with markets just taking a breather after a sharp rise from 4500 levels
I believe that a combination of good results and shifting global flows are likely to drive our Indices to new highs over the next few months.