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Have Money To Invest? Park Money in Shares as there May Be a Pre-Budget Rally


The Sensex has corrected a good 1500 points from high levels of almost 28,800 to the current levels of 27,350 points. Analysts say this maybe a good time to invest as we may see a rally in the next two months on the hopes of a pre-budget rally.


Have Money To Invest? Park Money in Shares as there May Be a Pre-Budget Rally
Now one other reason to invest is the fact that the Reserve Bank of India may cut interest rates going forward. It has already hinted that it might do so and analysts are almost sure that there could be a rate cut in the next three months.

What this means is that as long as inflation for December behaves, a interest rate cut in Feb could be a probability which could drive markets higher.

For the next few months we are also unlikely to hear anything from the US Fed which means that the news on interest rate hikes in the US would be on the backburner.

Now one other reason for optimism is the fact that there could almost certainly be a pre-market rally. Analysts are bullish that the Union Budget of 2015 could be pre-reform. Already we have seen that the government is leaving no stone unturned in positioning itself as a reform oriented government. It has already pushed the GST in the Lok Sabha and analysts expect the same to be done in the Rajya Sabha. We would have to wait and see what happens. The insurance Bill has already been passed in the Lok Sabha.

Which sectors to bet on?

The one obvious sector that investors are betting on is the banking sector. Some analysts are recommending public sector banks as these are high beta stocks and tend to rise and fall faster than the markets. Some stocks that look good from a 3-4 month perspective are stocks like Syndicate Bank, Union Bank and Oriental Bank of Commerce.


This week is a truncated week and there may be limited volatility in the absence of FIIs. Also global cues are expected to remain quiet. It may be the right time to look at stocks for a 2-3 month period.

Story first published: Monday, December 22, 2014, 8:54 [IST]
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