We have been for quite sometime been mentioning that the resistance level for Sensex comes at 17700 – 18000 and breaking this level satisfactorily is important for the bullish sentiments to continue on the Dalal Street. The index tried to break the level and hit a high of around 18048 and then there was a good 300 point profit booking by the cautious investors. The very next day there was some buying, reportedly by FII's which has again led the Sensex march towards 18k and we may see some kind off romance with the index in the coming trading week.
The news flow around the large Greece debt is flowing in staggered manner. The Thursdays profit booking was reportedly due to an expectation that Greece would be failing on repayment of their debt and Friday the sentiments turned a bit on EU chief statement that Greece is not an big issue for the EU region! At this point we should not trust any particular statement and it's prudent to wait and see how things unfold over next few weeks.
The large caps in the market are fairly valued and hence Sensex may remain in the range. We are at 18000 index and we at this point would like to shift our critical resistance range to 18100 – 18330. Hence we now would not be immensely bullish until we trade above 18330 atleast for three trading sessions!
SEBI, in a notice on Friday after markets closed issued a notice to 14 Life Insurance companies BANNING their ULIP policies. Luckily IRDA on Saturday evening issued a circular to all the insurance companies that they can ignore the SEBI notice and continue to sell ULIP policies as per the provisions of IRDA Act.
The reasons behind issuing a Ban notice after market hours are not known. But had IRDA not come out on Saturday, ignoring the notice could have sent Sensex crashing down atleast 500 points on opening on Monday! We should not forget that around Rs.40 – 45 Thousand crores of investment into Indian market comes from ULIP policies.
We fully endorse the view that the commissions on ULIP sales is absurdly high, but any abrupt action on them, keeping the size of investment they bring into market can damage the investor sentiments totally! Some damage has been done already. Let's see how the turf war between the two regulators now takes shape.
Jai Hind.
Vivek Karwa
CERTIFIED FINANCIAL PLANNERCM
& INVESTMENT STRATEGIST
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