We have to give the credit for the recent rally in world financial markets to the Fed. The Fed succeeded in surprising the market. This time it was a positive surprise. In fact the Fed deviated from its earlier stand of being only data driven . It took a broader view at the Global slowdown.
In India the markets are expecting the RBI ( India's Central Bank ) to announce a rate cut . However the market has already rallied in anticipation . A 25bps rate cut is already in the price . Anything above that can trigger a market rally !
On the long term prospects keep an eye on China and Oil .
Those who are long on NIFTY can continue to remain so . New positions should be initiated after the RBI move . In case the RBI feels that inflation may again shoot up with the recovery of the Oil prices it may act in a conservative way . This in turn can spook the market euphoria.
Investors as always can be a bit more relaxed as compared to traders. The long term trend is up . You may continue adding SBI , ICICI Bank , Maruti , Tata Chemicals and other select bank counters.
However for commodities the long term trend remains downwards , investors should use the recent rally in metals and Oil stocks to exit these counters. Stocks like Hindalco and Vedanta are prime candidates for profit booking.