See Nifty at 5000-5500 levels on higher side: Reliance MF

Madhusudhan Kela, Head- Equity Investment, Reliance Mutual Fund, feels that if the rain is not favourable in the next two weeks, that could be a worry in the near term. However, he still maintains that the market is in broad trading range. He sees 5000-5500 levels on a higher side of Nifty and 3800-4000 on the downside.

According to Kela for this recovery in markets, a lot of factors have coincided. "The trust vote came in favour of the government, we had a sharp fall in crude prices. If some of these factors continue to play in our favour, because we are coming from such a pessimistic scenario where people were more bearish than what fundamentals warrented for, that it may last longer than what people believe. "

He said that inflation ultimately is a base number. "Last year inflation was at 4% and this year it is at 12%. This 12% becomes a base. If our hypothesis on crude and commodity is right, that you have seen the toppest movement, then 12 months down the line you will see much lower inflation than what you are seeing currently." 

Kela said, "We are holding 20-25% cash and have deployed virtually half of that cash. It was a very intersting time and we still have 10-12% cash on our consolidated portfolio basis. I am fine with that because I still do not belive that all the worries for the market are over." He feels that if the rain is not favourable in the next two weeks, that could be a worry in the near term. "So I would still maintain that we are in a broad trading range." He expects 5000-5500 levels on Nifty on a higher side and 3800-4000 on the downside.

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