Sunday, March 26, 2017

March year end considerations

The week gone by was pretty much flat and I expect the current week to trend with a positive bias.

1. March 31st is the year end NAV time. Many of the fund managers have their bonus based on this. This month the DIIs have been sellers and I epect them to turn buyers the next week.

2. The post election results gap still has not been filled till 8935. Many times such gaps remain unfilled. This gap can remain unfilled if we have a final blow out rally till 9400 or 9500 and then a 400 500 point correction.

3. This market seems to have entered into a bull run and I do not expect any correction beyond 400-500 points on the Nifty.

4. Financials, Autos and selective Pharma stocks remain my top pick.

5. Global cues are stable and I do not foresee any trigger from them and the next doemstic triggers are only after the 10th of april with the full year results.

6. The markets are usually range bound, or negative at the time the Results are declared and I expect the same this time around too.

All in all, we are in a bull run for now with all corrections to be bought into. Also, by booking profits periodically we keep ourselves safe.

Let us see f the NAV pumping comes true the next week.

Monday, March 13, 2017

New Highs followed by 400-500 point correction

UP Results are out and the BJP has got a resounding victory beyond what even the most optimistic exit poll could forecast. This would mean that the markets would rally in the near time and we would go to fresh all time highs.

1. The SGX Nifty is at 9100 and the markets would easily scale Mount 9200. Now, the counts are very clear. We are in a long term bull market.

2. The first wave began in 2001 and ended at 6353 in 2008.

 Second wave corrected this from 6353 to 2252.

The Third and the most powerful wave is in progress.

3.1 2252 to 9119
3.2 9119 to 6825
3.3.1 6825 to 8968
3.3.2 8968 to 7893
3.3.3.1 7893 and ongoing

Within this, 3.3.3.1will end in a few days between 9200 and 9300. Then we will have a correction of 400-600 point which would be a very good buying opportunity.

This also means that the next 2 years will be very good for the stock markets. Book profits in the highs of this week and buy the stocks back at every dip.
    

Sunday, February 26, 2017

Technically where do we stand?

The rally from 7893 has taken everyone by surprise and where does it go from here?








1. The rally has retraced the fall from 8968 to 7893 in faster time. This indicates it is an impulse wave started from 7893.

2. The rally has consumed 9 weeks so far.

3. If it is a fresh impulse some decent correction is due as a form of consolidation before the up move resumes. Lower levels are 8724, 8567, 8437.

4. I have plotted the rise as a 3 wave corrective up move but more likely it would play out as a 5 wave impulse up move.

The 1st wave was very clear 7893-8461, 2nd wave corrected till 8327, third to fifth wave is not very clear so I took the rise as an a-b-c rise.

Either which ways a correction to 8724 seems to be on the cards. There are negative divergences playing out.

A secondary possibility is this is A B C corrective up move and we may revisit 7800. Now all these are just numbers how does one invest based on them?

Buy 50 pc of intended quantity between 8500 and 8700. The broader market is showing signs of correction.

Sunday, February 19, 2017

Fundamentals - Where are we?

In the 6 months since September we have fallen about 1000 points on the Nifty and have risen back almost the same amount. Is the fall justified and also the rise?

Let us look at the reasons:

1. The Trump factor - The major reason for markets tanking was the Trump factor and it has played out so far. Jobs back to the US and closed door towards immigrants along with H1B visas is going to be negative for emerging markets.

2. Further rate hikes in the US. As Janet Yellen speaks of rates hikes sooner rather than later it means that the emerging markets become less attractive for FIIs. Jan was a negative month for FIIs and Feb is positive mainly due to mad buying in HDFC Bank.

3. The Politics factor - As the reports come in, it seems more and more unlikely that the BJP will win UP but it can emerge as a single largest party. The problem for the BJP is the untouchability factor. Like the Game Theory, BJP and the Samajwadi combo will never support each other. Mayawati knows to extract her pound of flesh and even with lesser number of seats will expect to be CM with outside support from BJP. Punjab seems to be a lost cause with Goa too close to call.

4. Rate Cuts - The RBI is clear it is done with rounds of rate cuts. So steroids for the economy cannot be expected from the RBI.

5. Demonitization - No one has seen the tangible benefits so far, they may come further down the line in terms of tax compliance. The loss to GDP needs to be factored in. GST also will lead to a spike in inflation.

On the plus side, we have a stable government in place, borders are stable and General elections far off.

The month of March is important for US rate hikes, reforms linked to UP elections and what meausres Trump rolls out. It has been a good 3-4 months for the markets those who bought in December, their portfolios have risen a good 20-30 pc. Time t be cautious.

I strongly feel we will get 1 buying opportunity in March to May period.

Sunday, February 5, 2017

Possible Triggers for the Markets

All the major triggers have come and gone for big moves in the markets. The few visible triggers let us try and see.

1. RBI policy on 7-8 Feb
A 25 basis rate cut s factored in, anything more and the party continues, anything less and we correct.

2. Election Results on March 11
AAP seems to be ahead in Punjab, and UP is no longer a cakewalk. UP is especially significant, any reversal here will lead to markets falling.

3. Donald Trump Actions
This is the wild card here. What people feared when he got elected is coming true now. The bigger problem seems that his actions seem to have a lot of backers within the US. Trump poses the biggest risk as he may force reversal of funds from the emerging markets.

We seem to have reached the upper end of the markets here and at least a correction before we take out new highs seems likely.

What the markets needs to correct is a trigger. Let us see if the above 3 factors act as a trigger.

We are in a resistance zone and clearing it will lead to next set of resistances are 8850-8900.

Time to wait and watch.

Sunday, January 29, 2017

Chart of the Day





Chart says everything. Good budget bad budget as per Bollinger we should head to 8200 8300.

Sunday, January 22, 2017

Budget to provide further triggers

The markets corrected near settlement and that leaves us with several interesting possibilities.

1. Nifty corrected from 8598 to 7893 and we are merely retracing this up move before we head down.

2. We are retracing the entire down move from 8968 to 7893 before heading down.

3. We are in a fresh up move for new highs.

Now. possibility 1 gets nullified above 8457. The next probability of 8968 to 7893 has upward targets of 8437 8557 and 8753.

The 3rd possibility comes into the picture only after 8753. Now all these are just numbers how do we make them work for us?

8000 to 8200 zone is the best place to deploy the funds. One can invest say 70 pc of funds and remaining 30 pc can be invested below 7800 or above 8600.

Now, if the correction which began on Thursday has following targets of 8326, 8244, 8177 and 8110. The targets by the time we reach the budget session are  8500-8600 if the correction is short and swift.

Now. for the budget if we look only by numbers, there are 2 possibilites:

1. We are at 8100 8200 by the time budget is here and then rally to 8600
2. We rally till 8600 and then correct post the budget.

In any case 8100-8200 is buying time on the Nifty.

Sunday, January 8, 2017

Markets likely to remain sideways with upwards bias till the Budget

The markets continued their upwards march in spite of FII selling. Technically, the markets have retraced the last fall in faster time which means the correction is over for the moment.

1. The midcaps and small caps are going up faster than the large cap, this implies correction on pause for the moment.

2. 8968 to 8002 was A, 8002 to 8598 was B and C is ongoing.

C X is over from 8598 to 7893 and we are retracing this leg which can go up to 8457. Retracement levels are 8162, 8245 and 8328,

Once this up move is over maybe post budget the correction can resume.

3. The FIIs are continuing to sell but the selling is getting absorbed by the DIIs flush with SIP money.

We may have a correction to 8100 which may be the base for a 200-300 point rally.

Sunday, January 1, 2017

FIIs continue to Sell

The markets rose this week but the FIIs continued to sell. Amy upmove will remain shortlived till the FIIs do not begin to buy again.

1. The year end NAV dressing took the markets up. FII settlement played a key part in the up move. Now, is the up move just a corrective up move or is it a fresh rise.

2. As per Elliot 50 pc retracement is 7891 and 61 pc is 7650. The previous corrective up move we could have said 1 leg was pending if 7916 was not broken.

3. What seems likely is the corrective up move ended at 8274 and a fresh down move has unfolded and we are correcting the fall from 8274 to 7893.

4. 8250 to 8300 has many resistances and one needs to watch out these levels.

5. Every dip is a buying opportunity.

6. Considering Gold prices, very long term investors can consider buying a bit of Gold in their portfolios.

The New Year has begun and from Monday the picture will be clearer where the markets will go from here. The Budget is 1 month early this time on 1st of Feb so a pre budget rally may soon start.

Modi has given the indications of a populist budget, let us see if it cheers the markets though populism seldom cheers the markets.

Sunday, December 18, 2016

Eventually lower level await the Markets

December is turning out to be a listless period for the markets. We are stuck in a trading zone which seems to be getting narrower by the day.

1. 7500-7700 levels seem to be a matter of time. 1 probable wave count is

A 7916-8251
B 8251-8056
C 8056 - 8274

Now the fall from 8274 is very slow, so it could be

A 7916-8251
B a 8251-8056
B b 8056-8074
B c 8274 should end above 8043

This is said to be irregular correction.

C wave can go up till 8337- 8400 and then a final down move of 7500-7700.

Or we can go straight from here to 7500 7700. Either ways we seem to be headed down now or in the New Year.

The strategy remains the same accumulate on declines. The Bollinger Bands are narrowing with range between 8269 and 8069
.
There are no more triggers left for the markets for this year.