Sunday, August 30, 2015

Buying Opportunity beckons

The Markets went in a tailspin this week and crashed before recovering to some extent. This gave 1 good buying opportunity. Let us see what further opportunities lie ahead.

1. On Monday, the markets fell by 6 pc and intra-day even more. It was a panic situation with FIIs selling about 5275 crores of shares which is highest in any single day.

2. The Global economic worries fueled this downfall and all stocks fell down.

3. Coming back to our last week's analysis, there were 2 likely scenarios:

"Looking at Elliot,

If wave A was from 9119 to 7940 = 1179 points.(Roughly about 3 months)
    wave B from 7940 to 8654 = 714 points (Roughly about 1.5 months)

Wave C will have targets of approx 7475, 7144 and should end around October end.

Now there is an alternate view in place.

This is we are still in B wave up and there could be 1 more peak around 8600 - 8800 before the fall to 7500 levels. In that case, the current fall should halt around 8100-8200 levels.

Whichever way one looks at, there are 2 things which are certain. We should be revisiting 7500-7800 area once and we would also be revisiting 8800 at least once"

Th Alternate view has been negated now and we are looking at lower levels now before making new highs.

The current fall can be labelled as C with 3 waves down,

A - 8654 - 7667 = 987 points.
B 7667 - 8091 and ongoing which can go up to 8275.

Post that there will be a final fall which will take us again to 7500-7800 range.

The entire month of September at least should go in traversing all this.

Strategy remains of buy on dips and this would be 1 last buying opportunity before we make new highs at 10000-11000 Nifty levels sometime in 2016.

Sunday, August 23, 2015

Global Cues drive the markets lower

The Indian markets on the back of global cues fell down by 2.6 pc for the week. However all is not doom and gloom and we may get very good opportunities to buy. Let us look at the Technicals for the week.

1. The markets have begun a correction from 9119 on March 5th. If we see we are in an almost 6 month period of consolidation/correction. When this period ends we will see a sharp up move.

2. Looking at Elliot,

If wave A was from 9119 to 7940 = 1179 points.(Roughly about 3 months)
    wave B from 7940 to 8654 = 714 points (Roughly about 1.5 months)

Wave C will have targets of approx 7475, 7144 and should end around October end.

Now there is an alternate view in place.

This is we are still in B wave up and there could be 1 more peak around 8600 - 8800 before the fall to 7500 levels. In that case, the current fall should halt around 8100-8200 levels.

Whichever way one looks at, there are 2 things which are certain. We should be revisiting 7500-780 area once and we would also be revisiting 8800 at least once

Which makes this a buy on dips market If you enter around say 8000 levels, then even markets fall further you can average it out.

An investor buying with a perspective of next 1 year is sure to make profits.

3. The FIIs sold big time and that is one of the key reasons for the markets fall.

4. IOC FPO will suck out another 10000 crores from the markets on Monday.

All these factors make it a buy on dips market. The main gains for shares bought in the next 2-3 months will be in 2016.

Sunday, August 16, 2015

Hopes of a RBI Rate Cut

The markets were down for the week but there was a sudden spike up on Friday which reduced the deficit for the Nifty to a mere 46 points down for the week. What was the reason for the sudden burst of optimism? There are actually 4 reasons for this.

1. The inflation data released on Thursday shows inflation at -4 pc on the wholesale inflation front. This gives 1 more trigger for the RBI  to further reduce rates. The next RBI Meet is in end September so 1 could expect an unexpected rate cut. Maybe the rate cut is coming next week and there were certain people aware of it.

2. There is talk of special session of Parliament to pass the GST Bill in September. This raised market sentiments. Again, markets go up on hope more than anything else.

3. On Friday, the Finance Minister presented a comprehensive plan for PSU Bank reform. People were hired from the Private Sector for the first time as Chairmen of PSU Banks and lots of reforms were spoken of.

4. With the devaluation of the Chinese Yuan, there is talk that US may have to postpone rate hikes to December from September. This is because once interest rate are raised the currency becomes stronger. The US Dollar has already become 3-4 pc stronger to Yuan and further strengthening may hurt US companies who are export oriented.

5. The markets are continuing to consolidate with a positive bias. The longer it consolidates in this range, this range becomes support for the future. 8300-8650 is the key range for the market. A breakout in either direction could take us to 8000 or 8900.

6. Friday rally was different from the usual dead cat bounces. It got stronger during the day and we closed near the highs of the day. Normal relief rallies get sold into during the day and often we see a flat close.

China by devaluing the Yuan has changed the parameters of the game in the short term. All previous calculations go out of the window.

If the rupee continues to weaken, then IT sector and the export sectors gain but imports become costlier.

In 2 months the focus has shifted from the Monsoons and Greece to GST and RBI rate cut. Banks again will lead the rally or the fall.

Sunday, August 9, 2015

Markets continue in a Range

The Nifty gained a net 32 points for the week. The markets were range bound whereas the mid caps party continued unabated. The question is will this range continue for how long?

1. The Quarterly Results are out, Parliament session has been washed out. There are no major triggers for move in either direction.

2. The FIIs were net buyers the entire week which is a major positive.

3. Brent crude prices have sunk below 50 USD and this will be a major relief for the Government on the subsidy front. Already, there are talks that on subsidy the Government will save 30000-40000 crores then what was budgeted for and this will be used for Infra projects.

4. Gold will continue to fall and is not an appropriate investment right now.

5. Technically, we are still consolidating between 8300 and 8600. A break of either side would give us a move of 300 points. The targets would then be 8000 or 8900.

6. The markets will continue in their range unless there is a major trigger either locally or globally. A positive trigger could be if the Gvernment is somehow able to pass the GST legislation.

7. RBI may surprise with a rate cut sometime towards end of August or early September. This could be 1 more trigger for the markets.

All in all, better avoid midcaps which have run up and look at large caps like LnT or Coal India which have good long term prospects and be prepared to average at lower levels.

Sunday, August 2, 2015

Markets continue in their Range

The markets were flat for the week and they are still not giving any breakout in any direction. Lower crude oil prices continued. Let us see what the month of August brings for the markets.

1. The Crude Oil prices continued to be at year low. This will help the Indian economy.

2. The Monsoon session of the Parliament continues to be a washout. This now seems to have been factored in by the markets.

3. The Greece factor also has gone by.

4. Results continue to be a mixed bag. ICICI Bank results were good on Friday whereas L&T disappointed.

5. The market has no major triggers either to go up or to go down. This has resulted in a sideways trading market.

6. The FIIs continued to be sellers in the week gone by. Unless, they start buying, the markets will not have a very big rally.

7.In the 8500-8600 region, the markets continue to be in no man's land. Buying at these levels can lead to a trap.

The Strategy remains the same. Buy on dips and be cautious at higher levels.

Sunday, July 26, 2015

Lower Crude Prices a positive trigger

The markets were down 1 pc for the week. All the commodity prices took a big beating and that is a big positive for the Indian economy. Let us see the factors for the coming week.

1. The fall in metal and crude prices augers well for the Indian economy. The massive infrastructure spend lined up will get done at much lower rates.

2. The FII s have started buying and started buying big time. This bodes well for the markets.

3. The monsoons have picked up again and with almost half the monsoons gone by, the deficit is only 5 pc. For the met forecast of a deficit of 12 pc to come true, the next half of the monsoons should be almost 20 pc below normal which is very rare.

4. Reliance came up with very good set of numbers which should help the markets move higher.

5. The Parliament logjam continues and this is bad news for the markets. This is the only negative trigger for the markets currently,

6. The expiry is on Thursday and markets can be volatile till then.

7. The correction can take us to 8300-8400 levels which would be a good buying opportunity.

8. The PFC FPO opens tomorrow and which is a good buying opportunity as a discount of 5 % is being offered to retail investors.

All in all the markets seem to be in a good shape and the correction which started in March and lasted amost 5 months seems to be coming to an end.

Sunday, July 19, 2015

Time for some correction

The markets have been rallying since hitting 7940 and it is time for the markets to take a small breather. Let us see what can be the triggers for the correction.

1. The markets broke through the falling channel which had a height of about 600 points. Technically, the markets should rally up to 8900-8950 levels considering the breakout from the channel at about 8350.

2. The FIIs have turned positive and become net buyers for the past entire week.

3. The Parliament session begins on Tuesday and is expected  to be stormy with Vyapam and the Lalit Modi issue hogging the limelight. The land bill is most likely postponed to the winter session and the GST Bill if it is passed is a big positive.

4. The monsoons have turned into a deficit and are at a minus 6 pc level. Still, the things are not  too alarming.

5. In the very short term, the expiry is cose by and usually the markets cool off before expiry if they have been  bullish earlier.

6. A correction of about 200-300 points is very likely and most welcome before the markets try for 8800-8900.

7. If the markets continue to rally from here, the rise would be unsustainable and may lead to a sharp fall.

There are now 2 options before us:

1. The markets rally to 9300-9500 and make a new high or

2. Rally till 8800-8900 and then fall to 7500.

In case of either of the options, it does not make sense to buy now but wait for some minor correction to buy.

8300-8400 level would be a somewhat safe level to add positions.

All the positives have already been factored and we may see an intra day rally before some correction.

Sunday, July 12, 2015

What next for the markets?

The Greece referendum has come and gone. There is no clear solution and the markets went down by 1.5 pc. Let us see what the markets  have in store for us now.

1. The EU Finance Ministers are meeting this week and let us see if any solution emerges out of it. The Greece scenario seems to have been factored in by the markets.

2. The Crude oil prices have fallen by about 10 pc due  to this crisis and that will help India.

3. The Monsoons are slowing down and we are not slightly in deficit. The next 2 weeks become key for the Monsoons.

4. The Results season is upon us and TCS declared just about ok results.

5. The Monsoon session will start in about 10 days time and is expected to be stormy. I expect the markets to remain range bound.

6. The FIIs continued  to sell. After about 12000 crores worth of stocks sold in last 2 months, they are marginal buyers of about 100 crores.

7. Technically, the markets have to cross the strong resistance of 8500-8600. Till then it will remain in a trading band.

8. There are no major triggers for the markets to go up or down. In such a scenario, the markets will remain in a trading range for some time to come.

The current levels offer no safety net for buyers. If the markets correct from here, the next zone would be the 8000-8200 zone.

Sunday, July 5, 2015

Markets at Crossroads both Technically and Fundamentally

The markets closed up by 1.2 pc as the investors awaited the results of the Greek referendum. The markets are at a cross roads now, both technicaly and fundamentally.

1. The Greece referendum is on Sunday and the results will be out before markets open on Monday. If Greece elects to stay within the EU, the markets may rise.

2. The monsoons also have reached a critical juncture. We are in surplus of 16 pc with about 25 pc of monsoons gone by. The next 2 weeks become very critical for the monsoons.

3. The Parliaments opens on July 21st and with the Lalit Modi saga, there are high chances of Parliament getting disrupted.

4. The corporate results will start coming in towards the end of next week and usually during the results season the markets are subdued.

5. Technically 8500-8550 is a very strong resistance zone and a breakout above this level will open the gates for new highs.

6. The FIIs have been net sellers in the months of May and June. Still we have gained about 300 points on the Nifty since the month of April. (April 30th) This selling has been absorbed by the markets.

Now, there are 3 scenarios which can play out:

1. The markets rise on Monday on the back of Greece referendum and then start losing ground. (Most likely). We will go back to the 8000-8500 range for a couple of more months.

2. The markets breakout and we rise to new highs. (Medium possibility)

3. We start falling towards 7500 (least likely but possible)

It would not be a bad idea  to book some profits if the markets open gap up on Monday.

Sunday, June 28, 2015

Monsoon worries swept away

It was another week of heavy rainfall and the markets to went up. If this continues for a couple of weeks more, the monsoon fears may become irrelevant. Let us see what next for the markets?

1. The monsoons are already in surplus of +26 pc. This against the Met department forecast of -12 pc. Now, for the Met department forecast to come true there has to be a swing of 38 pc overall for which from now on the rains will have to be very poor.

2. Another interesting feature of the rains this time is that it has cover all regions more or less equally. Every year not only the quantum of rain but the distribution is very important.

3. Normal rains means another rate cut could be coming in August-September.

4. The Greece drama continues. For some reasons, the markets seem to be pretty confident it would be all right in the end. No markets are showing signs of panic as in  the past.

5. The markets are critically posed in the 8400-8500 resistance zones. This zone is particularly important because if the markets close convincingly above 8500 then we may see new highs coming in the region between 9300-9500.

6. The FIIs have started buying again in a small manner. If the FIIs start buying, then we would see new highs coming.

7. Also, the last fall took about about 15 sessions from 8489 and we have taken about 10 sessions to rise to a high of about 8423. If the markets take out 8500 within the next week, then we are on track for new highs.

8. The monsoon session starts on July 21st and is expected to be a very stormy session. Whatever rise has to come has to come before it starts. This is another indicator to know whether we are good to go for new highs.