Saturday, March 17, 2018

Probabilities for the Markets

We have seen the Nifty correcting from 11172 and there are a couple of probabilities in play.

1. A leg was 11172 to 10276
    B leg was 10276 to 10638
    C leg is ongoing

C.1 is 10631 to 10141
C.2 10141 to 10478
C.3 ongoing

2. The next possibility is all this is A leg down followed by corrective 600 700 point rally ending with a fall to 9500-9700.

In the case of 1st option, fall can end between 9900-10100.

In the case of second option, a bounce followed by new lows.

In both scenarios, it makes sense to deploy at least 50 pc cash in hand now.

Sunday, February 18, 2018

No Clarity yet in the markets

Last week, we had considered 2 possibilities in the market. Both still remain alive.

1. The down move is still not complete and a low is pending at 10000-10100 followed by 500-600 point rally.

2. A wave is complete, followed by a rally to 10700-10900 and then a final leg down to C.

Breach of 10398 means down move is not complete and breach of 10640 means we are headed to 10800-10900.

Investors can buy at 10100, sell at 10800

Saturday, February 10, 2018

Longer term correction sets in

The markets lost over 300 points on closing basis to close at 10454. There are several assumptions which may need to change following last week massive fall.

1. It was assumed that this is a sub wave 4 fall and a last wave up was pending. Now this probability has the least likelihood.

2. Most likely, the entire up move from December 16 to Jan 18 is being corrected.

3. 2 possibilities, the first down move ended at 10276, we are heading to 10725 to 10829 region before the next down move commences.

4. The first down move is not yet over and we head lower to 10000-10100 range.

The wave 3 from 11117 to 10276 was extended, about 841 points so wave 5 can be a smaller wave, till 10118 followed by a 600 point counter rally.

Either ways in the near term we are headed up.

For traders, 10000-10100 is buying zone and 10700-10800 selling zone.

For investors, 10100 is a 1 buying zone and 9500-9700 second buying zone.

Saturday, February 3, 2018

Technical Analysis for week 5th Feb 2018

The markets closed at 10760 down from a 52 week high of 11172. Let us look at the technical analysis.

1. Wave 1 from 9687 to 10490 a gain of  803 points.

2. Wave 2 corrected to 10033, a loss of 457 points or a correction of 57 pc.

3. Wave 3 started from 10033 to 11172, a gain of 1139 points.

4. Wave 4 started from 11172.

A is 11172 - 10878 equal to 294 points
B is 10878 - 11117 equal to 239 points
C is 11117 to 10736 ongoing so far 381 points.

If C is 1.618 times A target is 10641.

Now 2 probabilities from here, 5 the wave starts for at least 800 points from here or it is abc x abc correction.

Targets of x can be  200 to 350 points.

So, if 1 more abc down then that will start from 10900- 11000 to 10500.

Sunday, August 13, 2017

Technical Picture

The ferocity of last week fall took everyone but surprise. It throws up some very interesting possibilities.1. The fall was 452 points the previous largest fall was only 261 points.

2. The fall has 3 distinct legs A 10137-9981 B 9981-10081 C 10081- 9685.

3. Now, this could be the last fall or there could be a corrective up move before next round of fall. This could be if structure is ABC X ABC

4. If that is the case we could retrace to 9857, 9911 or 9964.4. The next leg of fall could take us 9450 to 9500 levels.Right now, let us consider these 2 possibilities only. Above 10050 we can expect new highs.

 At 9500 odd levels, we would have retraced entire 7894 to 10137 by about 30 pc fulfilling the criteria for correction.

Sunday, August 6, 2017

Long Term looks Bright

The markets continue to sustain above the Mount 10 K mark on the Nifty. Let us see what the next 6 months hold for the markets.

1. The GST rollout seems to be smooth with very few glitches. This bodes well for the markets in general. GST rollout was a major worry for the markets.

2. The monsoons have been fairly normal except few parts of Southern India. This is another major trigger out of the way.

3. Globally, the markets have settled in a nice bullish sentiment. Unless something drastic happens, the global cues will be supportive.

4. There seems to be no political threat to the Government.

The only negative factor seems to be tension with China. This may lead to small intra day or intra week corrections, but China has too much invested in India to seriously endanger its big market for a small piece of land.

This is a market which is a buy on dips market. A 400- 500 point correction will definitely come but when is the big question.

Sunday, July 16, 2017

Bull market rally knows no top

The markets have started moving on the back of good monsoons and also due to no major glitches in GST implementation. In spite of the rise there are some points to be considered.

1. The rise from 7893 to 9913 has almost been vertical with no meaningful correction. The max correction has been about 250 points.

2. There should be 1 correction of 400 to 500 points pending, whether it will occur now before we reach 10500 or post that is a matter of conjecture.

3. 10500 has been an Elliot wave target and looks like we will reach there by Diwali.

4. Classic signs of some kind of frenzy is apparent, newspapers headlines are talking about sensex, new listings are tripling, the OLA cab drivers are trading.

5. During the 2008 frenzy these were the classic signs. I remember in that frenzy I managed to be interviewed by NDTV as well as made the front pages of DNA with my opinions.

6. How do we play this? Part booking of profits is a must. Good quality stocks is another way of safeguarding one from the markets vagaries.

7. One must not forget, we alwayys get second chances in the markets, 6825 in Feb 2015, 7893 in 2016 November, we still may get some chance.

8. 8940 the pre election gap of March 2017 I think will not be filled for years. It will be known as the Modi gap. Same as 3700 is the UPA gap.

There are still undervalued gems in the market and they can still be bought. I see the next few years as the Modi years or the golden years in Indian history.

Sunday, June 18, 2017

GST and Progress of Monsoons to be watched

June has so far been a boring month for the markets. The indices have moved in a very tight range. Mid caps have corrected quite a lot. The next triggers for the markets are the Monsoon progress and the GST implementation.

1. The progress of the Monsoons by the end of the month will be closely watched for its impact on the markets. The positives have all been factored in.

2. The date for GST rollout has been set for July 1st and anything more than teething troubles will be taken negatively by the markets.

3. Globally, the rate hike by the Fed has taken the rates to 1.25 %. What no one realizes is that higher the rates go in the US, lesser is the cushion for a rate cut in India.

4. Globally, there do not seem to be any major negative triggers and that is 1 reason the markets are in a somnolent range.

5. The markets have risen from 7893 to 9700 levels without any major correction. The maximum the markets have corrected is 200 points. A correction of 500-600 points will come at some point of time.

6. Trump seems to have settled down in the US. So, negative triggers reduce from the US. He always will be the unpredictable wild card.

Strategy remains to buy on dips with periodic profit booking.

Sunday, June 4, 2017

Mid caps the focus now

The Nifty continues to go up slowly but steadily. The real story is in the midcaps where there are bigger swings. Many corrected about 20 pc or more when the index corrected barely about 2 - 3 pc.

1. The mid caps which one can look are the mid caps which will become the large caps tomorrow. The real cream is in these stocks.

2. To quote an example. a food retailer which had listed in March corrected about 20 pc from the top before resuming its upward journey.

3. The sectors which will do well now are Capital goods, consumption driven themes, housing finance companies. private banks.

4. The markets may correct in June. In all this talk of rally, there is a good 400-500 point correction pending. So far all corrections are limited to 200 points.

5. The GST rollout in July 1st will be the next big thing. It should go through smoothly with niggling teething troubles.

6. Mid caps which are high growth, low debt should be the focus areas.

7. Pharma stocks represent a long term buying opportunity. Every dip is a buy.

When Nifty corrects. the mid cap correction will be magnified and that is the time to buy.

Sunday, May 21, 2017

Long overdue correction happening

The markets for due for a correction and that is what we are seeing now. Trump effect does it act as a trigger for a more pronounced correction or it something for the very short term.

1. The maximum correction so far has been 200 points. This takes us to 9330. If it is a wave correcting the entire up move then it will last much longer and one can expect the election gap of 8940 to be tested.

2. Domestically, there are no major triggers in the coming months.

3. This is a bull market no mistake about it and every correction is a buying opportunity.

4. The Pharma and the IT stocks are in a prolonged bear market and they will take some time to recover.

5. The eventual targets for this markets on the Nifty are between 10500 and 12000/

6. The markets will follow the US market moves which will follow the antics of Donald trump It is not that easy to impeach a US President.

7. The GST rates announced are fair and reasonable.

8. Gold prices can spike up on every Trump crisis that erupts.

Every dip is a buying opportunity and the smooth rollout of GST will be watched. The onset of Monsoons will be an important trigger for the markets.