Sunday, October 16, 2016

Correction should end soon

The markets corrected as expected this week and this fall is showing all signs of a slow correctons, it should end soon.

1. Corrections are typically slow and markets float down. They last for 6 to 8 weeks and do not have any real momentum in them.

2. Correction comes in a 3 legged form . So we had leg A 8968 to 8555, leg B 8555 to 8808 and leg C. Leg C can be upto 8395, 8852 or  8140.

There is a possibility that this correction is over.

Elliot states that final targets can be as high as 10500 so next week may be the last buying opportunity.

Next week, I will try and look at sectors which can be stars going ahead.

We may dip 100 200 points more but I do not see markets falling more. Hillary Clinton victory as seems likely will send the markets soaring. A Trump win however unlikely it may seem will lead to markets crashing.

Sunday, October 9, 2016

Markets correct...buying opportunity presents

The markets have completed their short up move in the midst of correction and the downward move has resumed.

1. The C wave down has commenced after retracing the down move from 8968 to 8555 by 61 pc. The down move was 413 points. For equailty, this down can go to 8395.

2. The RBI rate cuts came and went, they had no impact on the markets. This shows the markets are consolidating for the moment.

3. In about a week's time, the pre Diwali rally may start, taking us to new highs.

4. Hillary Clinton winning the elections would be another positive for the markets..Donald Trump seems to be losing it.

5. The US Fed hike will happen in December in all probability.

I expect the next 10 days to give us the best buying opportunity in the next 1 year.

Sunday, October 2, 2016

Buying Opportunity is here

Markets corrected last week finally. The technicals were indicating a correction.  The event in the form of surgical strikes arrived.

1. The lower levels mentioned have arrived and we bounced from 8558, we could bounce to 8750 before ending the correction at 8450.

2. The crisis seems to have blown over and the markets gave a good dip in the last 2 days.

3. The RBI policy on 4th October will be keenly watched, I expect at max a 25 basis point cut. Before the end of this year one can expect a 50 basis points cut.

4. Globally, OPEC has agreed to cut oil supplies, which if it happens can lead to a short spike in oil prices.

5. IF we look at this up move,
Wave 1 was 6825 to 7992 approx 1167 points
 Wave  2 was 7992 to 7715 approx 277 points
 Wave 3 was 7715 to 8970 approx 1255 points
 Wave 4 8970 to 8558 approx 412 points and on going

I expect the correction to end around 8450 and then final burst to 9500 to 10500.
It is a buy on dips market.

Sunday, September 25, 2016

Range bound markets provide buying opportunity

The markets failed to break the previous high and are back in the 8640-8850 trading range. There are several scenarios which can happen from here and let us take a look at each of them.
1. Corrections are always 3 legged, 2 legs down sandwiching 1 leg up aka ABC correction. As per this we are in tricky B wave which may be over or may get over at anytime. First leg down was 280 points till 8688 from 8968.Second leg up till 8893 a retracement of 73 pc and a final leg down till 8613,8537 or 8440.
 2. The second alternative is that the markets go straight up. A break of 8968 will lead to test of fresh new highs.
3. We continue this range bound exercise for few days more. A break of 8640 can lead to 8440 and a break of 8850 will lead to 9050. Note the significance of plus minus 200 points, 8440 is a significant support and 9119 is a significant resistance.
4. The results season will start in 2 weeks and the results month is usually a range bound month.
The most likely scenario is some correction and then fresh highs by Diwali. This will fulfill the rangebound criteria as the same levels will be traversed in both up and down directions.

Buying on dips and booking profits partially is the best choice in the current scenario. Global cues will be benign for sometime to come.

Sunday, September 18, 2016

Decisive week ahead

The coming week has the US Fed meeting coming up and if there is no hike in rates, expect a swift upmove.

1. The market continues to be stuck in a range and a close above 8848 is first sign that the range will be broken on upside.
2. 8650 forms the lower end of the boundary. This week, the fed meet will be on Wed and we will know by the time markets open for trade on Thursday.
3. The rally will be swift and we will see new highs even if a correction happens. The reason for the rally is liquidity. Till liquidity flows in, rally will continue.
4. Break of 8650 will lead to 8450 8500 range and break of 8850 will lead to re test of previous highs.

I would book profits in mid caps and invest the profits in large caps. Always, the stratwgy of reducing cost price works.

Sunday, September 11, 2016

Every correction is a buying opportunity

The markets corrected after hitting the resistance zone. Every correction is a buying opportunity.
 1. The Technicals are at play out here. After hitting the expected resistance zone, the markets are correcting.
2. 8650 was a strong resistance and the whole 8540-8650-8720 will provide a very strong support.
3. The global cued have suddenly turned negative with prospects of rate hike in September by the US Fed.
4. Partial profit booking is a must in midcaps which have gone up from the Feb lows.
 5. We are in the 5th wave up from 6826. The first wave was 1200 points and we should go above the previous top of 9119.
It is a buy on dip market, with profit booking at appropriate times.

Sunday, September 4, 2016

Heading into a Resistance Zone

The markets finally broke the shackles of the resistance of 8550-8650. The good news is that the congestion zone is broken, the bad news is that the next resistance zone is near by.
1. 11 out of last 14 September s have been kind to the markets, this year could be the same.
2. The breakout is significant as it comes after several weeks of consolidation.
3. Last few weeks midcaps rallied and front line stocks were range bound now it may reverse.
4. One needs to lock in profits and non convertible debentures are safe instruments yielding 9 to 10 pc div yield.
5. Globally, Yellen may raise interest rates.5. In the last rally before peaking out at 9119, 8850 was a significant point and market may get resisted here.
6. Time to stick to quality stocks and avoid the telecom sector.
7. Auto stocks are rallying as the sector is seeing good traction.8. Gold bonds of RBI are 1 good investment option.These are times to be in the markets while at the same time one must lock out profits.

Sunday, August 28, 2016

Decisive week Ahead

Markets have been stuck in the trading range of 8540 to 8728 for almost a month. The previous expiry is over and now I feel we should get clarity this week on breakout or breakdown.

1. There are no major triggers for the markets now. All the positives have been factored.

2.A break of 8540 should give us 8350 or a breakout should give us 8950. A correction is welcome before we test new highs. Also 8650/is 80 pc resistance of 9119 to 6875 correction, so the current time pass at these levels is expected. Once it breaks 8750 expect a super duper rally.

3. DHFL bonds are coming up again. It has yields up to 9.25 pc and are listed on the NSE offering easy liquidity. This is 1 good diversification.

4. The global triggers are missing for the moment but we are approaching the month of September which is for some reason a volatile month globally.

5. The strategy remains the same, buy on dip, stick to good quality names and average if the stick goes down, book part profits if it goes up. Reduce risk, one cannot eliminate risk but minimise risk.

Sunday, August 21, 2016

Urijit Patel appointment signals all time highs coming soon

Modi government has signalled it's biggest intent of commitment to reforms by this appointment. What does it mean?
1. Government agreed with Governor Rajan policies and signal Continuity. Patel was Rajan right hand.
 2. No rate cuts, Patel is in Rajan mould.
3. Bond yields will rise in short term, 7.17 pc can goto 7.3 pc.
4.Markets may correct knee jerk if at all they do, but new highs coming mostly till Diwali.
5. Long time back I was saying 10500, we will get there eventually. 
6. 80 pc retracement of 9119 6825 is 8660, close above this on consistent basis implies new highs or testing of 9119.
.7. Sectors to watch out for are Banking, Pharma, defence, Infrastructure especially road building.This has been a Special, masterstroke, cut a popular Governor to size and yet retain the cream.

It feels good to restart blogging, my 1 month break is over. I am back.

Friday, July 29, 2016

Short Break from Blogging

It has been more than 6 years, I have been blogging almost non stop. It has been a very enriching journey.Now, time to take a short break of a month or so while I recharge.