Markets recovered smartly from 4143. Is the market gearing up for a pre-budget rally?
1. The rains have been delayed. The Met dept now talks of 93% of normal rains with a error rate of 8%. So we may go from 101% of normal to 85% of the rains. The picture isn't clear yet, it will take at least 2 weeks for the picture to be clear.
2. There are sky high and unrealistic expectations from the budget. From disinvestment to tax exemptions limit increasing. 1 thing to keep in mind is the fiscal deficit in mind. The government needs money. Money to subsidise fuel, money for drought relief if the monsoons fail.
3. However good the budgets may be, the rally usually peters out after a week of the budget. It would be Sell on news event.
4. FIIs have pulled 3840 crores in 2 weeks. But thee markets have not corrected much. The DIIs are supporting the markets, like they did in March.
5. All this would work, if the monsoons are almost normal. If the monsoons fail, then all this propping would not do.
6. Now is the time to get out of all the risky stocks and stick to quality. Speculative stocks do not give any exit points.
7. Technically, if the market reverses from 4500-4550, we have the H&S formation which would entail a sharp drop.The markets can go up higher and negate this pattern. The 4500-4550 range on nifty will be the zone to watch.Also the e leg of the triangle should be less than c leg (4693-4092= 600 points). This gives a range of 4450-4700.
8. In the absence of any immediate negative triggers, next week could be a positive week. The budget is on Monday, 6th July which will decide if we keep rising or some more time or tank immediately.
9. Time analysis wise, 15th July is an important turn date which would decide the trend for at least next 3 months.
10. The government is making all the right noises and I expect a good budget.
To sum, I expect the up move at least until the budget. If the budget is good, then correction would get delayed by 1 or 2 weeks (the monsoon picture would get clear by then), else correction post budget. Markets rise on hope and correct on news.
Great Budget + Good Monsoons = 17000
Good Budget + Average Monsoons = 12500
Bad Budget + Poor Monsoons = 10000
Sunday, June 28, 2009
Sunday, June 21, 2009
Trading Opportunities
A breach of 4400-4450 did happen last week.
The breach took the nifty to 4206 thus achieving the target of 4250.
What next?
1. As per the extracting triangle theory, leg d (488pts and ongoing) is greater than leg b (417 points). The d leg may continue for some more time.The e leg which would follow would be less than the c leg (600 points).
2. The nifty may dip to 4000-4150 levels before a bounce.
3. It may be a time for the pre-budget rally. The monsoons have been delayed and they will definitely have an impact on agriculture. India remains an agrarian economy with more than 70 pc people depending on agriculture for their livelihood.
4. The amount of rains that fall is not important. It is the temporal and spatial distribution. In layman terms, the area over which the rains have fallen and the timing of the rains. We are now on the brink. A further delay of more than a week means serious trouble.
5. Having said that, if monsoon sets in as expected in 2-3 days, the relief the rains bring in and the pre-budget rally would lead to a sharp upward rally till the budgets.
6. This could lead to trading opportunities of 12-15 pc profit. I would prefer sugar stocks and the PSU stocks for trading purposes.
7.I would prefer o buy on dips in the next 3-4 days before this settlement. The short covering rally which took place on Friday was on lower volumes. Indicating further downsides in the coming week.
8. US indices have gone into sideways movement suggesting that up move is limited. This could be the lull before the storm.
To sum it up, if markets correct further, buy on sub 14000 levels on the sensex, stick to quality stocks, exit on 10-12pc profits and also keep a strict stop-loss.
The breach took the nifty to 4206 thus achieving the target of 4250.
What next?
1. As per the extracting triangle theory, leg d (488pts and ongoing) is greater than leg b (417 points). The d leg may continue for some more time.The e leg which would follow would be less than the c leg (600 points).
2. The nifty may dip to 4000-4150 levels before a bounce.
3. It may be a time for the pre-budget rally. The monsoons have been delayed and they will definitely have an impact on agriculture. India remains an agrarian economy with more than 70 pc people depending on agriculture for their livelihood.
4. The amount of rains that fall is not important. It is the temporal and spatial distribution. In layman terms, the area over which the rains have fallen and the timing of the rains. We are now on the brink. A further delay of more than a week means serious trouble.
5. Having said that, if monsoon sets in as expected in 2-3 days, the relief the rains bring in and the pre-budget rally would lead to a sharp upward rally till the budgets.
6. This could lead to trading opportunities of 12-15 pc profit. I would prefer sugar stocks and the PSU stocks for trading purposes.
7.I would prefer o buy on dips in the next 3-4 days before this settlement. The short covering rally which took place on Friday was on lower volumes. Indicating further downsides in the coming week.
8. US indices have gone into sideways movement suggesting that up move is limited. This could be the lull before the storm.
To sum it up, if markets correct further, buy on sub 14000 levels on the sensex, stick to quality stocks, exit on 10-12pc profits and also keep a strict stop-loss.
Thursday, June 11, 2009
Time to Take Some Money Off the Table
The markets are booming.
Some few justifications for booking profits:
1. Monsoons look to be delayed. Markets have factored in a bumper monsoon. For first week of June we have 35 pc deficient monsoon.
2. When market fell on Monday, broader markets tanked. Many stocks were down upto 15%.
3. When the markets rose, fewer stocks recorded lesser gains. Yesterday inspite of rise advance-decline was negative. These are classical distribution signs.
4. Markets surging on FII flows. Buy figures were 750 odd crores today and yesterday each, 950 cr day before. Total 3800 crores for June so far. Interestingly in spite of such heavy duty buying markets nor rising much.
5. This is a cheap liquidity driven rally. later it corrects, harder it will fall.
Look to keep a trailing stop-loss.
A break of 4400-4450 may lead to deeper cuts.
Vivek Patil is talking of extracting triangle in which there are 5 legs.
a-b-c-d-e. In which a-c-e upwards and b-d downwards.
To put it in layman terms the falls will be deeper,rises smaller.
a took us from 3534 - 4509
b 4509-4092
c 4092-4688 and ongoing.
a >c > e and b> d.
Last fall was 417 points nifty so next fall, if we assume 4688 top could take us to 4250 at the minimum.
Trade with caution.
Some few justifications for booking profits:
1. Monsoons look to be delayed. Markets have factored in a bumper monsoon. For first week of June we have 35 pc deficient monsoon.
2. When market fell on Monday, broader markets tanked. Many stocks were down upto 15%.
3. When the markets rose, fewer stocks recorded lesser gains. Yesterday inspite of rise advance-decline was negative. These are classical distribution signs.
4. Markets surging on FII flows. Buy figures were 750 odd crores today and yesterday each, 950 cr day before. Total 3800 crores for June so far. Interestingly in spite of such heavy duty buying markets nor rising much.
5. This is a cheap liquidity driven rally. later it corrects, harder it will fall.
Look to keep a trailing stop-loss.
A break of 4400-4450 may lead to deeper cuts.
Vivek Patil is talking of extracting triangle in which there are 5 legs.
a-b-c-d-e. In which a-c-e upwards and b-d downwards.
To put it in layman terms the falls will be deeper,rises smaller.
a took us from 3534 - 4509
b 4509-4092
c 4092-4688 and ongoing.
a >c > e and b> d.
Last fall was 417 points nifty so next fall, if we assume 4688 top could take us to 4250 at the minimum.
Trade with caution.
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