Sunday, March 27, 2011

Markets: Technically Ahead

Last week, the markets gave indications of being week as per the Technical Analysis. True to form the Markets took a dip on Monday and then bounced back smartly. This week, the pattern formed is exactly reverse its showing an up move. So do we have a top on Monday.Lets look at a few charts.

1. There is an upward channeled move going on with top around 5720-5750 and bottom around 5340-5360. Breakout on either side could give moves of up to 400 points minimum. This can also be called a Bearish Flag. It is a Continuation Pattern and happens during down moves. Lets watch the channel.So if 5750 breaks we may move to 6150 else if 5350 goes down to 4900.

2. If we connect the tops from 6339 to 6177, resistance comes at 5900 right now.

3. I am almost sure a 5 wave down move got over at 5177. So wave 1 was 6339 to 5177. ow we are in Wave 2 correcting the entire down move and targets could be 5629 (done), 5758 or 5895.

If the above assumption is true, then April can have a range between 5350 to 5850 before we commence a sharp down move of about at least 1200-1300 points targeting Nifty 4500 by June end.

Well nothing has changed. Crude is boiling, Interest rates are rising and so is Inflation. 1 good buy on NSE is L&T Debentures which have 8 years left to maturity with Coupon Rate of 10.24 pc paid twice a year. Bonds are trading at Rs 1025 on NSE. You can lock in 10 pc Interest Rates for 8.5 years. No FD is offering that and liquidity is you can sell on NSE and get the principal back in 2 days.