Saturday, September 17, 2011

At crossroads: Tricky Juncture

It was a week where market threatened to tank and then showed signs of breaking out but ended up with 0.5 pc gain. Markets are at cross roads with endless possibilities before breaking down.

1. As per Elliot, this could be sub-wave 3 of C starting from 5741 and we are in the last leg of upmove of sub waved 4.
Sub waves of 3 as below:
1. 5744 - 5497
2. 5497 - 5702
3. 5702 - 4720
4. 4720 - ongoing
4 A till 5169, B till 4911 and C ongoing. If this is 4th wave of 3rd then should not go beyond 5200.

It could also be Wave 3 ended at 4720 and this is C-4 which can go on till 5360.
In any case, the upmove should end this week.
Wave 1 5944 - 5196
wave 2 5196 - 5741
wave 3 5741 - 4720
wave 4 4720 and ongoing

(This is preferred view)

To summarize, if C-3-4, upmove should end soon. If C-4, then the market can go up to 5300-5400.

3. The RBI has hiked interest rates 25 basis points. This will leave less cash in hands of people as also kill demand. Inflation is also raging. The Petrol price hike of 3 bucks adds to the misery. Growth is slowing down. Stock Markets moving up looks to be difficult in all this.

4. Banks and autos will be the most affected along with real estate stocks. These sectors should be on the avoid list for the time being.

5. The problems of Europe are still not solved. All these are temporary fixes. Time is being bought.

6. Money should be locked in gilt funds. The NCDs have come and gone. Buying should be done around 4600-4800 band.

7. The rupee has depreciated to 48. After the rate hike, some pullback to 47.20 is seen. A weak rupee further diminishes the returns of FIIs.

To summarize, fresh downsides when 4900 breaks, 5020-5040 is another support area. On upside 5130 -5180-5200 are strong resistances beyond which comes 5350-5400.

For those interested in stock picking in the downturn, I am enclosing the link of Lakshmi,

I am enclosing the link of Lakshmi for those who are interested in bottom fishing of stocks.

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