Sunday, December 11, 2011

Action Packed Week Ahead

The Next week brings in a lot of news on the domestic front. This could be the last week of real big moves before everyone gets into the holiday mood. Lets try and take a look at the action ahead.

1. Next week, we have the monthly IIP numbers, monthly inflation figures and to end the week we have the RBI policy. If we have poor IIP numbers and tame inflation figures, the RBI may pause and even in fact cut the CRR or SLR rate. Expect markets to rally if any cuts happen.

2. The European summit has come. The outcome is not as great was expected and I expect markets to react mildly positive on Monday morning and put the event behind it.

3. Technically, if 5400-4640 was wave 1 then we are in wave 2. Now here comes the tricky part.
Wave 2 A = 5100- 4640 = 460 points
Wave 2 B = 5100 - 4841 = 359 points
Wave 2 C = ?
We have corrected around 56 % of the up move. If indeed, C is pending, then we have targets of 5125 and 5300 ahead.

The invalidation point for this would be 4720.

4. December has the year end bonuses coming up and hence usually there are not many huge falls in December. Markets do have a history of peaking out in January. Let us see what happens this year.

5. The PPF limit has been enhanced to 1 lakh. One can put in the extra 30000 rupees and get a higher interest rate of 8.6 % instead of 8 %. Also, Infrastructure bonds of IDFC and L&T are in the market giving an attractive interest rate of 9 % along with tax savings of about Rs 6000.

6. The government has been paralyzed with the FDI in Retail put on hold and the Anna Hazare agitation looming ahead. Ana agitation has the potential to defeat the UPA in the next elections whenever they are held. Manmohan Singh will not last this full term till 2014. The Congress will make a change to have a fighting chance in the next elections whenever they are held. This also caps the upside to the markets.

Its time to wait and watch with 4720 and 5050 as crucial breakout points. 1 could go log with 4841 as a stop loss.

For those interested in individual stock picks, we have Lakshmi's Cherry Picks.


  1. Hi Nishit
    Agree with you that Pm will not last
    Believe congress is grooming prince in waiting
    They might just want the pm to go

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  3. Hi Nishit..

    have been reading your analysis for some months now.. great going always.. any changes in the wave counts after today s downmove..



  4. Saurabh,

    No change yet in my wave counts. Once 4700 goes on closing basis we will see.

  5. Nishit, with your last week analysis, Nifty should not go below 4700 and should bounce.. Hope it maintains its history..