Sunday, December 18, 2011

Markets Ahead

The Rate Hikes took a pause and the markets tanked in the last 2 hours to close the week -4.4 pc. Lets take a look at what lies ahead for the Indian markets.

1. The RBI as expected took a pause. There were wide spread rumors of a CRR cut. There is no basis for a CRR cut and these were just rumors spread by vested interests to take the markets down. The Gilt funds have a given an absolute return of about 4 pc in 1 month and this is an early indication of the benefits of gilt funds now that the Rate Hike cycle is coming to an end.

2. If we take a look at the Elliot waves. and C5 commencing from 5400.
C-5 -1 = 5400 - 4640 = 760 points
C-5-2 = 4640 - 5099 = 459 points which was almost equal to the golden ratio of 61.8 pc retracement.
If the second wave ended at 5099 then the targets for wave 3 are 4339, 4132 and 3869. The bare minimum target is 4339.

3. The key support areas of the retracement of the entire up move from 2250 - 6339 are 4777, 4295 and 3812. We have already seen how the area around 4777 (+/- 100 points) has given support multiple times. Now may be it is the time to test the support around 4300-4400 area.

4. The area around 4750-4800 now offers a stiff resistance and can be a shorting point.

5. We are testing the support line of the entire up move from Oct'08 and it should hold. There is a cluster of supports around the 4400-4500 area.

6. We are also heading into the holiday season and trading volumes will be thin. I expect expiry to be above the 4700 area.

7. Gold has corrected sharply and is soon heading into buy territory.

8. This is a good time to lock into high yielding fixed income and Gilt funds. The current high rates may not be available for some time to come. It is also the time to start building a portfolio of quality stocks. For those interested, we have Lakshmi's Cherry Picks.


  1. dear nishit..

    it would be great if u can give us an idea about the timeline for C-5-3 to finish..

    and an idea about the large cycle, so that we can manage our buying for the portfolio..

    thanks in anticipation..


  2. I am looking at a March-April 2012 time line at the earliest for the entire downmove to finish.

  3. Your view on Muthoot Finance NCD- which is offering NCDs @13% for 2 years and 13.43% for 5.5yrs