The budget has come and gone. The markets are 0.3 % down for the week.Let us see where the markets are headed.
1. The markets have risen from December end on the back of liquidity flows from the FIIs and nothing else. The UP results, railway budget, RBI policy all have come and gone, but the flows continue every day. Till the flows continue, the markets will continue to rise.
2. This has become a buy on dips market. Every dip is being bought into. The markets have no events to trigger any major moves till the results around 10th April. The year end liquidity considerations may not induce a sharp rally very soon.
3. As per Elliot, we had wave A ending at 5630. B wave is the corrective wave for this up move. B-a finished at 5171. B-b was from 5171 to 5499. Now, we come at interesting cross roads. 1 view is B-b ended at 5499, leading B-c to end the correction anywhere between from 5215 to 5040.
Another view is B-b sub wave a ended at 5499, B-b, sub-wave b is ongoing to end anywhere from 5305- 5236 followed by another up move till 5500-5537 to complete B-b. This will be followed by another down leg till 4950-5040 in the form of B-c.
4. Net-net around 5200-5250, we come to our buying levels.
5. The Facebook IPO is slated around May 18th 2012. Usually bull runs end with large IPOs. We have seen this with Coal India and Rpower in India.
6. The budget was nothing great. It gave some relief to tax payers but took it back in the form of Excise Duty and Service Tax.
7. The budget was a market neutral event in the sense nothing very positive and nothing very negative.
On the whole, we are in a range for some time to come. 5500-5100 is the broader range. Buy around 5200 levels.
For those interested in individual stock picks, I have picked along with Lakshmi which are good for long term trades as well small trades in them.
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