The markets have had a wonderful run up in the past few weeks. This has been mainly due to a confluence of 2 factors. Government making positive reform announcements and abundance of liquidity thanks to the measures announced by the US Fed. Let us look at how we can profit from these 2 factors.
1. As we saw in last week's study, if we have a very positive September, then the Octobers are usually flat or with a limited upside. For this expiry, I see the top at 5800-5850 and a base at 5350-5400. We have tested the upper side and now it is time to test lower side of the range.
2. The last up move has been from 5216 to 5815 which is almost 600 points. A retracement to this can lead us to 5728 (already done), 5674, 5586, 5516, 5445, 5357 and 5336. Below 5336, this bull market would be over. Since, we are in a strong up trend I do not expect the markets to fall beyond 5516-5586.
3. We are in the last frenzied up move of this rally which started from December 20th 2011. We had 3 legs from Dec'11. First was 4532 - 5629, second was 5629-4770 and 3rd is ongoing from 4770-5815. 1st leg consumed about 2 months, second consumed about 5.5 months. The 3rd leg has been ongoing for about 2 months now. I expect it to go on for 3.5 months. (Time for Up move = Time for Down move)
4. Fundamentally, the rupee has strengthened to Rs 51.8, thus cutting down on the import bill and also reducing the fiscal deficit.
5. The FII inflows continue unabated. The next 1.5 months will be a great opportunity for the traders to trade in and out of the markets. It also is a time for long term investors who can buy, book part profits, reduce their cost of acquisition and wait it out enjoying the dividends.
6. The US elections in November further strengthen the case for markets remaining bouyant. Obama was routed in the debate but came up with a good jobs number. Hpw accurate or true are the numbers is a matter of speculation. This type of newsflow will add fuel to the fire of keeping the markets up.
7. The Government will try to push in the disinvestment while the markets are buoyant. For this very reason, expect positive newsflow from the Government till the model code of conduct kicks in for the polls in Himachal Pradesh and Gujarat. BJP retaining these 2 states will state the stage for the markets to correct.
To sum up, the positives for the market are the liquidity, reforms announcement from the Governments.
The negatives are Spain crisis looming large, the domestic and US election results. The negatives are still further down the road and it is time to enjoy the good times while they last.
Lakshmi and myself have come up with a revamped fresh set of stock picks with which long term investors can benefit. Our last 2 set of picks have returned 47 pc in 1 year and 52 pc in 9 months respectively. For those interested, they can contact Lakshmi.
1. As we saw in last week's study, if we have a very positive September, then the Octobers are usually flat or with a limited upside. For this expiry, I see the top at 5800-5850 and a base at 5350-5400. We have tested the upper side and now it is time to test lower side of the range.
2. The last up move has been from 5216 to 5815 which is almost 600 points. A retracement to this can lead us to 5728 (already done), 5674, 5586, 5516, 5445, 5357 and 5336. Below 5336, this bull market would be over. Since, we are in a strong up trend I do not expect the markets to fall beyond 5516-5586.
3. We are in the last frenzied up move of this rally which started from December 20th 2011. We had 3 legs from Dec'11. First was 4532 - 5629, second was 5629-4770 and 3rd is ongoing from 4770-5815. 1st leg consumed about 2 months, second consumed about 5.5 months. The 3rd leg has been ongoing for about 2 months now. I expect it to go on for 3.5 months. (Time for Up move = Time for Down move)
4. Fundamentally, the rupee has strengthened to Rs 51.8, thus cutting down on the import bill and also reducing the fiscal deficit.
5. The FII inflows continue unabated. The next 1.5 months will be a great opportunity for the traders to trade in and out of the markets. It also is a time for long term investors who can buy, book part profits, reduce their cost of acquisition and wait it out enjoying the dividends.
6. The US elections in November further strengthen the case for markets remaining bouyant. Obama was routed in the debate but came up with a good jobs number. Hpw accurate or true are the numbers is a matter of speculation. This type of newsflow will add fuel to the fire of keeping the markets up.
7. The Government will try to push in the disinvestment while the markets are buoyant. For this very reason, expect positive newsflow from the Government till the model code of conduct kicks in for the polls in Himachal Pradesh and Gujarat. BJP retaining these 2 states will state the stage for the markets to correct.
To sum up, the positives for the market are the liquidity, reforms announcement from the Governments.
The negatives are Spain crisis looming large, the domestic and US election results. The negatives are still further down the road and it is time to enjoy the good times while they last.
Lakshmi and myself have come up with a revamped fresh set of stock picks with which long term investors can benefit. Our last 2 set of picks have returned 47 pc in 1 year and 52 pc in 9 months respectively. For those interested, they can contact Lakshmi.
Thanks for updating precisely for 11 oct trade.
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