Sunday, October 14, 2012

Mild Correction to Continue

The markets were down 1.2 pc for the week and the market was range-bound for most part of the week. Let us try and find out what the market direction will be for the current week and in the medium term.

1. The markets had a target of 5674, 5586, 5515 and 5450. Of these 5674 was achieved before the markets bounced back from the support area.
2. The liquidity flow is keeping the markets at higher level. A consolidation and a mild correction is essential before the markets start the next leg up.
3. The bye-elections results over the weekend where Congress lost in their stronghold in Uttarakhand and the President's son just scraping through in West Bengal means that the tide may be further turning against the Congress.
4. The Government may try to push through more reforms before opting for elections at the earliest in September 2013. This would again depend on next year's budget and the monsoons in the next year.
5. The stocks with stronger fundamentals are rallying. The Q2 results have started trickling and Infosys disappointed again. Infosys need not be an indication of the IT Stock results because in the past couple of quarters we have observed that other IT companies come up with better results.
6.The broader trend of the market remains up and targets of 5944 - 6200 remain on the horizon by Diwali.

I will post the Broader Elliot picture over the course of the week. As Octobers are usually quiet periods especially when we have had strong Septembers, the markets have played true to formand have declined just 0.5 pc in the first half of the month.
Come Navratri and Lakshmi Ramachandran and myself are launching our Top 10 picks, after the success of Cherry Picks and Midcap magic which netted 47 pc in 1 year and 52 pc in 9 months respectively. For those interested, they can get in touch with Lakshmi.

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