The markets gained 4.6 pc this week, to stage an amazing recovery. Let us try and examine if the recovery is sustainable. The next week should be a volatile week as is it a truncated week with expiry also down the corner.
Fundamentals:
1. Gold crashed below the 1400 USD ad Brent crude is trading below the 100 USD. These are 2 key fundamental factors which should help the rally if this continues. India's main problem are the high level of crude oil and gold imports. Lower prices of these 2 commodities should help keep the Current Account Deficit low.
2. The inflation came in lower and a rate cut is expected in the RBI policy on May 3rd. This is what is keeping the Banking stocks on a high.
3. A large number of bills are lined up in Parliament on Monday and a lot depends on how the opposition allows the Parliament to function.
4. The Results have been good for TCS, HCL Tech and some of the private sector banks. There have been no major unpleasant surprises so far barring Infosys. This should sustain the markets.
Technicals:
1.The Nifty fell from 6112 to 5477. Now there are several probabilities at play here. 1 is that this was the first leg of the down move and what we are witnessing now is the corrective up move to the entire fall. The fall took about 10 weeks. The current rally is corrective up move to the fall with targets of 5720, 5795 and 5870. Beyond 5985, we can treat this as a fresh leg up.
2. If the scenario mentioned in 1 is correct, then from the levels above we should see a fall of 400 - 600 points to form the final bottom.
3. The up move which has commenced from 5477 can have a retracement till 5673, 5636 and 5598.Below 5540 we can say a fresh down move has commenced.
4. Long term Trend line support is 5250 below which we will enter a bear market. The entire fall from 6112, trend line resistance is 5840 beyond which we can say a new rally has commenced.
Strategy:
Buy on Dips towards 5670 with a strict stop loss of 5600 and 5540.
Fundamentals:
1. Gold crashed below the 1400 USD ad Brent crude is trading below the 100 USD. These are 2 key fundamental factors which should help the rally if this continues. India's main problem are the high level of crude oil and gold imports. Lower prices of these 2 commodities should help keep the Current Account Deficit low.
2. The inflation came in lower and a rate cut is expected in the RBI policy on May 3rd. This is what is keeping the Banking stocks on a high.
3. A large number of bills are lined up in Parliament on Monday and a lot depends on how the opposition allows the Parliament to function.
4. The Results have been good for TCS, HCL Tech and some of the private sector banks. There have been no major unpleasant surprises so far barring Infosys. This should sustain the markets.
Technicals:
1.The Nifty fell from 6112 to 5477. Now there are several probabilities at play here. 1 is that this was the first leg of the down move and what we are witnessing now is the corrective up move to the entire fall. The fall took about 10 weeks. The current rally is corrective up move to the fall with targets of 5720, 5795 and 5870. Beyond 5985, we can treat this as a fresh leg up.
2. If the scenario mentioned in 1 is correct, then from the levels above we should see a fall of 400 - 600 points to form the final bottom.
3. The up move which has commenced from 5477 can have a retracement till 5673, 5636 and 5598.Below 5540 we can say a fresh down move has commenced.
4. Long term Trend line support is 5250 below which we will enter a bear market. The entire fall from 6112, trend line resistance is 5840 beyond which we can say a new rally has commenced.
Strategy:
Buy on Dips towards 5670 with a strict stop loss of 5600 and 5540.
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