Sunday, September 15, 2013

News driven Week

The truncated week started with a big bang. The markets ended up with a net gain of 3 pc for the entire week. The coming week will be decisive for the markets in the short term.

1. The FOMC decision on tapering comes on Wednesday (our markets will get impacted on Thursday) and we have our RBI policy on Friday the 20th.

2. Both are news based events and it depends on what the FED says. My guess is some amount of tapering will be announced.

3. 6000 is a key resistance beyond which we may scale new highs.

4. Any rally has to correct. The current rally can retrace till 5621, 5525 and 5428 and still continue higher. A higher bottom needs to be in place.

5. The Thursday after next is Options expiry. Many times, just about 7-8 sessions before expiry the markets go in the opposite direction that they have been during the month. This gives the big time writers a escape route. So we may have a small dip coming.

6. We made most of the gains on Tuesday and spent rest of the week around that range. This indicates that the rally needs a breather. A correction would be considered healthy.

In a nutshell, trade cautiously as up side seems limited before some sort of correction. Of course, it could well happen that the markets rally higher till 6000-6100 before correcting. Any sustained closing above 6000 would indicate that new highs may be in the offing.

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