Sunday, January 5, 2014

Markets wait for Triggers

This week the markets went down by 1.6 pc on the basis of rumors of the PM resigning and also due to the Technical factors. The inactivity in the markets will soon come to an end with the Fund Managers returning from vacations and also with the Results season kicking in.

Lets look at the market from Technical Factors first:

1.  The markets have fallen from 6415, the high made on the day after the election results. The markets had corrected to 6130. The markets then retraced 80 pc of the fall to reach 6358. Now, technically this fit in well. The next leg down can go up to 6073 to achieve equality with the previous fall or can go down till 5896.

2. Now, the previous fall in November was from 6342 to 5972 a net fall of 372 points. In this case, if we go below 6045, then this will become a larger fall then the previous fall and will point to a deeper a correction.

3. 6050 becomes a solid support for now and any fall till that level will only be a correction.

4. A rough labelling of the waves from 5118 can be as follows:

1. 5118 - 6142 (1024 points)
2. 6142 - 5700 (442 points)
3. 5700 - 6415 (715 points)
4. 6415 and on going

Now, a logical end to this wave would be at 6141, 6057, 5973 or 5843 which matches with our figures in point 1.

Fundamentals:

1. Fundamentally, there is not much change. The Q3 Results will drive the markets sentiments. RBI policy in mid Jan will tell us if there are going to be any further rate hikes.

2. The CAD has almost reached 94 % of the target in the first 8 months. The Finance Minister is still confident of meeting the target. Let us see how he manages to do that.

Overall, I feel after a dip, there will be 1 final euphoric rally which will take us to new all time highs.


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