Sunday, August 23, 2015

Global Cues drive the markets lower

The Indian markets on the back of global cues fell down by 2.6 pc for the week. However all is not doom and gloom and we may get very good opportunities to buy. Let us look at the Technicals for the week.

1. The markets have begun a correction from 9119 on March 5th. If we see we are in an almost 6 month period of consolidation/correction. When this period ends we will see a sharp up move.

2. Looking at Elliot,

If wave A was from 9119 to 7940 = 1179 points.(Roughly about 3 months)
    wave B from 7940 to 8654 = 714 points (Roughly about 1.5 months)

Wave C will have targets of approx 7475, 7144 and should end around October end.

Now there is an alternate view in place.

This is we are still in B wave up and there could be 1 more peak around 8600 - 8800 before the fall to 7500 levels. In that case, the current fall should halt around 8100-8200 levels.

Whichever way one looks at, there are 2 things which are certain. We should be revisiting 7500-780 area once and we would also be revisiting 8800 at least once

Which makes this a buy on dips market If you enter around say 8000 levels, then even markets fall further you can average it out.

An investor buying with a perspective of next 1 year is sure to make profits.

3. The FIIs sold big time and that is one of the key reasons for the markets fall.

4. IOC FPO will suck out another 10000 crores from the markets on Monday.

All these factors make it a buy on dips market. The main gains for shares bought in the next 2-3 months will be in 2016.

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