Thursday, October 22, 2015

The Stalemate continues

Markets continued to remain sideways in the last week and the 3 trading sessions this week. The result season is always flat and I believe the things will remain the same till Bihar results are out November 8th.

1. The Results season sees stock specific movement and that is what is happening currently. The markets are not going anywhere and are at a key resistance level.

2. The markets need a trigger and that trigger could be the Bihar election results. Win or lose, the markets may slide post the results. BJP winning is a bit of a long shot and even if that happens the euphoria may vanish soon. In March 2012, the UP elections triggered similar reactions where even though SP won, the markets corrected when it was clear that the Congress would not be able to play king maker.

3. The Technical Indicators are flashing several warning lights. Technical models are irrespective of fundamentals and as the days go by I am getting more and more convinced that we will visit 7200 first. Technically, first we have to clear 8350 then 8500-8600.

4. Globally, right now the story is China but then these stories keep coming back. I do not thing a rate hike will come in December this year. The Rate hike will get pushed to next year.

5. The FIIs have bought in large numbers in the past 10 days and that is what is supporting the markets. It just needs some trigger for the gun to be pulled.

6. It is a time to be very careful. The mid caps have gone up and same was seen last November. Fresh money should not be put in right now as the risk reward is most unfavorable right now. Buy above 8600 or wait for lower levels of 7200-7500.

The time frame also fits in for the traditional November to Feb rally to take place. Many years I have seen tops around the Diwali week, The current levels of the markets are most unfavorable for any long trade. Going short has its own pitfalls. We wait and we watch.

1 comment:

  1. Currently sugar stocks have moved 70-80% above their all time low prices. Was there anytning on charts which indicated that the cycle has reversed and that stocks like bajaj hindustan have bottomed out