Eventually lower level await the Markets

December is turning out to be a listless period for the markets. We are stuck in a trading zone which seems to be getting narrower by the day.

1. 7500-7700 levels seem to be a matter of time. 1 probable wave count is

A 7916-8251
B 8251-8056
C 8056 - 8274

Now the fall from 8274 is very slow, so it could be

A 7916-8251
B a 8251-8056
B b 8056-8074
B c 8274 should end above 8043

This is said to be irregular correction.

C wave can go up till 8337- 8400 and then a final down move of 7500-7700.

Or we can go straight from here to 7500 7700. Either ways we seem to be headed down now or in the New Year.

The strategy remains the same accumulate on declines. The Bollinger Bands are narrowing with range between 8269 and 8069
.
There are no more triggers left for the markets for this year.

The Down move resumes

The markets almost tested the 50 pc retracement of the fall from the top made after Trump election and then the down move seems to have continued.

1. A dip below 8000 will confirm that the downtrend has resumed.

2. A key feature of this down trend has been the non stop selling by the FIIs. The DIIs have stepped n and bought a large quantity else we would have been at 7500.

3. The first half of December will have the RBI policy meet coming up, the US Fed meet and all the action is expected in the first 15 days. I expect the first 15-20 days to be negative and then the markets will pick up.

4. Elliot wise a last leg of fall of 700 to 1000 points is pending. I expect 7500-7600 to hold.

5. The RBI will have to go in for a 25 basis points cut. They are now behind the yield curve that is the rates have fallen below the rates.

6. The auto sector seems to be resilient and  the sales of 4 wheelers have not dropped dramatically as expected.

Every dip is a buying opportunity and one should take advantage of this fall.

Corrective Up Move

This week Nifty made a bottom at 7916 and that bottom held for 4 trading sessions after that. The market will look for cues from the RBI meet.

1. The markets took support at the Bollinger Band. The market is correcting the down move from 8598 to 7916 and one can expect an up move till 8185, 8257 or 8337.



2. The RBI has come out with a  notification saying 100 pc CRR for incremental money kept with it from Sept 16. What this means is right now in the wave of demonetization, the banks were keeping money with the Reserve Bank and getting 6.25 % interest, taking the money from the public at 4 %/ So, the banks were earning 2.25 % as arbitrage money. Now, they would be forced to lend aggressively bring down the lending rates.

3. The RBI policy meet on the 7th of December and the US Fed meeting are the next 2 triggers for the Markets.



4. I expect the correction to be over in December, the demonetization mess also seems to be clearing up.

Every decline is a buying opportunity. 7650-7800 seems to be a good base for the markets.

FIIs continue to Sell

The markets continue their negative bias as the FIIs continued to sell. Thsi week there may be a short technical bounce due to expiry.

1. The markets have a strong support at 8000 which has been tested once. Such supports give way at the third or fourth test of it.

2. The big event of December would be Fed rate hike in US and that may coincide with the bottom formation process.

3. The rise from 6825 to 8967 took 6.5 months so it would be reasonable to expect the correction to consume 3 to 4 month. The top was om 7th of September.

4. In December 2011, there was an important bottom formation in December.

5. The Demonetization ruckus will die in about a months time and the Banking sector would be a major winner.

6. 82580-8350 are the immediate resistances and the supports are at 7950-8000.

7600-8000 will be a major buy zone for the markets for a final burst towards 10000-11000 Nifty which will define the first term of Modi in office.

Short term Pain Long Term Gain

Whichever I look at the charts, short term there may be pain but long term we are in a uptrend.

1. The markets may correct upto 8230, 8125, 8000 or worst case 7896.

2. On the upside 8600 is a firm wall, only on breach of that we can think of new highs.

3. The demonetization will have the banks leading the next way of up move.

4. Donald Trump has already started changing his rhetoric, reality will be different.

Right now, the markets are unstable but in the month of November we may see a major low in place.

The FII outflow happened in August 2013, after that we rallied from 5118 to 9119, same way we should rally after the dust has settled.

Correction should end soon

The markets corrected this week too and if it is only a bull market correction, it should end with a Hillary Clinton win. If Trump win it means we are in an extended bear market.

There are 2 charts which suggest a bounce may be coming.

1. Trendline chart

2. RSI chart is very near its support levels.

Also EW, 1st fall was 8968 to 8556 = 412 points this fall 8807 to 8400 equal to 407 points,

If Trump wins we may hit 8200.

Happy Diwali

The correction in the markets seems to be ending. Diwali is here and the markets look to bounce.

1. The Tatas fight has dampened the sentiment. That was 1 of the main reasons markets corrected.
2. The bottom should be in place or 100 200 points away but a rally of 1000 points on the Nifty is due.
3. Clinton seems to be winning and that will have a positive effect on the markets, a Trump  win would lead to a disarray as markets do not like move away from status quo.
4. Diwali sales seem to be good and that is a sign of economic turnaround.
5. Nifty bounced from the support zone of 8550. I think the next move would be post the US elections.Enjoy a safe and happy Diwali.

Correction should end soon

The markets corrected as expected this week and this fall is showing all signs of a slow correctons, it should end soon.

1. Corrections are typically slow and markets float down. They last for 6 to 8 weeks and do not have any real momentum in them.

2. Correction comes in a 3 legged form . So we had leg A 8968 to 8555, leg B 8555 to 8808 and leg C. Leg C can be upto 8395, 8852 or  8140.

There is a possibility that this correction is over.

Elliot states that final targets can be as high as 10500 so next week may be the last buying opportunity.

Next week, I will try and look at sectors which can be stars going ahead.

We may dip 100 200 points more but I do not see markets falling more. Hillary Clinton victory as seems likely will send the markets soaring. A Trump win however unlikely it may seem will lead to markets crashing.

Markets correct...buying opportunity presents

The markets have completed their short up move in the midst of correction and the downward move has resumed.

1. The C wave down has commenced after retracing the down move from 8968 to 8555 by 61 pc. The down move was 413 points. For equailty, this down can go to 8395.

2. The RBI rate cuts came and went, they had no impact on the markets. This shows the markets are consolidating for the moment.

3. In about a week's time, the pre Diwali rally may start, taking us to new highs.

4. Hillary Clinton winning the elections would be another positive for the markets..Donald Trump seems to be losing it.

5. The US Fed hike will happen in December in all probability.

I expect the next 10 days to give us the best buying opportunity in the next 1 year.

Buying Opportunity is here

Markets corrected last week finally. The technicals were indicating a correction.  The event in the form of surgical strikes arrived.

1. The lower levels mentioned have arrived and we bounced from 8558, we could bounce to 8750 before ending the correction at 8450.

2. The crisis seems to have blown over and the markets gave a good dip in the last 2 days.

3. The RBI policy on 4th October will be keenly watched, I expect at max a 25 basis point cut. Before the end of this year one can expect a 50 basis points cut.

4. Globally, OPEC has agreed to cut oil supplies, which if it happens can lead to a short spike in oil prices.

5. IF we look at this up move,
Wave 1 was 6825 to 7992 approx 1167 points
 Wave  2 was 7992 to 7715 approx 277 points
 Wave 3 was 7715 to 8970 approx 1255 points
 Wave 4 8970 to 8558 approx 412 points and on going

I expect the correction to end around 8450 and then final burst to 9500 to 10500.
It is a buy on dips market.

Range bound markets provide buying opportunity

The markets failed to break the previous high and are back in the 8640-8850 trading range. There are several scenarios which can happen from here and let us take a look at each of them.
1. Corrections are always 3 legged, 2 legs down sandwiching 1 leg up aka ABC correction. As per this we are in tricky B wave which may be over or may get over at anytime. First leg down was 280 points till 8688 from 8968.Second leg up till 8893 a retracement of 73 pc and a final leg down till 8613,8537 or 8440.
 2. The second alternative is that the markets go straight up. A break of 8968 will lead to test of fresh new highs.
3. We continue this range bound exercise for few days more. A break of 8640 can lead to 8440 and a break of 8850 will lead to 9050. Note the significance of plus minus 200 points, 8440 is a significant support and 9119 is a significant resistance.
4. The results season will start in 2 weeks and the results month is usually a range bound month.
The most likely scenario is some correction and then fresh highs by Diwali. This will fulfill the rangebound criteria as the same levels will be traversed in both up and down directions.

Buying on dips and booking profits partially is the best choice in the current scenario. Global cues will be benign for sometime to come.

Decisive week ahead

The coming week has the US Fed meeting coming up and if there is no hike in rates, expect a swift upmove.

1. The market continues to be stuck in a range and a close above 8848 is first sign that the range will be broken on upside.
2. 8650 forms the lower end of the boundary. This week, the fed meet will be on Wed and we will know by the time markets open for trade on Thursday.
3. The rally will be swift and we will see new highs even if a correction happens. The reason for the rally is liquidity. Till liquidity flows in, rally will continue.
4. Break of 8650 will lead to 8450 8500 range and break of 8850 will lead to re test of previous highs.

I would book profits in mid caps and invest the profits in large caps. Always, the stratwgy of reducing cost price works.

Every correction is a buying opportunity

The markets corrected after hitting the resistance zone. Every correction is a buying opportunity.
 1. The Technicals are at play out here. After hitting the expected resistance zone, the markets are correcting.
2. 8650 was a strong resistance and the whole 8540-8650-8720 will provide a very strong support.
3. The global cued have suddenly turned negative with prospects of rate hike in September by the US Fed.
4. Partial profit booking is a must in midcaps which have gone up from the Feb lows.
 5. We are in the 5th wave up from 6826. The first wave was 1200 points and we should go above the previous top of 9119.
It is a buy on dip market, with profit booking at appropriate times.

Heading into a Resistance Zone

The markets finally broke the shackles of the resistance of 8550-8650. The good news is that the congestion zone is broken, the bad news is that the next resistance zone is near by.
1. 11 out of last 14 September s have been kind to the markets, this year could be the same.
2. The breakout is significant as it comes after several weeks of consolidation.
3. Last few weeks midcaps rallied and front line stocks were range bound now it may reverse.
4. One needs to lock in profits and non convertible debentures are safe instruments yielding 9 to 10 pc div yield.
5. Globally, Yellen may raise interest rates.5. In the last rally before peaking out at 9119, 8850 was a significant point and market may get resisted here.
6. Time to stick to quality stocks and avoid the telecom sector.
7. Auto stocks are rallying as the sector is seeing good traction.8. Gold bonds of RBI are 1 good investment option.These are times to be in the markets while at the same time one must lock out profits.

Decisive week Ahead

Markets have been stuck in the trading range of 8540 to 8728 for almost a month. The previous expiry is over and now I feel we should get clarity this week on breakout or breakdown.

1. There are no major triggers for the markets now. All the positives have been factored.

2.A break of 8540 should give us 8350 or a breakout should give us 8950. A correction is welcome before we test new highs. Also 8650/is 80 pc resistance of 9119 to 6875 correction, so the current time pass at these levels is expected. Once it breaks 8750 expect a super duper rally.

3. DHFL bonds are coming up again. It has yields up to 9.25 pc and are listed on the NSE offering easy liquidity. This is 1 good diversification.

4. The global triggers are missing for the moment but we are approaching the month of September which is for some reason a volatile month globally.

5. The strategy remains the same, buy on dip, stick to good quality names and average if the stick goes down, book part profits if it goes up. Reduce risk, one cannot eliminate risk but minimise risk.

Urijit Patel appointment signals all time highs coming soon

Modi government has signalled it's biggest intent of commitment to reforms by this appointment. What does it mean?
1. Government agreed with Governor Rajan policies and signal Continuity. Patel was Rajan right hand.
 2. No rate cuts, Patel is in Rajan mould.
3. Bond yields will rise in short term, 7.17 pc can goto 7.3 pc.
4.Markets may correct knee jerk if at all they do, but new highs coming mostly till Diwali.
5. Long time back I was saying 10500, we will get there eventually. 
6. 80 pc retracement of 9119 6825 is 8660, close above this on consistent basis implies new highs or testing of 9119.
.7. Sectors to watch out for are Banking, Pharma, defence, Infrastructure especially road building.This has been a Special, masterstroke, cut a popular Governor to size and yet retain the cream.


It feels good to restart blogging, my 1 month break is over. I am back.

Short Break from Blogging

It has been more than 6 years, I have been blogging almost non stop. It has been a very enriching journey.Now, time to take a short break of a month or so while I recharge.

Lull before the storm

With the absence of any major triggers, the front line indices are range bound where as the mid caps are racing ahead. This inertia may last for 1 week more as a lot of triggers are ready to move the markets ahead.

1. The Parliament will be in session from July 18th and it looks like the GST bill may pass through the Rajya Sabha. If that happens expect 8800-9119 on the indices.

2. The monsoons are normal so far and in a couple of weeks, there will be confirmation of normal rains and 1 more positive for the markets.

3. The FIIs continue to buy and that is a great support for the markets.

4. Every dip becomes a buy now and the markets may test 8000-8100 area once before the next up move.

5. The earning season is about to begin and typically such months are range bound for the markets.
 The GST bill will come up towards the end of July after the customary shadow boxing amongst the various parties.

6. Technically, the market looks set for new highs after some consolidation.

7. IPOs are hitting the markets and that is a sign of bull markets.

All the negatives seem to have been taken care of and the markets should make new highs before Diwali unless some unforeseen event happens.

BREXIT, REXIT what next?

Both the events which would have negative impact on the markets happened. First REXIT and then the BREXIT. BREXIT was unexpected and let us see how it pans out.

1. Typically, my experience in the markets states that if there is a sell off on a Friday it continues and peaks on a Monday. So, in all likelihood the fall will continue on Monday.

2. This is a very good buying opportunity for all those yet to buy and for those who have booked profits. We could be correcting the move from 7715 to 8295 or the entire move from 6825 to 8295.

3. If we are correcting from 7715 to 8295, the targets are 7940 (already achieved), 7860 and 7805. Below 7805 we are in for a deeper correction. So, 7805 one should ideally finish 50% of the buying to be done.

4. Now if we are correcting whole move from 6825 to 8295,  the targets are 7849, 7653, 7495,7337 and finally 7100.

5. The monsoon session will start sometime in the third week of July and GST seems to be likely to be passed by then. If that happens, then there will be another big rally in the making.

6. BREXIT impacts are still 2-3 years down the line. First the UK Government has to trigger clause 50, 2 years after which the divorce will be complete. PM Cameroon is talking about letting the next PM do that so that will not happen before October 2016 at the eariest. The exit will happen towards late 2018. In the meantime, UK will have to come up with trade agreements with other countries to replace the existing ones.

The Results month is typically a range bound month. So, expected limited immediate upsides, some correction and sideways movement. This is a very good buying opportunity.

REXIT is here. what about BREXIT?

Well, Governor Rajan shook up everybody on a somnolent Saturday by stating he will not be in office for a second term. The poster boy whom everyone wanted will not continue and this will have a sentimental effect on the markets.

1. Markets are driven by human sentiments and emotions. I expect a short term reaction from the markets before stabilizing. 1 major event is out of the way and kudos to Mr Rajan were not keeping the issue hanging in fire till September.

2. The next issue is the British referendum on whether to remain in the European Union on the 23rd June. If this happens, then UK may split with Scotland seeking its own independence.

3. If the BREXIT happens, then we may see the 7500-7800 band being tested and which will be a buying opportunity. Even the dip arising from Rajan exit will turn out to be a very good buying opportunity.

4. The FIIs were sellers 3 of the 5 days and their support is needed for the markets to move higher.

5. The Mahanagar Gas IPO is coming next week and it is a very good IPO to subscribe to.

6. Technically, the markets are pausing after a sharp up move and now would be a good time to add stocks.

7. The GST Bill seems to be almost sure to be passed. So, after the BREXIT event we have a potentially positive event lined up.

All in all, every dip which would be presented next week will be a very good buying opportunity.

Every Dip is a Buying Opportunity

The markets reacted from the strong resistance zone and have begun to correct. If the correction persists, it will be a very good buying opportunity. One would now find the mid caps rallying while the large caps will cool off a bit.

1. The FIIs have continued to be buyers for every day of June. DIIs are sellers and the support is there for the markets to avoid a drastic fall.

2. The poor IIP numbers may lead to the minor correction continuing in the early part of the next week.

3. Technically 8114 and then 7950 - 8000 are strong support zones. A cooling off is healthy and required for the markets.

4. The RBI policy as expected was a non event for the markets. Rates were kept unchanged and unless more rate cuts are transmitted to end users, this will continue.

5. The next event coming is the supposed exit of Britain from the EU, Brexit as it is called on the 23rd June. If that happens, the global markets will collapse.

6. Domestically, other than confirmation of the monsoons, there are not many triggers in the immediate future for the markets to react.

7. Technically, the markets have reacted from a resistance zone and are expected to retreat to a support zone before the next leg up.

One will now see action shifting from the front line stocks to the mid caps. The index will take a breather while the cash shares do well. Even for the correction from November 2015 to Feb 2016, the cash shares or the mid caps started correcting only in the month of Jan 2016.

Rains, Rains waiting for the Rains

All the positives are priced in the markets and we are in a resistance zone. Let us see what course the markets take next? Markets are poised interestingly.

1. The zone between 8250 and 8350 is a strong resistance zone. Any moves above this will open the flood gates for 8600-8700. I have reached several conclusions since the end of February bottom.

2. The bottom seems to be conclusively in place for now. There could be a correction to 7900-8000 levels but that should be a buying opportunity.

3. This markets is headed to fresh new highs in the next 12 months. A god monsoon itself should see it propelling towards fresh highs.

4. The RBI policy on Tuesday is a non event and may be a trigger for mild correction. I expect  status quo to be maintained.

5. The rains are supposed to hit Kerala in the next couple of days and the progress of the monsoons will be closely watched.

6. The Brexit, that is UK leaving the European Union and others are all in the distance towards 23rd June.

7. Politically, the GST seems to be closer to passage then any time before. 2 things have changed. The number of Congress MPs have reduced and second is Jayalalitha may join the Government. This will make a huge difference to the GST bill. Mamata Banerjee has already indicated support for the GST bill.

The markets have rallied and rallied strongly proving all naysayers wrong. The tone has changed from sell on rises to buy on dips. Let us now join the rise up, and make money.

I hope many subscribed to the Mahindra Finance NCDs. The issue closed in 2 days and was oversubscribed 4 times with option to keep all the money. I expect the allotment to be done in the next 2 days.

Technical Breakout in the Markets

The ferocious up move in the last 3 days broke through several technical barriers and one can reach several conclusions from the move. Let us try and explore each 1 of them.

1. The downward trend line joining all the tops from 9119 (The previous All time high in March 2015) has been convincingly broken on the up side. This means that the correction is over.

2. 7900-8000 was key resistance as well as previous top, that has been convincingly broken and now becomes a support level.

3. There will be retracements of the entire up move from 6825 to 81xx or higher. These would be buying opportunities. The retracements would approx be at 7850,7650, 7500 and worst case 7350. It is unlikely we would go below 7500.

4. On the up side the previous top of 8336 becomes a target. Also, trend lines give a resistance between 8300-8350.

5. The markets may correct the up move from 7715 to current levels before 1 more leg up.The targets for this correction could be 8000, 7950 or 7900.

6. From sell on rises, this has now become a buy on dips market.

7. The FIIs have bought for the last 3 days but still remain net sellers for the month of May.

8. The large caps have rallied. Now, they will take a breather and the mid caps will rally now.

9. The weekly Bollinger Bands indicate some cooling off for the markets.

The structure of the market has changed now. The correction is over and we have a bottom in place at 6825. We can never catch exact tops or bottoms and even if we get a chance t buy at 7500 or 7750 now, we should grab it with both hands.

Flat Markets so far in this Financial Year

I just happened to look at the market movement post 31st March and we are at the same level since then. Almost 2 months have gone by and no movement. This means a range breakout or breakdown is coming soon.

1. On March 31st 2016, the markets closed at 7738 and yesterday they closed at 7749. The high and low in this period is 7516 and 7992, a range of 476 points. So if the markets break 7992, then they may head to 8468 and if they break 7516, target is 7040. In the month of June I am sure we will come very close to either of these 2 levels.

2. The FIIs continued their selling and now are net sellers for the month of May. If this trend continues, then the markets will see further downsides.

3. Mahindra Financial is coming out with a NCD offering and coupon rate of 9 pc for 10 years seems very attractive to me. You can get 9 pc locked in for the next 10 years. This current low interest rate regime will continue for at least 2 years more.

4. The Election results were more or less on expected lines and hence the markets sort of ignored them What I have noticed is post results, invariably the markets trend to drift irrespective of the results.

5. The market behavior over the last few days has been indicating some form of correction. There are no new immediate triggers present.

It is time to keep fresh cash ready. AT every dip, one can start accumulating. The time to buy will be soon upon us.

Election Results to watch out for

The Markets are in a somnolent state oscillating in a thin band of 200 points on the Nifty. The monsoons in a couple of weeks or so will be 1 solid trigger. This week we have the election results of 4 Assembly States.

1. Usually, State Elections should not affect the markets but in 2006, the markets had a steep crash after these results. The BJP is a marginal player in most States, except Assam. This result is very crucial for the Congress Party. If they are able to show a strong showing and retain Assam and Kerala, then the markets may take a plunge.

2. The FIIs have been marginal buyers. They are not pumping in huge quantities either. This is 1 more reason why the market is not giving a breakout.

3. Technically, as is for the last several weeks, 7950 and 7750 remain key levels. We ended 13th April with 7850 and now we are at 7815. The markets have not gone anywhere in the last 4 weeks.

4. The Met Department is supposed to issue a second monsoon forecast today. I expect it to be positive.

5. The Parliament has closed and there will be no action till the Monsoon Session in June. No GST bill passed so far.

6. The markets are listless and waiting for a trigger to either rise or fall. I expect this scenario to continue, firstly at least till Thursday when the elections results are out and secondly the more major trigger, the progress of the Monsoons.

There are individual stocks which give buying opportunities and my advice is to pick them when you feel the price is right. Such stocks may not fall further when the markets fall.

7900-8000 becomes a firm ceiling for the market

The markets again had a negative week and the markets have not moved much in the past 3 weeks. The triggers for the Market movement are almost done with in the near future. Let us evaluate what can move the markets in the near future.

1. The progress f Monsoons in the first week of June and the UK referendum on whether to stay in the EU in late June are 2 big triggers and which could be positive for the markets.

2. The FIIS have sold nearly 750 crores in the first week of May and an equal quantity has been purchased by the DIIs. There seems to be a overall lack of interest.

3. Globally, there seem to be no major triggers on the anvil.

4. The major corporate results have come and gone. Infy, TCS, HDFC bank surprised on the positive side whereas Axis and ICICI Bank had negative surprises.

5. Technically, the next supports lie around 7450-7500 if the current range were to give way. Resistances remain at 7850, 7950-8000.

6. Sugar sector seems to be in a sweet spot with the production of sugar set to fall. There is no corresponding dip in the consumption.

7. Capital goods is another sector which will do well after years of recession.

There are currently few IPOs there in the market and there can be listing gains on the same. With the new SEBI norms that all Retail Applicants will be treated on par, that is if you apply for 1 lot or 10 ots, you will be allocated only 1 lot, it makes sense to apply for only 1 lot.

ICICI Bank Results show the Risks of NPAs

The week was flattish for the markets as the markets continue to stall around the 8000 levels. ICICI Bank declared its results after market hours on Friday and which were disappointing to say the least.

1. ICICI Bank increased provisioning for NPAs and this led to a decline of 76 % in its profits. The executives of the Bank will also forgo bonuses for the year. Steel, power and cement sectors could have more NPAs.

2. The ICICI Bank results underline the fact that the Indian economy is not out of the woods and the financial sector could face more stress.

3. Bank of Japan refused to extend Fresh Stimulus to the markets and that will lead to less hot money pumping up emerging markets like India.

4. The FIIs were net buyers of only about 3000 crores compared to 24000 crores in the month of March 2016.

5. It will take some very strong news to take the markets above 8000. The Parliament is in session only the next week and GST bill does not seem to be on the agenda.

6. Technically, 7950-8000 remain very strong resistances and supports are at 7400-7500 followed by 7250.

7. There are some very good IPOs in the market with Parag Foods coming in the first week of May.





8. The Election Results in May could provide some direction to the markets. The similarities are eerie. In May 2004, 2006, the markets corrected in May on the back of election results and there was no correction in the month of March like this year.

Good results from Infosys and Reliance

The full year result are off to a good start with two bell weathers announcing very good results. The market has now reached a very solid resistance zone and will need some very good piece of news for further rise.

1. The Results season has started off in full swing and the results are very good till now. Results season and Parliament in session means the market moves are in a very narrow band.

2. The FIIs continue to buy but their volume of buying has dramatically reduced. Till date in April they have bought 2000 crores worth of stock whereas they bought 26000 crores in entire March.

3. The Global cues are neutral at the moment. The next big triggers are still some time away. THe UK vote whether to stay in the EU is in June, election results for the assembly elections are still 1 month away and the progress of the monsoons still 45 days away.

4. The Parliament is in session the next week onward and expect the Opposition to block the proceedings over the dismissal of the Uttarakhand Government.

5. Technically 7950-8000 are strong resistances. Logically, the markets should correct to the 7250-7500 band before making attempts for further up moves.

All in all, a dull time for the markets. It is a good thing to book profits for those who bought stocks at lower levels.

Markets always give a chance to buy stocks.

Fixed Income Options in Falling Interest Rate Regime

Let us take a break from the normal markets this time and look at the various fixed income options available especially for the Senior Citizens. A friend of mine had this query and I realized this might be something many of us might be looking at.

1. Bank Fixed Deposits - The Rates have crashed and this becomes the most un viable option of all. The benefit of Bank Deposits is that easy liquidity is available.

2. NCDs - Many non convertible debentures are listed on the NSE and are can be bought through Open Markets. Some like L and T pay about 10.24 % twice a year. There are other NCDs also listed of less reputed players.

3. Tax Free Bonds - One should always apply for every issue and once we get proportionate allotment keep accumulating these tax free bonds. No Income Tax needs to be paid on these bonds' interest every year.

4. Debt Funds - A clear idea of good debt and income funds can be had on www.valueresearchonline.com. I can spot many funds which have consistently given returns of 8 to 10 pc per annum. Now, the catch with such funds is that one needs to hold them for 3 years to qualify as Long Term holdings. Also there is a Dividend Distribution Tax to pay. This the MF will pay on your behalf.

Now, if you go for the growth option and liquidate the gains, Short Term Capital Gain will be as per your income tax slab. This option is good for Senior Citizens who are not paying much income tax.

5. In case one is a Senior Citizen, then there is a Government of India Scheme with assured 8.6 % interest per year.

So these are the options available. The next 2 years are going to be very tough for fixed income folks and one must look at all possible options to squeeze out the last penny from our investments.

Sell on News Event materializes

The RBI Policy has come and gone. It announced a 25 basis point reduction and not the 50 basis points which the markets was expecting. April is a month of corporate results and I expect  the markets to be flat with a negative bias.

1. The entire rise from 6825 to 7777 can be corrected. The targets for this correction can be 7413, 7301, 7188 or 7050. This would be the dip which presents a very good buying opportunity.

2. The RBI will not cut rates further till it gets to see the progress of the Monsoon. The GST Bill also is not likely to get passed very soon.

3. The FIIs have become marginal net sellers for the month of April so far. Any up move is largely dependent on FII inflows.

4. Stock moves have become very sector specific. In the last 2 weeks, the Pharma stocks were heavily battered. Front line Pharma stocks are always a very good bet. The USFDA observations are always closed.

5. Globally, the markets do not have any positive clues.

6. The next 2 weeks are truncated weeks with 3 trading holidays on April 13, 14 and 19. This will lead to very subdued movement in the markets.

7. The Corporate earnings are expected to set the tone for the markets which will start coming in from the next month.

8. There are 2 ways at looking at this rally. 1 is that the correction ended at 6825 and this is a fresh impulse under way. Second is that this is just a corrective up move and 1 more leg down is pending to new lows.
Whichever way one looks at it, 7250-7400 seems to be on the cards and which would be a very good buying opportunity.

RBI Policy to dictate the next course of Action

The RBI policy is on April 5th and expectations are being built in of a 50 basis points cut. The rally so far from Budget day has been on expectations of a Rate Cut. The RBI policy could well turn out to be a Sell on News event.

1. The FII continue to buy. They bought about 24000 crores worth of shares in March and that is one of the key reasons the markets have rallied so far.

2. The Government commitment to meet the fiscal deficit target as well as the Rate in Small Saving Schemes has led  to expectations of a higher rate cut. Governor Rajan normally holds his cards close to his chest so one never knows.

3. April is the month of full year results of companies. Result months are typically flat to down months for the markets.

4. The Sell in Feb, buy in April saying which usually comes true states that same stocks are usually cheaper in April than they were in Feb. The same may not hold true this time as the markets were down in Feb and up in March. The adage can be modified to get the stocks cheaper than their peak prices in March.

5. For the last 5-6 years, April has been mildly negative to a flat closing month. Let us see what this month brings in.

6. Technically, we are heading into a resistance zone from 7800 to 8000. Supports remain at 7600, 7450 and 7250. The markets may go down towards 7200 but not below that.

7. The Pharma stocks have been beaten down on USFDA warnings and as such present a good buying opportunity.

It is time to be cautious, book a little profit and wait for dips to add more.

Year End NAV dressing will keep the market afloat

The Hope of a Rate Cut rally continues and the markets gained a further 1.5 % in the truncated week. The year NAV dressing time is here and the bonuses of the Fund Managers are dependent on the NAV values so expect the markets to remain afloat at least in the first half of the week.

1. The key ingredient of a rally is the FII inflow and till date in March the inflow has been 16500 crores. This has been the highest since March 2014 when it was 25000 crores. As long as the money is pouring the markets will rise.


2. The RBI policy on the 5th of April is a key trigger. A 25 basis rate cut has been factored in. It could also happen that it is a sell on news kind of event. The markets have run up almost a 1000 points and some kind of correction is due.

3. The Result season is in April and as we have noticed in the past the Results season usually the markets are flat to negative.

4. Technically speaking we have resistances coming in from the 200 EMA at 7778 and at 200 DMA at 7900. The layer between 200 EMA and 200 DMA becomes a critical zone. This zone is tested before a breakout or a breakdown.

5. The Global cues are quiet at the moment. So everything depends on the RBI Action in the first week of April.

This is a good time to book profits for stocks bought at a lower level and wait for a dip to buy again.

Nifty in Resistance Zone

The markets continued their upward march after the Budget to close up 1.3 pc. The FIIs have continued to support the markets in the month of March. I feel the post budget rally may be coming to an end and we should soon see a correction of about at least 400 points which should be a buying opportunity.

1. The FIIs have bought big in March almost 12000 crores worth of stocks. This is the highest in the last 2 years.

2. The Markets have retraced the last falling leg from 7600 to 6825 in faster time. This means it has made up the lossses from top to bottom in faster time. This is a bullish sign.

3. The markets may have made its bottom at 6825. What does this now mean for the markets now? It means now that every dip is a buying opportunity. The markets should generally correct about 50 % of the rise before continuing its up move. This is a thumb rule and need not be followed. If we go by this logic then, this means we can touch 7219 once again. 7240 is also a very crucial support for the markets.

4. For a change. I looked at the Technical Indicators like RSI and Stochastic. As the image shows they are at a point where the market usually makes some kind of a top.

5. There is no major news to take the markets up now. The next major trigger is the RBI policy on April 5th.

6. The coming week is a truncated week with the markets being closed on Thursday and Friday. This can lead  to profit booking in the markets.

7. Globally, also for the month of March all triggers seem to be over. There is a saying stocks are always cheaper in April. So, if we continue this rise for 2-3 sessions more and then there is a correction, then the saying will be correct this year also.

FII Buying Continues

The FIIs bought for all the trading sessions in March so far and the index sustained its post budget rise. Let us see what can influence the markets going forward.

1. Every correction in the markets has lasted 12-14 months so far. By correction, I mean the time taken to reach a low point from the top. In this case 9119 was the top. In all probability, 6825 might have been the bottom. It is always said that the markets visits a bottom once. In this case, 6869 and 6825 are very close by.

2. The first up move from 6825 has lasted about 800 + points and may be nearing completion. We may have a 300 400 points correction which would be a buying opportunity. The support zones comes to around 7240.

3. The Advance Tax numbers will be out next week and will be a good indicator on how the companies have fared.

4. The next major event in the Markets is the Annual Results but that is still some distance far off in April. The FOMC meet next week could be 1 trigger for the markets.

5. Technically, we are in the Resistance Zone of 7500-7600, break of which can lead us to 7900-8000 region.

6. This could well be the last opportunity to capitalize on the lower stock prices.

7. The expectations of RBI rate cut in the first week of April is what is keeping the markets up.

As of now, it looks like the bottom is made for the time being and every dip is a buying opportunity.

FIIs buy in Huge Quantities

Finally, after selling for the past few months, the FIIs have bought big in March and the markets have rebounded. Let us see if this rally has the legs to go higher.

1. The Budget was nothing great, the key take away from the budget was sticking to the fiscal deficit target. Many had expected that to infuse growth, the Government would do more spending and as a result of which relax the fiscal deficit target.

2. The FIIs have given a thumbs up to the budget and pumped in almost 6000 crores into the markets in the 4 trading sessions of March. The results were evident and the markets have risen correspondingly almost 10 pc from the intra day bottom of the Budget day.

3. The burning question is what next for the markets. The markets have risen up to the critical resistance levels of 7500-7600. From these levels, the markets can retrace this rise by say 300-400 points to 7100-7200 before continuing the up move.

4. The markets once they clear 7500-7600 will face the next set of resistances at 7900-8000 levels.

5. Only above 7751 we can say that the down move is complete and we are in a fresh up move.

6. So what do we do next? Buy when the markets cools down a bit to 7200-7300. From here the market can make 1 more low or continue higher up.

7. If the bottom is in place, then in the next 18 months, the market should make new highs in the 10500 region.

Most bear markets do not last more than 12 to 14 months. We are almost 1 year since we made a previous top of 9119 and the journey back up should recommence. By bear markets not lasting more than 14 months, I mean the time taken to make a bottom after hitting a top is generally not more than 14 months.

DownTrend Continues

Unless the Union Budget pulls off something which is groundbreaking, I can see the down trend continuing. The DIIs have started selling now and there seems to be no respite to the markets.

1. The latest casualty of the global downtrend is the valuations of the Startups and Flipkarts of the world taking a hit. Morgan Stanley has written down the valuation of Flipkart by 27 pc.

2. The DIIs too have started to sell big. This is a matter of concern. For the month of Feb, with just 1 trading day left  FII have sold 5700 crores and DII have sold 6800 crores.

3. Technically, Feb is supposed to be a flat month but this has been proved wrong this time. Unless there is a big rally on Monday, the market is down 7.1 pc for the month and 11.5 % for the year so far.

4. If the previous lows are broken then the next supports come in around 6450-6550.

5. 1 thing is clear, the time frame for getting return on Investment has got enlarged. 1 would have to wait at least 18 months for stocks bought in the current downtrend.

6. There seems to be no sign of the passage of the GST bill in the Parliament. 1 major trigger for the markets to rally is missing.

7. Unless the FII flow gets back to normal, this down turn will continue. Every rally will be sold off into.

8. I can see this Government losing focus of the issues at end getting side tracked. Unless Modi concentrates on reforms, I see it getting increasingly difficult he being re-elected again.

All in all it is a tough time all around. The Fixed Deposits are not earning more than 7.5 % rate of interest, Real Estate is sluggish and the stock markets are down.

No Pre-Budget Rally this year

Contrary to expectations, we did not have a pre budget rally this year. There are various reasons for it and the way the global cues are factored in, the market may not have a pre budget rally after all.

1. The FIIs continue to pull out money. They have pulled out about 6500 crores so far in Feb and are sellers almost everyday.

2. The Sovereign Wealth funds which had invested their Oil Earnings in India have now begun to pull their money out. That is 1 more reason why we see high FII sell figures.

3. The passage of the GST bill becomes very crucial for the Government this session. With the domestic politics getting ugly to say the least.

4. Technically, the market is stuck in the range between 6850 to 7400. The previous support of 7242 will become a very key factor for further up moves. Technically, we are in a sideways zone.

5. If we look at the big picture, I do not see this market going anywhere for the next few months. It will give very good buying opportunities.7500 and then 7600 remain very key resistances for the market.

6. The Investment Alternatives are very less in these conditions. Fixed Income Instruments are barely getting anyone more than 8 pc. Equities still remain the best asset class to invest. The only change is that the instant gain period is over.

7. The Rail Budget gets presented next week and that will present clues about the Union Budget. It is very clear unless there is something dramatic in the budget or the passage of the GST bill the markets will continue to totter for some more time.

The Silver lining is all major corrections have not lasted more than 12-14 months and we almost 1 year since we hit the top in March 2015 after the Union Budget.

Markets defy Average Fall for Feb

The markets tanked big time and the way individual stocks sold off, it looks like capitulation is happening. Let us see what could be the factors to influence the markets.

1. The Result season has come to an end. The PSU Banks finally acknowledged huge bad loans and that lead to the markets tanking further.

2. The FIIs are continuing to sell big time and till the time they stop their basket selling, the markets will not rise.

3. There is a fear factor in the Global Markets and hence Gold is rising. Only, once this fear factor wave passes over, the markets will start rising.

4. Technically, we are in the support zone of 6400-6800. If 6400 breaks then one can say entire bull market phase is over and we are in a for a prolonged recession.

5. The Passage of the GST bill and the Union Budget are only things which can make the markets rise from these levels.

6. 7400-7600 the previous highs now becomes a strong resistance zone and an area to which the markets could attempt before the budget.

7. The indicators have reached an oversold area and a Technical bounce is due. This bounce could be 400-500 points before we resume the downtrend.

From the way, the markets have fallen it is very clear, that we are in a for a prolonged bear market and it will take at least 1 year to 18 months before the market can make new highs. It is a time to be patient and stay invested in good quality stocks.

Those brave enough to buy now may well see the stocks they had bought doubling in next 2 or 3 years.

FIIs continue to Sell

The markets lost 1 pc for the week even though a late week recovery was made on the back of DII buying. The FIIs continued to sell and till they resume their buying no meaningful recovery can be seen.

1. The dates of the Union Budget were announced as 29th Feb and we may see some kind of pre budget rally brewing if the FIIs stop selling.

2. The IPO market is buzzing with the Team Lease IPO and the Quick Heal IPO opening on Monday. These are well run companies.

3. The GST bill is expected to pass in the coming session of Parliament. If the bill goes through then there would be a big rally else the correction continues.

4. There are no immediate triggers for the markets to rally or fall and hence the market is stuck in a range.

5. Technically, the markets are not giving any clear breakout or breakdown sign. Only above 7693, 7825 we can say we are headed to 8200. 7400 is a strong support zone. A break of 7400 can lead to fresh lows.

6. The crude oil prices have stabilized and so has the rupee.

7. February is not known for any violent moves and we may see range bound trading with a slightly positive bias unless there is major bad news globally.

It is time to be patient and accumulate good stocks.

How has February fared after a weak January?

This time I am taking a break from the usual weekly posts and trying to analyze statistically how the month of Feb has fared? Feb usually is the month of hope with the Union Budget coming up. Let us take a look.

1. In the last 15 years, Februray has been negative only 6 times which means generally February is a positive month.

2. When the month of January has been negative, February has been positive only once has been Jan, Feb both negative.

3. The maximum gain in the month of Feb has 6.2 pc and loss 5.7 pc. Taking an average swing of 5 pc we get a range from 7941 to 7184. This means book profits closer to 7950-8000 and start buying closer to 7200-7300.

4. The FIIs bought on the last day but still they ended up selling about 14356 crores for the month.

5. The 100 week moving average also comes to 7969. This means 7950-8000 becomes a very crucial resistance for the markets.

6. The entire down move could have ended at 7241 or 1 last leg is pending. This could be possible as corrections usually last for 13 months and should end sometime in April.

In any case, 7200 to 7600 is a very good buying range for long term and 8000-8200 is a range where profit can be booked to see if the markets rise further.

FIIs continue to Sell

The markets recovered almost 200 points from the bottom to close almost flat for the week and in the process also formed a Doji. Is a bottom in place? Let us look ahead and see what the markets have in store for us.

1. Technically, the markets have met all the criteria for a bottom to be in place. 7118 on the day the election results were declared that remains a key support area. This also means the euphoria over the Modi election is over now.

2. The fall may have ended or we may now retrace the fall from 8336 to 7241. If this is the case then the targets are 7659, 7789 and 7917. Only above 8117, we can contemplate that the correction is over. Time-wise the correction can go on till end of March. In which case a rise now and 1 more fall.

3. We have the famous 8 year cycle, in which every 8 years the market corrects big time. In 2008, we fell from 6353 to 2252.  If we take 5118 in August as the start of this rally, then the targets were 7591, 7118 and 6646. The 6350-6400 is a long term support area and breach of this would put an end to the Bull market.

4. The indices tell only part of the story. Reliance is almost at 52 week high and Nifty at 52 week low. Which means the other Nifty components, mainly the Banks have lost big time. If India has to do well, the Banks have to do well and the Private sector Banks represent a lot of value.

5. The FIIs continued to be net sellers and till this trend continues, there cannot be a big rally. They have sold 13500 crores in Jan with the DIIs buying 11500 crores. There are 4 trading days to go in Jan and if this trend continues it would be the largest monthly outflow since August and September.

6. Fundamentally, for India low crude oil prices is a very good thing even though our exports may take a hit. Repatriation of money from the Gulf will also stop. There are layoffs in the middle east. Petroleum products form 18 pc of our exports and lower crude prices means lower exports in terms of value.

7. Fundamentally also we are at cross roads, Modi has done a lot in the 20 months in office, but a lot more needs to be done like the GST bill.

I would say this is amongst the best time to add quality stocks provided one has the faith in the India Story as also the willingness not to get scared if we see much lower levels from here.

Stocks at Attractive Levels

The markets continued their downward momentum picking up from the first week to lose another 2.2 pc. There is an environment of doom and gloom everywhere. Let us look and see if the things are really as bad as they seem.

1. The Results season has kicked off and Infosys has shown that innovation still leads to out performance. TCS seems jaded and Infosys seems on an upswing. It is a cyclical story and the baton keeps swinging between the 2 giants.

2. FIIs have sold and sold big in 2 weeks of Jan 2016. Almost 7500 crores worth of shares. This is a huge figure and the DIIs have bought about 5300 crores. There are various bond issues sucking out money from the markets. The FIIs are selling not becuase they have given up on India but becuase they are under pressure to bring money home.

3. China slowing down has lead to commodity prices coming down and India is best poised to take advantage of this. The money one puts in now will definitely reap rewards 12 to 18 months down the line. If we take the worst case scenario of Jan 2008, then at that time in time of panic the stocks bounced back in March to give 20-30 pc returns before again falling down.

4. Every 2-3 years such scenarios come in the Market and that is the time when the stocks are to be tanked up. If everything is falling, then one cannot question why a particular stock is falling down. The Budget session and the passage f the GST Bill becomes very crucial at this point of time.

5. The Sovereign Gold Bond issue is another option for those who want the safety of Gold and earn 2.75 % interest per annum.

6. Technically, we are approaching the support zone of 7200-7400 and from where the markets can bounce up 400-500 points. Whether this is the last leg of the fall is not clear.

If A was 9119 - 7940 = 1179 points
B was 7940 - 8654 = 714 points

C should be  7475 already achieved or 7154. Technical Analysis is an art not an exact science so we may well be in the last leg of the fall.

The best approach is buy fundamentally strong stocks, be prepared for lower levels and be open to averaging. Folks should be willing to stay in the markets not get worried by everyday falls. The Best money is made in the scenario prevailing today.

China spooks the Markets

The markets lost 4.5 pc in the first week of January as fears over China slowing down led to world markets having a bad first week of January 2016. For long term investors, this is the best time to buy, if they believe in India.

1. The world markets were down and if the world markets are down, India follows suit. This is because FIIs have to pull out funds and they do basket selling. It is not as if there is a problem with India. They have pulled out 3300 crores in  the first week of Jan itself.

2. Crude oil prices are at 11 year lows which means the fiscal deficit will definitely be under control. The 7th Pay commission handouts will lead to rise in  the consumption story.

3. Gold has started inching up because of the fear factor but because of the long commodity cycles, gold will remain in a cyclical bear market for few years to come. Thanks to the rupee depreciating, Gold will continue to do well as an asset class.

4. The Results season will kick off in right earnest from the next week. Results month is usually a sideways to slightly negative month.

5. Large caps have seen a fall whereas mid caps are still flying high. The situation has to correct, and it is prudent to selectively book profits in mid caps which have given good returns so far.

6. 7500 is the next support for the market and 7200 after that. We hit a top of 9119 in the month of March and have completed 9 months of correction. 13 months of correction can follow so we may take out previous highs any time only after April 2016.

It is a time to buy and buy selectively. Buy quality names which you should be willing to buy even if the market goes down further.

Round Table for 2016

I am taking a break from the usual weekly format which I usually post in. My article had got selected for the Investing.com Round Table which was published about 2-3 days back.

I am giving the link here.

http://in.investing.com/analysis/2016-outlook-4065





My part is as below:


Nishit Vadhavkar 2016 Will Be The Year Of India
With low commodity prices globally, India will get the raw materials cheap for the Make In India Program. India, being a crude oil importer with almost 80 pc of crude imported, will have a lower fiscal deficit. Lower steel prices will further help in infrastructure development at optimal costs. Domestically, good governance with transparent auctions of Coal, Spectrum the roadblocks to doing business in India have been removed. India will have the highest GDP growth rate amongst key economies of the world, coupled with a falling interest rate regime, low inflation, aspirational middle class, we have a perfect recipe for markets to take off. Sectors I am most bullish on are Capital Goods, Private Banks, Defence and Power Sectors. Low commodity prices, good governance coupled with Managements with high Integrity in the sectors mentioned above will lead to winners in one's portfolio.

2016 is the year of hope, year where big money is to be made. A rare combination of events has lead India to be in the sweet spot it is in.

Copy paste the link if doesnt open to the Round Table views.

I would also take this opportunity to thank my mentors Taran Marwah and Subhankar Ghose for their guidance.

It is the time for new beginnings, to leave the old behind and have fun.