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.
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.
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