Sunday, March 6, 2016

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.

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