Sunday, March 20, 2016

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.

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