Sunday, December 15, 2013

Sell on News comes true

There is an old adage in the markets, Buy on Rumours and Sell on News. The markets displayed this by hitting an immediate high on the news of BJP victory and then promptly retreating back to close the week 1.5 pc down. Let us see what can happen next?

1. The FIIs have continued to buy every single trading day in December. The DIIs selling is lessening. As long as this FII buying continues, the markets will not tank.

2. This week, all eyes will be on the Central Banks as we have the FOMC meeting and the RBI meeting. I expect some kind of Repo Rates hike in the RBI meeting. The FOMC is unlikely to make any statement which is dramatic as this would be the last meeting Ben Bernanke would be chairing. Typically, he would leave the tough announcements for the next chair Janet Yellen to make in January.

3. The markets gained 9.8 pc in October and have lost 2 pc in November and 0.1 pc so far in 2 weeks of December. This points out to some kind of correction rather than a top being formed.

4. Historically, the markets either correct in the Jan-March quarter or heavily correct in May. The rally will continue unless some really bad ews comes on US Fed tapering.

5. The support levels for the markets come at 6245, 6193, 6141, 6076 and 6061. Oly below 6061, oce can say the correction will extend much further down.

6. The tax free bonds have been drawing a good response and it would be a good idea to lock in some of the money in those while the rates are still high.

The markets usually never crash in December and it is time to enjoy the winter chill and watch the markets meander their way up.

2 comments:

  1. Hello Nishitji

    On the right side the trade has to be updated as sell generated @ 6244 , presently its showing the previous trade.

    Regards
    JK Singh

    ReplyDelete