Last April, I had predicted correction in Indian Equity
markets and Sensex corrected around 25% from its all time High (Sensex - 30000
to 22500). As explained in my last year’s blog, corrections are painful at the
time but a very healthy part of whole mechanism. Now it’s time to BUY once
again for long term. In my opinion market will create a base around 23500-25000
in a month or two. So start buying good stocks to achieve your long term goals
and dreams.
Fundamental View
Lower Crude Oil:
Global economies are still under pressure. Europe, Japan is
in recession. Though US have started increasing interest rates after 6 years
but the pace of rate hike is still low. China economy is also slowing down.
Because of global slowdown Crude oil hit 12 years low. Technically Crude oil
will not go above $60 for next 2-3 years at least. Overall crude oil fall is
helpful for India as we import almost 80% crude from abroad. We are going to
save lots of currency reserves because of lower crude rates.
Above average
Monsoon:
Last two year’s monsoon was below its long term average. IMD
is expecting normal rains this year which will improve rural economy. The
Seventh pay commission will also help in increasing demand from rural sector.
Lower Interest Rates:
If it rains normal then overall food inflation will be under
control and RBI will have some more room to cut interest rates.
Majority in Rajyasabha
: Since last two years, NDA government faced lot of problems in Rajyasabha.
Currently Congress has majority in rajyasabha but in next two years strength of
NDA and UPA will become almost the same. In that case with the help of other
regional parties NDA can clear major bills in both the houses.
Indian GDP:
India got independence in the 1947 but it took 60 years to
become 1 Trillion $ economy. In 2007 Indian economy surpassed 1 trillion $
mark. To become 2 trillion $ economy India took just 7 years. Overall Indian
economy is in sweet spot; if everything goes right we will start hitting 8-9%
GDP growth. Now India will become 3 trillion $ economy in next 4 years and 4
trillion by 2024.
Technical View
Short Term View:
On Daily Chart Sensex is forming Inverted Head &
Shoulder Pattern. Sensex should make a short term Top around 26000-26300. We
may see some profit booking around this level. Sensex will create second
shoulder of a pattern in this profit booking. It will make a base around
23500-24500 in next few days. One should start accumulating good Stocks on this
correction. This will be the last correction.
Long Term View:
Sensex is still maintaining its long term support line.
Support for this year is around 22000-22500, we will not see major sell off
unless Sensex gives close below its support on yearly chart. Now the chances
are very remote that Sensex will make a new Low. From 1988-1992 Sensex became
11 times, so we saw 11 years sideways correction after that Rally. Same thing
happened 2003-2007, in 5 years Sensex became 7 times. We saw a sideways
correction of 7 years from 2007 to 2014. Now Sensex has made a good base for
next Rally. India, the fastest growing country in the world has become favourite
destination for FII.
On the basis of Historical data, I am expecting sensex to hit 1, 00,000
(One Lac) by 2022. Some people may think this is impossible but I am just
following the charts. Please don’t miss this mother of all bull markets. Happy Investing!!!!
