Is this a new bull market or just a bounce back??

On 24^th March 2020 Prime minister of India announced the first locked down in the country. On the same day Nifty made a short term bottom around 7511. Stock market is a derivative product of the economy. When economy is booming, stock market gives abnormal profits and vice versa. Then why stock markets are going up in the locked down phase?? Ideally it should go down…

That’s because of liquidity pumped in by central banks in the economy. All central banks in the world have reduced interest rates sharply and purchased bonds from open markets. RBI announced moratorium till august 2020 so that borrowers will not have to worry about their EMIs. Now all banks can book the interest income in their books though they have not received EMIs. Since it is a moratorium period no new NPAs.   

Is this rally sustainable?? No, it’s impossible. Then when will this bubble burst?? It may be a week or a month or a quarter or two. We have already reached almost 60% of fiscal deficit in the first quarter of financial year. Unless Government opens the economy we may not achieve budgeted tax collections. Right now RBI has increased overdraft limits of state governments still many state governments are not in a position to pay salaries of employees. In private sector and MSME we have already seen so many job cuts. Situation is very bad on the ground. We locked down our economy when there are just 500 odd covid-19 cases and after 3.5 months we still reached to more than 8 lakh cases.

We may see so many NPAs in next 6 to 12 months. All leveraged businesses are in big trouble. So avoid buying leveraged companies. Bear market always gives you a chance to buy good stocks at cheap valuations.  

 

On technical front, Nifty is taking support of the trend line shown in the chart. Near term support of this trend line comes around 10500. If Nifty closes below 10500 on weekly chart, please exit all your long positions and wait for more correction.

To conclude, this is just a bounced back. So use this opportunity to exit your long trades. I repeat, you will get a chance to enter again at much lower levels. Happy Trading!! Stay Healthy and wealthy!!

Perfect time to enter equity through Mid-cap stocks!!!!

I had recommended to book profits when loksabha elections (May-2019) results came out. I had mentioned 12000 is upper side for Nifty and support will come around 11000. As I expected, after election results Nifty made a High of 12104 and then came down to 10700 levels. Though Nifty started it’s sell off after elections results but Midcap and small cap stocks started its correction from February 2018 (Introduction of Capital gain tax).

Since last 2 years Midcap and Small cap indices have corrected more than 25%. Normally corrections in Indian stock markets are of 13 to 21 months, so most probably correction is over. On technical front, BSE Midcap index has given breakout of falling trend line since January 2018. Now it has started sustaining above that resistance line. In last 2 months Midcap index has outperformed Nifty and SENSEX. Normally Midcap and Small Cap indices start out performing in the Bull Run. So I recommend to increase exposure in Mid and Small cap Stocks.

Selecting Mid and Small cap stocks is difficult task. Ideally one should invest through Midcap mutual funds rather than directly investing in stocks. 

Following are good Midcap funds to invest.

·         Axis Midcap Fund

·         DSP Midcap Fund

·         Kotak Emerging Equity Fund

·         L&T Midcap Fund

·         HDFC Midcap Opportunities Fund

On fundamental front, data is still not that positive. But RBI and Govt have taken steps to boost the economy. It will start giving results in next 2-3 quarters.  This year Kharip crop got damaged due to extended monsoon but Rabi crop is very well due water availability. I am hoping that rural demand will increase in next 2-3 months after harvesting of Rabi crop. Right now external factors are more damaging sentiments. Market has corrected this month due to corona virus in China. I think this is blessing in disguise. China has become manufacturing hub for entire world. Now India has a chance to become second supplier to world. I hope more foreign companies will start manufacturing units in India.

To conclude, one should start investing in Midcap and Small cap stocks through Mutual fund route for next 3-4 years. (Low interest rates, low inflation and adequate liquidity)I don’t think we will get such opportunity every now and then. So don’t miss this opportunity of minting money.

Happy Investing!!! 

Golden Opportunity to Invest in Gold

Gold made a high of  $1900 in 2011 and then started coming down. Gold made a low of $1050 in the year 2015. We had predicted that in 2016 that Gold should create a base around that level and start going up again. In that blog we had predicted Gold will touch 31000 and next target would be 55000 ( $3000).

Please check link
http://dhaneshbhagwat.blogspot.com/2016/01/gold-bull-run-will-start-soon-all.html

Now Gold has given Buy in all the currencies i.e. USD,Euro, GBP,JPY, Swiss Frank & Yuan. Since last 5-6 years Gold has given negative returns only. It starts performing when nobody expects.  This is peculiar  characteristic of Gold.

Don't miss this Gold Bull run. You can take benefit of this Gold bull run in following ways.

1. Buy Physical Gold
2. Buy Sovereign Gold Bonds ( Where you will 2.5% interest also)
3. Buy Gold ETF
4. Mutual funds ( DSP BR World Gold Fund & Kotak World Gold Fund)
5. Stocks : Following stocks can outperform the market when Gold is in Bull run.

             MCX India, Titan, Manappuram Finance, Muthoot Finance 

To Conclude, this is the best chance to mining Gold so don't miss the opportunity.

Time to book profits and preserve the capital....

Most of the people hate stock market because of its volatility and uncertainty. Now the stock market is entering into that phase. There are so many events lined up , global as well as local. One of the most important event " Loksabha election result" will come in next few days. Because of that market can be very volatile. If you are on right side of the market then you will earn huge profits or vice versa. To be very frank election results impact will be very short term in nature, may be a quarter or two.

Ultimately market follows fundamentals. Stock market is function of corporate profits, if earnings are not catching up we will not see capital appreciation either. Analysts are expecting earnings growth since last 3-4 years but we have not seen much improvement in earnings. Market has gone up just because of liquidity. Since last 4 years NIFTY EPS is just moving in the range of 390-410. Any negative news can take market down heavily. It can be Local or Global. It can be Election results or US-China trade war or Brexit or anything else. Always remember fear is always greater than greed. So stock market falls are always faster than rallies. If we preserve our capital in these falls then only we can enjoy the up move of the market.

Right now market has discounted that NDA will form the govt. If actual results deviate from this then volatility will increase. So one should book partial profits and exit 50% stock portfolio before election results. If NDA forms the govt and Nifty goes above 11800-12000 levels then book full profits and wait for correction. If NDA wont come to power, one should book profits and wait for more correction.

On Technical front, momentum indicators are giving negative diversions on Daily, Weekly and Monthly charts. Major Support for NIFTY is around 11000-11100.Major resistance will come around 11800-12000. 

To conclude, any rally must be used to book profits and wait for correction.The correction can be price-wise or time-wise. In short  Long term bull run in Indian economy is still intact but we can't ignore short term correction. Happy Investing!!!!

USD/INR View: Short USD/INR Future at 66.80 for target of 63 and 59

Since last 5 years US Dollar was appreciating against Indian Rupee. It made a high of 69.20 in February 2016. But now the trend will change soon. If USDINR breaks 66.15 on closing basis, it will give confirmation of down trend. Second level confirmation will come below 66.

On Daily chart, USDINR has already given sell below 66.72. It has created Island Reversal pattern. Now 200 days simple moving average placed around 67.35 which will act as a resistance. Now support will be in the range of 66-66.15. Below that support we may see a sell- off in the US dollar.

USDINR has broken major support line on monthly chart in March and made a low of 66. After making a low of 66.15, it retraced 61.8% and made a lower high of 68.25 (Support line has become Resistance line). If USDINR gives close below 66.83 on monthly chart, it will be engulfing bear candle which is also bearish pattern.

Normally there is 30 paise difference in USD spot and one month future. That 30 paise difference is basically interest rate differential between two countries. Now Spot is around 66.50 and October future is around 66.80. Let us assume spot will be as it is for entire October month. So if we sell one lot of future at 66.80, it will come down to 66.50 on expiry. So by selling one lot future we will earn Rs.300 per lot (0.30 * 1000) on investment of 1500.

To conclude, one should sell USDINR October future at CMP (66.80) with stop loss above 67.50 for targets of 63 and 59. 

Sensex may Hit 100000 ( One Lac) by 2022

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!!!!

Gold Bull Run will start soon; all investors please fasten your seat belts for next Gold rally…

Since December 2013 Gold was in correction mode. It came down from 35000 to 25000 in last 3 years. As per my expectation it made a base around 25000. Now it will start rallying again. 

http://www.dhaneshbhagwat.blogspot.in/2013/04/long-term-trend-is-still-bullish-in-gold.html

Gold will always outperform when Global markets are in financial trouble. Currently all world economies are facing big financial problems. All major central banks have pumped liquidity in to the economies by lowering interest rates and through Quantitative easing. Still economies are not performing that well. So countries have started depreciating their currencies to support exports. 

Technically also Gold has made bottom near 24500-25000 levels. Now it will be very difficult for Gold to break that level easily. Momentum indicators are also giving Buy signal on Daily, Weekly and Monthly charts.

To conclude, one should Buy Gold Future at CMP-26750 with Stop Loss Below 25500 for target of 28500, 31000 in next few months. Gold will touch 54000 by 2020.

Those who want to take position in spot market, they can buy Sovereign Gold Bonds issued by RBI which will give 2.75% interest over and above normal capital gains. 

Traders can book profits below 8269 and long term investors must accumulate good stocks on correction...

Since last one and half year Nifty has given almost 78% return. (5118 to 9119). So I am expecting a correction in Nifty, if it breaks 8269. Stock market correction, although painful at the time, are actually a very healthy part of whole mechanism. In last Bull run (2003-07) also, we have seen such corrections. In 2004 & 2006 Nifty had corrected almost 30%. In 2008 we saw a major correction of 60%. But after 2010 we have not seen a major correction. As I have shown in below monthly chart, correction is on the cards. Nifty is making Popgun Pattern on monthly chart and Head and Shoulder pattern on Daily chart.
So be cautious...
                                                                          Nifty Daily

On Daily chart Nifty is making Head and Shoulder pattern. If Nifty breaks 8269, it will confirm the down trend. RSI is also giving negative divergence. So minimum target of this pattern is 7860. It can go down to 7420 also.

                                                                     Monthly Chart

On Monthly chart Nifty is making Pop gun pattern. Popgun pattern is also a trend reversal pattern. And RSI is also in overbought territory. Long term trend line support is also near 7080.

To Conclude, Short term traders should book profits below 8269 and long term investors must use this correction to accumulate good stocks. Traders can go short below 8269 for target of 7860-7420-7080 with a stop above 8850. Happy Trading !!!!

Time to enter Equity market for Long Term Investors!!!!

Since last 5 years I was advising my clients to park their funds in debt instruments. Now it’s time to change the strategy. After Narendra Modiji’s spectacular performance in Lokasabha elections, Nifty made all time high 7563. In last one month Nifty has appreciated by almost 25%.I think Nifty has made it’s short term High.  I am expecting one last correction in the market. It can be pricewise or timewise.  So Long term investors must start to accumulate good stocks or mutual funds.

Now 7080 is very crucial level for Nifty ( Sensex-23730). If Nifty breaks that level then it can come down to 6800-6400-6000.

So that’s the time to enter equity market once again. Long term investors must use this fall to accumulate good stocks. It is very difficult to predict top and bottom, so one should start buying systematically.

These are some diversified funds who has given good returns in SIP.

		SIP Period in years
Scheme Name	1	3	5	10	15
Reliance Growth Fund- Growth	67.84	21.64	12.85	16.13	25.69
HDFC Top 200- Growth	69.54	24.20	15.73	18.22	23.68
UTI Dividend Yield- Growth	46.42	16.20	11.67	N.A.	N.A.
Franklin India Bluechip- Growth	39.45	17.08	12.31	14.98	21.02
DSp Blackrock Top 100- Growth	46.68	18.34	12.50	15.87	N.A.

Following Sectors looking week:

IT, Pharma & Healthcare, Real Estate, Consumer Durable

Following Sectors looking Strong:

Capital Goods, Banking, Metals, Sugar and Power

To Conclude, Short term traders should short Nifty below 7080 for target of 6800-6400-6000 with a stop loss of 7570. Long term investors must use this fall for accumulation. This is last chance to enter equity market. Happy Trading!!!!

Diwali Picks

Its Diwali yet again! This year has been a roller coaster ride with very high volatility across asset classes. Discipline and focus will help us ride the volatility. Last year, as we had predicted, nifty made a high 6200 and consequently a low of 5100.

For a person who had invested in the nifty in 2008 has generated no return at all, even most mutual funds are under water since most mid cap and small cap stocks are closer to their yearly lows than highs, going forward also we expect the nifty to consolidate with elections looming and economy still to pick up. Investors who have been able to invest in specific stocks with strict discipline are able to generate above average returns. Hence, this year we are going to be more stock specific with no particular view on the nifty.

Therefore, we should invest 50 percent of our portfolio in low risk tax free bonds and the remaining 50 percent in high risk stocks and commodities.

Our view on gold remains the same; at least 10 percent of your portfolio should be invested in gold as insurance against weak government policies and rising dollar.

The interest rate scenario is not very clear with RBI still raising rates due to high inflation but we could be closer to a top in rates, hence some money should be invested in long term bonds.

Have a Happy & Prosperous Diwali !!!

Long term trend is still Bullish in Gold!!!

Since last three days Gold has fallen almost by Rs.4000 and I got more than 20-25 calls from clients. Everybody was asking,” is this right time to buy gold??” So in this blog I am going to give my views on Gold.


India is largest importer of Gold in the World. Though we are largest importer, we are still price taker. Our Gold price is dependent on 2 factors.

1. Gold in Dollar terms     2. Dollar/ Rupee rate

Gold in Dollar terms

Normally Gold follows 20 years time cycle. The last Bull Run has started from year 2000. In 1980 Gold was around $875; in 2000 it made a low of $250. In 2008 it made a High of $1034 and corrected to $680 in 2009(30% from High). From $680 it started going up once again and made a high of $1920 in 2012. Now in this correction, Gold can go to $1250-$1300 once again. Long term investor should start investing around $1300. Normally the last leg is extended leg in commodity market. So Gold can go up to $3000 by 2020.

Dollar/ Rupee rate

As India is an importer of Gold, Dollar and Gold are positively correlated. Gold price in India increases with Dollar appreciation and vice versa. In 2000 Dollar was around 43 against Rupee; it has appreciated to 57 in 2012 by almost 35%. The Support from Dollar will continue for next 2-3 years. Currently $ is quoting at 54.20. In my opinion 53 is a major support level for Dollar, it will not break this level easily. On the upper side, if it breaks 55 levels then it will go up to 59 at least. As I said earlier also, last leg in Commodity and Currency are extended leg. So it can take Dollar to 62-64 levels also. In short, Dollar is going to support Gold prices in India, so keep your eyes on Dollar as well.

Gold in India

In 1925 Gold was around Rs.18.75 per 10 grams. In 2011, it became 26400 so Gold has given around 8.8% compounded annual growth rate (CAGR) for last 86 years in India. With the same return, we can expect Gold should be at Rs.40000 by 2016 and 55000 by 2020.

Yesterday Gold made a low of 25500; it has corrected almost 22% by its all time high of 32500. Normally 25% to 30% correction is considered to be healthy. Now the minor support for Gold is around Rs.25000 and if it breaks that it can go down to Rs22000 to Rs.23000 also. In my opinion one should start Systematic Investment Plan (SIP) around 25000 for next one year.

To Conclude, Gold should make a base around Rs.23000-Rs.25000 in next few months. Hence, long term investors can start accumulating Gold for the target of Rs.40000 by 2016 & Rs.55000 by 2020. So those who have missed the train earlier can enter Gold once again.
Happy Investing!!!

 

Exit, Exit and Exit from Equity!!!!

As I mentioned in my previous blog, Nifty reached 5950. Now it can go up to 6200-6250 also but investor must use this rally to book profits & park their fund in long term debt instruments. From this monetary policy RBI may start cutting interest rates; so those who will hold long term debt instruments like Tax free Bonds or NCDs will get capital appreciation on their debt instruments. In my opinion RBI may cut Repo rate by 200 basis points in a year or two. So debt investors will get at least 15-20% appreciation over and above interest rate.


Now 5830 level is major support for Nifty. If Nifty breaks this level we must exit equity. Second level confirmation will come below 5555. As I said in my previous blog one big sell off is still pending in the market, so better we exit at this point. Now market will become very volatile. I think one should not carry any long position in futures.

Following sectors looking weak:


Capital Goods, Consumer Durables, FMCG, IT, Metals, Power & Real Estates

Following sectors outperform the market:

Banking, Oil & Gas, Healthcare & Auto

To conclude, one should short Nifty below 5830 for target of 5555-5400-5200, stop loss above 6300. Those who don’t want to take short position in market they can buy listed tax free bonds or NCDs. Happy Trading!!!!

Short term trend is Bullish…

As I mentioned in my previous blog, 5400 was a crucial resistance for Nifty. Nifty broke that resistance and made a High of 5630 but couldn’t succeed to hold that level. It came down to 5135 once again. Now 5200 to 5400 is the range for Nifty and either side breakout will decide the new range for Nifty.


I think bias has shifted to buy side for short term & we may see a triangle breakout which will take nifty to 5900-5950 level. But that does not mean the major trend has changed, market will come down once again. It will not make a new high.

These stocks may outperform in short term.

In this leg Mid Cap & Small cap firms will outperform the large cap stocks. So I will suggest invest in mid cap stocks of strong sectors

Sectors Looking Strong on Charts:


Auto, Banking, Pharma n Healthcare & FMCG


Sectors looking weak on charts:


Oil & Gas, Metals, Real Estate, Power & IT


To conclude, one can buy Nifty above 5390 for target 5940 with a stop loss below 5135. This is pure short term view, biased is still negative so investors can still hold their funds in debt instrument. One large sell off is still pending in market. Happy Trading!!!!

Is Market Bottomed Out????

When everybody in the market expects market to come down, market always reacts opposite. The same happened this time. Everybody was bearish on market and giving down targets. After breaking a low of 4632, Nifty made a new low of 4538. All market participants were expecting Nifty to come down to 4300-4000 level but Nifty reacted differently. Nifty gave a good bounce back in January and came back again to 5149 level. Is market bottomed out????


I will wait for confirmation. Still there are no signs of trend reversal in Nifty. Neither I found any trend reversal pattern nor Nifty has made Higher High and higher low (previous high 5402 is still intact). So I will wait and watch.

Let us assume Nifty has bottomed out then also it will have to come to 4850-4900 before making new High. If Nifty takes support at this level and gives bounce back and makes a new High, then only we will mark this as trend reversal. Second level of confirmation will come once Nifty breaks 5400 level.

Now let’s look at the chart; whenever RSI is near 70, Nifty has changed the trend. It has started coming down from that level. Since last one year whenever Nifty is coming down volumes are high and low on bounce back. In this bounce back also volumes are low.

Following Sectors looking weak on Charts:

IT, Metals, Power, Real estate, Oil & Gas

We may see profit booking in following sectors:

Consumer Durables, Capital Goods, Mid Cap and Small cap

Following sectors will Out-perform the market:

FMCG , Auto, Banking & Health Care

To Conclude, Nifty has not bottomed out yet. We will wait for confirmation. Confirmation will come only if Nifty makes higher low around 4850-4900 and then makes new High. If not, then we are still in down trend and down trend will resume once again below 4780.


WAIT AND WATCH FOR CONFIRMATION. Happy trading!!!!!!!




Sell off has started once again

After breaking major resistance of 5175 (17300), Nifty went up to 5400 levels. That was a typical Bull Trap and as I mentioned in my earlier blog, that was the last chance to exit equity market. Since August 2011 Dollar has appreciated against Indian rupee by almost 18% and hence foreign investors had to exit from Indian equity markets. Once Nifty breaks 4667 (Sensex-15652) we will get confirmation for next round of sell off.


Since the sensex has started, whenever it has broken previous years’ low, it has corrected at least 15% from that low. Previous year’s low for Nifty is 4667(Sensex-15652). Once that low is broken we can expect at least 15% correction till 3960(Sensex-13300). So every bounce back is a shorting opportunity. Now 4940 is a major resistance, one can go short around that level with stop loss above 5080.

Following Sectors looking weak on Charts:


Capital Goods, Metals, Power, Real estate, Oil & Gas, Midcap and Small Cap

We may see profit booking in following sectors:

Consumer Durables, IT, Banking & Health Care

Following sectors will Out-perform the market:

FMCG & Auto

To conclude, every bounce back is selling opportunity. One can go short in Nifty around 4900-4940 with keeping stop loss above 5080 for the target of 4680, 4400, 4200 & finally 3800. PLEASE DON’T BUY ANY STOCK IN HURRY. Happy Trading!!!!!!!

Last chance to Exit from Equity market

I hope those who read my earlier blog must have booked the profits and parked their funds in Debt instruments where capital is safe. As I mentioned, Nifty came down by almost 1000 points and made a low of 5720 (Sensex – 15765). Nifty confirmed the down trend once it broke the major support of 5175 (17300). Now that support (5175) has become major resistance. Nifty tried to break the same twice but couldn’t succeed.


Today S&P CNX DEFTY (Nifty in terms of Dollar) has broken its previous low. Because of that FII sold the shares with volumes. Still we have not seen panic in the market but once Nifty breaks 4720; we may see a huge sell off in the market.

Till today FMCG sector has not given Sell but tomorrow we may see selloff in that sector too. If FMCG sector also becomes bearish that confirms down trade has started.
Sectors looking weak on charts:

Capital Goods, Metals, Oil & Gas, Power

Sectors may outperform the market:

IT, Pharma & FMCG

To conclude,  this is the last chance to exit from equity market, we may see a huge sell off and Nifty can go down to 4400, 4200 and then 3750. Happy Trading!!!!!!

Time to book profits from Equity market

After the rate hike from RBI, market has started going down once again. As I said in my earlier blog, it’s a time to book profits from Equity markets and park your funds in debt instruments where capital is safe. This week Sensex has broken a major support of 18975 (Corresponding levels in Nifty – 5700), now the first support will come around 17800 (5350).

If you have missed the train you will get a chance to ride the trend once again. Next week if sensex comes around 18800 (5600) then one can go short with a Stop loss above 19300(5750). As I mentioned in my previous blog , this C wave of A-B-C correction. A wave was 21200 to 7700, B wave was 7700 to 21108 and C wave has started now which may take sensex to 12500-13000.

As mentioned in the chart “e” wave has started and this wave can be a very destructive one. This wave can be 161.8% to 261.8% of “a” i.e. 16000 / 14200 or 100% of “c” i.e. 16300.

Following sectors looking weak

Real Estate, Telecom, Capital Goods, Power

We may see profit booking in following sectors

Metals , IT, Banking ( If Tata Steel goes below 575, it can go down to 500 in 10-15 days)

Following sectors may outperform broader market

Healthcare, FMCG, Auto

To conclude, book profits from equity market and park fund in debt instruments. One can go short in Nifty around 5600 with a Stop loss of 5750 for the target of 5200-4900. Happy Trading!!!!



Time to book profits in Smallcap and midcap stocks

Since Feb 2009, Midcap and Smallcap stocks has been appreciated by almost 240% and 300% respectively. But both the indices could not made a new high, both the indices recovered almost 80% of entire fall ( from Jan 2008 to Feb 2009).

If you are holding any smallcap or midcap stocks then please exit them if it goes below 10 days low.

If BSE Smallcap index closes below 8992 then it may test 6000-7000 levels once again.

If BSE midcap index closes below 7215 then it may test 5600-700 levels once again.

Its a 34 th Month from the all time high and 21st month from recent low (March 2009), so december month can be trend reversal. So be cautious in the market and keep tight stop loss orders.

Following sectors looking weak on charts:

Capital Goods, Power, PSU, Real Estate.

We may see profit booking in following sectors:

Banking, FMCG,Auto, Consumer Durables, Metals, Oil & Gas.

Following sectors may outperform the broader market:

Pharma ( Healthcare), IT.

18950 for Sensex and 5690 for Nifty are crucial levels. If it goes below mentioned level on closing basis then that confirms the down trend. Happy Trading!!!!!!

Sell off in Nifty

Nifty has broken a major support of 5180 and sustained below that level, so as I mentioned earlier we must exit our long positions. Nifty broke its previous High (5344) and made a new high of 5398 but came down sharply from that level. We consider this as a false breakout as volumes were not much on breakout. But this is not the case in last week’s sell off. Nifty came down with good volumes and open interest was also increasing. Now any bounce back should be considered for exiting long positions.

Next week I am expecting nifty should take a support around 4930 and will give a bounce back from that level. Major resistance will come around 5130 and then around 5200. If nifty comes around 5200 one can go short with keeping stop loss above 5350.



Since last few months Nifty is making higher highs and higher lows but the momentum indicators are giving negative diversions which suggest this is just a bounce back of major sell off ( Sell off from 6300 to 2500). We will get the confirmation of major trend reversal only if Nifty makes lower low i.e. Nifty goes below 4667. If Nifty goes below 4667 then we may see a huge sell off in Nifty in next month or two. In that case Nifty may go down to 3700-3800 level which is the Gap yet to be filled on the chart.




To conclude, any bounce back must be used to exit long positions and go short around 5200 level with stop loss above 5350. Happy Trading!!!!!!!!!!!

Nifty Buy or Sell?????

In my previous blog I had given the targets for nifty for short term which achieved very fast. After that Nifty came up but it has started losing momentum. Nifty broke the recent high but volumes were very low, the same thing happened with Sensex. Now the question is that whether we should consider that as a breakout or not??? In my opinion breakout without volumes is very risky to trade. So let’s wait for Nifty to break its recent High (5344) to accumulate position once again.

Now the crucial support will come around 5245 and then 5180. If Nifty goes below 5180 that will confirm the break out was false breakout. But if Nifty sustains above 5344 then the next resistance will come around 5450-5500.

To conclude, put a stop loss below 5180 in Nifty and hold the long positions. If Nifty breaks 5180 then start exiting long positions. Happy trading!!!!!!!!!!!