Apr 3, 2013

The possible Indian Stock Market Nifty Movement in Next 12 months

The State of the Markets as on today and Where are they heading?
Indian Stock Markets, Nifty, Sensex Future in Next 12 months:

We saw NIFTY touching 6111.80 on 29 Jan 2013, which was almost 2 year high for Indian Stock Markets.
As we had explained how the markets can rise in coming months in our last article of September 2012, the market almost behaved in the anticipated fashion.
(Please read the article at below link giving explanation with charts. Also find how we predicted a US Stock Markets present bull run)

We will, in this article discuss what could be the course of the Indian Stock Markets in the coming months. We will also give a short commentary on global markets which comprises of US, Europe and Asian markets other than India.

The markets behaved haywire in January and gave hopes of a new year long and more bull run by making almost more than 2 year highs.
However, came the Budget in February and the markets began to shiver even ahead of the Budget. The RBI policy was only an addition in the strength that the bears were gathering up for a sell off.
We had already seen support levels breaching during the previous sell off from 5800 to 5500 during November. All in all the wise knew that the markets were not worth trusting then and neither now.
The banking, Auto, Pharma and FMCG are not any more making new highs. In fact among this 4 Ace, Auto has started to shiver giving correction we have not seen in years, backed by strong negative fundamental newsflow. The banking got battered badly after the RBI policy announcement. However, the wise already knew that banking will get a hit once the fact that the interest rate cycle has peaked is digested among professional trader and investor class. Also, the new competition that is going ahead due to new banking licenses, made investors get the clue that banking is a good sell for now and buy later after you see what happens. The Pharma and FMCG remained strong all along, while it did not pushed the indices down, it did not help them gain either.
As on date (2 April 2013) we have seen good pull back in banking sector; however the autos are likely to correct further before it could suggest that they have not been disgraced from the 4Ace list.
It sector has shown stellar performance in last 12 months. TeCHM, HCLTECH, and TCS were the stocks in which wise guys earned maximum remaining long in markets in a list of ‘tradable’ rising stock of about 50!  Wise guys have another IT stock in their buy lis to gain and that is Wipro.
Steel sector and metal was never so weak in the last few years. It can fall further before making a bottom, however it will make a bottom fast.
SECTOR WISE OUTLOOK FOR MAIN SECTORS: (Note: short term is 4-12 weeks, midterm is 12-24-48 weeks, long term is over and above them within 52-104 weeks) (‘Neutral’ mainly means flat to negative or flat to positive, or highly uncertain at this point)
Banking: Negative in short term, neutral in mid term, positive in long term.
Auto: Negative in short term, negative in mid term, neutral in long term.
IT: Positive in short term, positive in mid term,positive in long term.
FMGC: Neutral in short term, positive in mid term, neutral in long term. (We include gems and jewellery retailer in fmcg)
Pharma: Neutral in short term, positive in mid term, neutral in long term)
Cement: neutral in short term, negative in mid term, positive in long term.
Metals-all: Negative in short term, negative in mid term, neutral in long term.
Power and CG: Negative in short term, neutral in mid term, negative in long term.
Oil and Gas: Positive in short term, positive in midterm, neutral in long term.
Financial: Negative in short term, positive in midterm, neutral in long term.

3 Perils for Nifty (Please see chart)
Before going ahead and read, we assume you have read our earlier article giving the possible chart formation in Nifty from September 2012, which almost has formed in that fashion. In that we have argued a multiple inverse head and shoulder pattern for markets spanning over more than 2 years.  As said by us, according to formation markets should have or must cross the high of  6340 made at the beginning of the pattern and then form a new life high above 6360 life time high in February or March, or by April i.e. this very running month.
However, after the Budget, the markets went down and distorted the formation to a danger.  Only a miracle can make Nifty rise above 6340 from present 5750 levels.
So, our technical analysts first came to conclusion that if the markets don’t cross this 6340 in at max 1-2 month, then markets can plunge by more than 1000 points (Nifty) in 1 year itself .
However, later on our technical analyst team after a brainstorming came up with idea that the market still had chance to make new high in next 12 months by forming a new pattern; so what it could not made it in next 1-2 months.

You may say that the central Government election in next 12 months/end of 12 months can be the trigger to a new high (or even fall immediately after making new high or achieving 6300+)  HOWEVER, IT SHOULD BE NOTED THAT THE MARKETS SHOULD NOT GO BELOW 5000, SO BY THIS YOU UNDERSTAND THE LOW THAT THE ‘HANDLE’ FORMATION CAN TOUCH IS AROUND 5000.
(note: Technical analysis enthusiast please note that long-term technical chart reading in not much in fashion and practice, but we have gotten tremendous result out of it. Also note that the nifty cup and handle formation can be viewed better in monthly charts), we have tried to put possible formation in weekly duration)
1. Gap up open gap on 2 Jan, 2012 between 4645.95 and 4675.80: Impact high and determinant:
As per Gap open technical peril to the security, this 30 point gap is important technical aspect and this should fill itself.
Fortunately, another gap at 5440 might have arrived on 13 Sep 2012, meaning Nifty would definitely have come to this level, had not the violent move on 5 Oct, 12 occurred and filled the gap on charts. However, violent we consider it as a genuine gap filling. Technical Analysis and chart reading involves discretion and subjectivity. We will, however, keep the gap in mind and that it was filled with the violent intraday move.
2. Head and Shoulder Pattern for the short term: Impact high but medium term. (See chart ‘Nifty Peril-2)
Read below,
3. Double Top breached already, and double bottom not happening: (See chart ‘Nifty Peril 3)
its bewildering because the double top is exact, as you can see in chart Nifty high is 5971 on 20/02/2013 and n 11/03/2013 also it made high of 5971.20, making a difference of only 0.20 point, so this pattern is rock solid, however, its impact can be only short term as the difference between two tops in terms of days is only 1 month. And we can also say that if Nifty rises above the double top level and firms up above it then it will gain significant strength.
Also, then, the head and shoulder pattern will nullify itself and Nifty will be out of danger from h and s pattern peril.
4. Bearish Grave stone doji pattern in monthly chart:
Please enlarge the below chart to view...
Presently there is no news from USA, except that it is recovering and US markets are gung ho, making new highs (read here how we clearly told that US markets will rise and also showed the chart pattern formation as well) and the things are so negative that they are not expected to go any worst, excepting that the unwarranted speculation of bears that the FED will start to tighten interest rates, which is far far from any indication made by FED so far!
The Asian markets are on a steroid rally. Most markets are on what we call ‘confused rally’. Japan is rallying because of yet devaluation and huge bureaucratic and governmental shift of mentality towards the economy by new regime and new men at policy institutions. Thus, there is nothing forceful from Asia which could take market down or up.
The situation of North Korea warning for war is indeed serious. This can become ‘the reason’ markets may want to crash. However, earlier also many times, the ‘tensions’ have risen to high temperatures between North Korea and South Korea/US duo, but receded for good later on. Nobody wants a war now when the economic situation is fragile all over the world, and especially when everybody has the atom bomb.
The real danger can come from Europe, it is the worst part of world to hear exciting news about financial markets. One by one, each small country is falling apart and the EU gives them bailout, but how long this will work, a decade also and 1 year also. If we see a bank run type situation and across the board financial markets sell off with bad political news turnouts such as Angela Merkel losing the German Chancellor positions and so on; then markets will not need more negative news to go way down if they want to.
 Now, turning to the main playing field, that is India itself, we have biggest event coming ahead i.e. central government election in next 12 months.
We will see high volatility (alas, says traders who have thirsted for good regular movements for last 2 years!) and we may as explained above see markets reaching to 6120 level in next 12 months to give cup and handle formation break out and then breaching 6340, which is the life time high for our markets.
Remember our markets may be pricey but they are not bubble.
The markets can also react to downward pressure when it has to due to mostly bad economic figures which is becoming a trend since last 4-8 quarters in India; including inflation number, balance of payments/CAD figures, fiscal deficit issue and so on.
The market also, has risk of, as already said earlier, an earlier election in first part of H2 of this calendar year. However this is not much anticipated by us and wise people in the market and polity.
So, thus this also clarifies that if the market has to go down below 5000 and not make a cup and handle pattern then it can slip up to at least 4500. Then as you know now, which domestic as well as international factors/newsflow/even development could become the culprit.
We will update further on this if necessary.

Meanwhile if you are a trader or investor then you can choose suitable advisory service from our variety of services for traders and investors in Indian stock and commodity markets.
Please click below for the same,

Technical analysis and stock movements as well recommendations are subject to changes in market condition and news flow of company and the economy. So please remain updated with us. Or contact us directly in case of any query on info@meghainvestments.com or 09377008708


Post a Comment