Saturday, December 17, 2011

Relevance of Economic cycles in Indian markets...Should a chartist care about Economic cycles?

Nifty would be in the last leg of a bear market and majority of Indians don't believe it would end soon.How do we know a market is bottoming out?We are at the peak of an interest rate hike cycle and inflation is supposed to come down in the first half of 2012. Crude oil and Dollar are two major components which decides the inflation cycle. As we are seeing in the commodity market crude oil was testing life time high's till last week and cooled off just 2-3 days ago. Thus it should first top out and start its downward journey for some relief. Dollar Index is continuously making higher bottoms and it would be a major danger for those companies which are involved in trading in overseas markets and it would be a major challenge for the growth of the economy as well.Thus the result season would not be that good for the market at least in the coming quarter. As Dollar was making life time highs it would have a major negative impact for most of the balance sheets. One could see bond yields coming down when the market is about to bottom out and it is a sign of people buying equities. There would be a little more downside left in commodities especially in Gold.Gold could most probably test 26500 levels in the near future.Thus peak of rate hike cycle and bond yields coming down would be the first signs of a recovery process. Another major worry would be European markets as we have not seen anything worse in Europe and we are yet to see major correction in European markets. Thus in a nut shell it would be difficult to get out of all the economic issues that soon but as a long term investor one should start buying any dips close to 4500 levels in Nifty.We have attractive valuation level of 13-14 P/E when the markets coming down from these levels and one could get the stocks at the lowest levels on any panic selling day.Thus make use of the available opportunities in this current downtrend.(followed by nifty weekly analysis 19-23 December 2011)
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5 comments:

  1. AnonymousDecember 17, 2011 at 5:52 AM

    great analysis. Appreciate all the efforts and hard work put here.

    regards
    Nitin

    ReplyDelete
  2. AnonymousDecember 17, 2011 at 5:56 AM

    i am daily viewer of your analysis and must say your understanding is spot-on alongwith analysis.

    Can you pl help me in following;
    - from where can i download metastock software for windows vista platform
    - how can i upload it with real time data so that it can work as a intraday day trading system for me which will help in giving buy/sell call on intraday basis.

    Appreaciate your help in advance. you can send the details at my email id which is nitsdotgera atgmail.

    thank you.
    regards
    Nitin

    ReplyDelete
  3. Nayak Ajit SrinivasDecember 17, 2011 at 9:00 PM

    i hope it is last leg of bear market .but US and europe mkt are yet not bottom out .even i feel unless and until it takes support at 4500 it is still a doubt. fii's still holding their position.i feel 13 may 2012 will see mkt bottoming out. no doubt ,jan there may may rate cut but other problems (global and domestic) are yet to be showcased.

    ReplyDelete
  4. Nayak Ajit SrinivasDecember 17, 2011 at 9:02 PM

    i dont know do u take any classes for gann or not . if you plann to take any class for gann i will be the first one to join .

    ReplyDelete
  5. VinuDecember 18, 2011 at 9:08 PM

    @Nitin: Thanx a lot for your kind words and hope the blog is of some use for you.I would send the details as soon as possible.
    @Ajit:Thanx a lot for support. As you said U S is not yet in a bear market and we have not seen any significant correction in Europe. Regarding Gann ...i don't think i'm not yet eligible to teach what the master trader has given to the world. I'm just giving my perception about Gann angles.Anyway do keep in touch

    ReplyDelete

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