Indices
Thursday, February 06, 2014
INDICES:
IF NOT NOW THAN NEVER-III:
GOING ON THE OTHER WAY:
BEARISH COUNT NOT PLAYED OUT & BULLISH COUNT NOT VIOLATED, IT MEANS NEW BEGINNING:
Sensex closed @21513.87 & Nifty closed @6401.15 levels on 12.02.2014. It made a low of 5933.30 levels & 19963.12 levels on 04.02.2014. It sharply reversed from these levels & managed to hold support of 5875 levels on nifty & kept bullish wave count intact.
Bullish wave count was not my preferred one as mentioned on my earlier write up on 13.02.2014 based on stocks structures & underperformance but finally market won & confirming medium term reversal. Stocks also made “U” turn & started to join the rally at current levels of market.
Though, I am surprised this time not by main index behavior but especially stocks behavior because in main index anyway bullish wave count was still open as mentioned but in stocks end, I expected that normally in beginning of any new Bull market, all the stocks correct & start one by one in the rally. Such kind of bull market behavior I studied in Post 2001 rally in sensex/Nifty.
But this time, Overall Market behavior & structure turned out to be different not similar as I was comparing with 2001 rally. This time,
1. Some stocks already bottom out.
2. Some are half way in correction
3. & some are not corrected at all.
So either market dynamics is changed or it may eventually turn out to be euphoria rally but as a discipline wise main Index it self is confirming trend reversal therefore its advisable to assume that either stock specific differentiation may still go on (i.e. some may still correct or some may rally) or all will join the party of this Bull market from their recent levels. Therefore, ideal approach I would recommend to focus on main Index at current levels of market.
Nifty is finally breaking this range of 6000-6350 levels on upside. Momentum indicators are also started to turn on up side. It indicates the next trend is going to emerge on upside till its proven otherwise.
After a long time wise consolidation market is breaking this range on upside that can’t be taken lightly till it’s proven otherwise.
Though Many stocks relatively basis still underperforming but we never know which stage of market they are going to participate (i.e. at beginning of rally or may be at middle of rally).Therefore, I am focusing on main index ( sensex/Nifty) while writing this view.
At current levels of market, there is no any suitable bearish option that I can figure it out unless this becomes final C of Z as a Euphoria rally but by looking current scenario it doesn’t look appealing option and it’s not advisable to participate with such fearful assumption at the beginning of rally.
So As per my bullish alternate, from bottom of Aug 2013 lows (i.e. - 17448.75 on sensex & 5118.85 levels on nifty), we formed leading diagonal & recent correction turned out to be Expanding flat as per chart attached & market managed to found support near expected levels in the range of 5970-5880 on nifty & 19826-20137 on sensex. It made a low of 5933 & 19963 o nifty & sensex respectively.
Recent rally looks like beginning of wave-(iii) of III of 3 UP of Bull market for completely new territory & new higher levels targets of 24400 levels on sensex & 7300 levels on nifty in medium term. It will be time wise also minimum 3-5 years Bull Market in which many other higher levels targets will unfold eventually once rally becomes mature. And it will be also end of pain of BEAR PHASE that we all suffered in last 6 years since Jan-2008.
As per my view many times I mentioned Equity is going to be outperforming Asset class when next bull market rally will begin, that time has come now.
This view, I am writing in keeping mind Indian equity market only. Not sure about global Equity market & how India is going to react against it. We will see it, if rally will not play out because of global factors eventually.
Lastly, Rupee is also very close to my Short term reversal level of $60. It will be also additional evidence to watch out for in near term. Strengthening of Rupee against USD will be also another confirmation & positive factor for beginning of this Bull market Rally.
Conclusively, I would advice to BUY stock specific at current levels or any kind of decline till Medium term reverses or we get any further advance indication or confirmation of TREND REVERSAL.
Its very good opportunity to invest in equity market with discipline to earn good returns at current levels of market for medium to long term perspectives.