Month of August has been a surprise
for all positional traders. After a low of around 5100 we saw a quick recovery
to 5700 the same month and ultimately to 6100 after New RBI governor took up
the charge. IIP data had improved last month from almost -0.20% to +2.6 % MoM ,
which is a trigger sign to new road of growth building up. Yet inflation was
not down as expected due to disastrous currency movement. But since then rupee
has cooled off and we can be biased towards lower inflation in coming month
data. One of the best fundamental move last month for economy was the
liberalizing of new bank branch norms for pvt banks. New RBI governor seems
promising and as per various economic analysts, monetary policy steps taken by
him were the best for economy as per current situation. October month is going
to be earning season and we could experience some real volatile sessions on
Nifty.
Central
government is working hard to improve economy by controlling CAD. Gold imports
have decreased duty to hike in import rates but on other hand we need some
strict plans to reduce CAD than with just hiking duty on Gold import. FDI
limits in various sectors have been raised but investment are not getting
clearance with the respective departments.
Jet-Etihad deal has been talks
since almost a year but still has been facing many hurdles. Second, WalMart
clearance for retail sector is still lingering. On other hand Posco steel
discontinued its willingness to invest in Orissa. Now 100% FDI in Telecom
Sector. So , I am of view that we need more Dollar investments rather than
restricting to imports. Looking at Pharma Sector, Indian firms are losing on
quality check. Wockhardt and Ranbaxy are facing ban from USFDA which is a hit
to the sector. Overall, fundamentally we need some check on our clearances to
attract flow of Dollars in our country to reduce CAD.
Now let’s get to Nifty technically.
Here I have attached a monthly chart of the Nifty Index. All the technical
analyst might have understood from the chart that we are in secular bull trend.
In the Month of August we ended up with Wave 4 of a smaller degree and now we
are in the formation of wave 5 to complete wave1 of larger degree around 6200-6500.
Nifty has been taking strong support at 50 Monthly EMA which is currently at
5270 which is a strong support for worst downside which I don’t expect
now. Looking at CNX Midcap and CNX
BankNifty Index charts they are suggesting stronger buy next month than Nifty
Index. In the month of October we may see some downside from Current level of 5833
upto 5741, 5677 or worst scenario upto 5536. Though I expect
markets wouldn’t go down below 5741. I would suggest for going long on MidCap
stocks for your portfolio with holding view of more than 1-2 years. My top
picks from mid cap and small packs which could be multi baggers are DENABANK,
ORCHIDCHEM, TATACOMM and RPOWER.
For short term traders view follow us on twitter @chartechnician and FB page www.facebook.com/mavjihari
Our Strategy: Going Long on the index and adding on dips at
5677/5536 with a tgts of 6212/6370/6500 in next two months. SL could be at 5471
Note: All the data and
graph is as of 28 September 2013 closing
Disclaimer: I may have
personal position in index and above mentioned stocks. Views and News mentioned
above may have Errors and omissions. My views are biased more towards technical
analysis. Please read and study the market carefully before investing on my
idea. For any suggestion contact me on my email. Some words mentioned in
article don’t mean their actual meaning. They are correlated for market.
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