The market closed up about 2.7 pc for the week. The Interesting part was the number of times it was resisted at 4780-4800 in this week. The coming week will be decisive for the markets.
1. The markets got resisted at the 4780 mark for about 3-4 times this week. This is a worrisome sign for the bulls. If it does not break through in the first 2-3 sessions of the week, expect a sound crack in the markets.
2. The trend line from the move down from 5400 comes at 4825 making it a very crucial resistance. If this gets broken decisively expect the markets to visit the 5150-5200 region.
3. For the medium term 5150-5250 have a cluster of important resistances. The trend line joining all the tops from Nov 2010 top of 6339 comes at about 5200. The 200 EMA comes at 5154 and 200 SMA comes at 5254. This region is what decides if the bear market is over.
4. From the Elliot perspective of the 5 wave decline which began from 6339 this is the wave down. Sub wave 1 of the 5th wave started from 5400 and ended at 4532.A fall of 868 points.
Wave 3 from wherever it starts I expect it to take the market about a 1000 points down.
5. The Gilt funds have been given good returns since November. They are up almost 5 pc. The gilts have moved down from about 9 pc to 8.2 pc. Thus a 0.8 pc decline has given a return of about 5 pc.
6. The gridlock continues on the policy front and one can expect no change there. The budget will be presented around March 15th due to the Assembly elections.
For the Nifty, 4650 and 4825 are 2 breakout points. Trade in the direction of the breakout or breakdown.
Now is the time to accumulate good stocks with low P/Es, sound business fundamentals and high dividend yields. Lakshmi and I have identified some good midcaps along with our Investment Cherry Picks.
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