The markets had the best week, this calendar year and bounced 4.7 pc to close almost at the high point of the week at 5068. Can the bounce continue? Let us look at few technical and fundamental reasons which can impact the markets.
Technicals:
1. The 50 DMA is at 5090 and 200 DMA is at 5066. These are the immediate 2 resistances for the markets to scale.
2. If we consider the fall from 5342 as 1 leg, then the 50 pc retracement is 5056 and 51.8 pc retracement is at 5123. Also, for the entire fall from 5628, the 38 pc retracement comes at 5098.
3. The markets are touching the upper end of the Bollinger Bands showing immediate overbought positions.
From the above Technicals, we can note that fresh buys can be considered only on a closing above 5125. If we consider downsides from here as a corrective, then the targets can be 4964, 4927 and 4889. One can consider long positions at 4964 and 4927 with a stop loss of 4889.
Fundamentals:
1. The Crude prices further stabilized at around 100 dollars a barrel. If this sustains then the petrol prices can be further reduced. In fact, the price before the hike of Rs 70 was the correct price for the Petrol.
2. Growth has faltered making a rate cut more likely in the next meeting of the RBI in June.
3. Spanish banks have received a bailout thus preempting a Spanish economic crisis for the moment. All eyes are on Greece with next Sunday's crucial elections.
If parties supporting a move to stay within the Euro win the Greece elections, expect the rally to continue. I expect the week to be a quiet week in anticipation of the results and also domestically waiting for the progress of the monsoons and the RBI policy meet decision.
Taking Elliot into consideration, I feel there are 2 possibilities:
1. Of the XYZ move from 4532 in December, we have started the last leg up with targets of 5650-5850.
2. Y leg down is still continuing, and we are Y-c-b. That is a corrective up move before a last fall to around 4650-4750 levels.
So, what can one do? Restrict buying levels around 4900-4950 and invest in good dividend yield stocks.
The reason, I say so because in any case I feel a test of 4900-4950 is due before a fresh up move.
Technicals:
1. The 50 DMA is at 5090 and 200 DMA is at 5066. These are the immediate 2 resistances for the markets to scale.
2. If we consider the fall from 5342 as 1 leg, then the 50 pc retracement is 5056 and 51.8 pc retracement is at 5123. Also, for the entire fall from 5628, the 38 pc retracement comes at 5098.
3. The markets are touching the upper end of the Bollinger Bands showing immediate overbought positions.
From the above Technicals, we can note that fresh buys can be considered only on a closing above 5125. If we consider downsides from here as a corrective, then the targets can be 4964, 4927 and 4889. One can consider long positions at 4964 and 4927 with a stop loss of 4889.
Fundamentals:
1. The Crude prices further stabilized at around 100 dollars a barrel. If this sustains then the petrol prices can be further reduced. In fact, the price before the hike of Rs 70 was the correct price for the Petrol.
2. Growth has faltered making a rate cut more likely in the next meeting of the RBI in June.
3. Spanish banks have received a bailout thus preempting a Spanish economic crisis for the moment. All eyes are on Greece with next Sunday's crucial elections.
If parties supporting a move to stay within the Euro win the Greece elections, expect the rally to continue. I expect the week to be a quiet week in anticipation of the results and also domestically waiting for the progress of the monsoons and the RBI policy meet decision.
Taking Elliot into consideration, I feel there are 2 possibilities:
1. Of the XYZ move from 4532 in December, we have started the last leg up with targets of 5650-5850.
2. Y leg down is still continuing, and we are Y-c-b. That is a corrective up move before a last fall to around 4650-4750 levels.
So, what can one do? Restrict buying levels around 4900-4950 and invest in good dividend yield stocks.
The reason, I say so because in any case I feel a test of 4900-4950 is due before a fresh up move.
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