It is again a new month and let us try and see how markets have traditionally performed. The last month analysis was pretty spot where the range of 5880-6080 thrown up by statistical analysis held up. This month is interesting because FIIs have pumped 20000 crores of equity, DIIs have sold big ad the markets have basically gone nowhere.
1. In the previous 12 years, markets have gained in about 7 instances.The gains have been small except for the year 2002 where the markets gained about 6 pc. This translates to 6400 in an extreme scenario. This possibility comes into play only if we break the previous high of 6112.
2. The month of Feb monthly low has always been below the Jan close. This year is no different. We have already gone 0.86 below the Jan close. If we the markets have to reach 6400, the markets have to hit a low in the next week or would have already hit a low.
3. For those playing for 6400, there are 2 markers, the low should not go too below 5983 and second confirmation is basically 6112.
4. The month of Feb has seen typically lows which on average are around 4 pc below the Jan close. This projects a possible low of 5800. The range thus arrived at is a broad 5800-6400.
5. February is a month where there are typically no wide swings. The average is a flat closing and the range of closing is usually + or - 3 pc. This gives a narrower range of 5850- 6200 to play for the market.
6. Also, the month of Februrary has seen a big fall of -8.2 pc only once when the gain was 2.9 pc in 2007 which is similar to the gain of 2.2 pc this year.
What conclusions can one draw from all these numbers?
A huge gain over 6035 looks unlikely. A huge fall is also unlikely since it has happened only once. A range bound market looks likely with a range of 5850 - 6200 and a downward bias for the month.
Those looking to play for next 3-4 months could look at buying closer towards 5800 - 5900 range and look to book profits at 6400.
Buying at current levels gives limited upside.
1. In the previous 12 years, markets have gained in about 7 instances.The gains have been small except for the year 2002 where the markets gained about 6 pc. This translates to 6400 in an extreme scenario. This possibility comes into play only if we break the previous high of 6112.
2. The month of Feb monthly low has always been below the Jan close. This year is no different. We have already gone 0.86 below the Jan close. If we the markets have to reach 6400, the markets have to hit a low in the next week or would have already hit a low.
3. For those playing for 6400, there are 2 markers, the low should not go too below 5983 and second confirmation is basically 6112.
4. The month of Feb has seen typically lows which on average are around 4 pc below the Jan close. This projects a possible low of 5800. The range thus arrived at is a broad 5800-6400.
5. February is a month where there are typically no wide swings. The average is a flat closing and the range of closing is usually + or - 3 pc. This gives a narrower range of 5850- 6200 to play for the market.
6. Also, the month of Februrary has seen a big fall of -8.2 pc only once when the gain was 2.9 pc in 2007 which is similar to the gain of 2.2 pc this year.
What conclusions can one draw from all these numbers?
A huge gain over 6035 looks unlikely. A huge fall is also unlikely since it has happened only once. A range bound market looks likely with a range of 5850 - 6200 and a downward bias for the month.
Those looking to play for next 3-4 months could look at buying closer towards 5800 - 5900 range and look to book profits at 6400.
Buying at current levels gives limited upside.
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