The Namo Trade - Confirmed

I wrote my first post of NaMo Trade on 12^th March 2014. In this post I expected that Indian markets will break to new highs and this was clear indication that Narendra Modi the BJP candidate was expected to become the next prime minister. 

The first chart is monthly chart of Sensex as on 30^th April 2010. As you can see from the chart the monthly candle for Nifty was Gravestone Doji which is one of the most bearish patterns and signifies a significant trend reversal and perhaps a multimonth bear market.

This really got me worried. We all know that the election results will be declared on 16^th may and if market were supposed to fall it would mean that election loss for BJP and its prime ministerial candidate Narendra Modi, which I believed would be absolutely detrimental for the future of the country.

In the next chart we can see the monthly chart of Sensex as on today. We can see that market has completely negated the bearish candle and has made new all time high today.  As readers would know that negation of a bearish candle or a pattern signifies massive move on the other side. 

Hence I would say that if market stays at these levels till next Friday two things are certain. 

1.       Narendra Modi will be elected as the next prime minister of India

2.       Nifty will move towards 7200 – 7500 levels in short period of time.

In my last post on INR written on 11^th April 2014 I wrote, “If INR continues to trade above lows of 59.60 it may see a temporary reversal and move towards 62.75 level.  Longer term downtrend in INR will start only if INR moves above 63.50 level.”

INR indeed moved up to the level of 61.31 but failed to surpass that resistance and has again corrected to 60 levels.  This itself indicates that the underlying current in INR is extremely bullish and the currency wont depreciate significantly from these levels.

If you look at the given chart of INR you can see that INR has broken below the channel line and has 

formed a doji in weekly chart.

Since this was a 4 year long channel, a break down of this channel is suggesting a massive bullishness for INR. If we coupled this to equity markets breaking out and Narendara Modi coming to power in India,  it looks highly likely that INR will appreciate by 200 – 500 points in this month and may be this week. Hence all expats can hedge their future currency exposure with a stop loss placed at 61.30 and target of 57  -55.

Summary:

1.       Narendra Modi will become the next prime minister of india

2.       Nifty will move to 7500 – 8200 in next one or two years

3.       We are in a long term bull market

4.       INR will appreciate significantly to 55 levels.