Tech Musings - Nifty yearly update

Before I embark upon my call on Indian markets for 2013, I want to summarize my call on Nifty given in 2012 and make an assessment of how they fared. 

In long term forecast on 7^th Jan 2011   I wrote “When I think about the current economic scenario I think the 2012 candle (for Sensex) can shape up something very similar to what I have presented in the fourth chart.  I would like to caution my readers that there can be 4 -5 scenarios which looks probable but according to my understanding this is most probable scenario whereby Sensex  have opened around 15.5K, will make a high of 18 -19K, a low of 11- 12K and will close the year at around 13-14K.”

It was for the first time in December 2011 that market closed below 15900 and if we get a three consecutive monthly closing below 15,900, (Therefore according to me it’s very crucial to watch January monthly closing) then I am reasonably sure that we will see market going down to lower levels of 14,500 and 13,000.”

As we all know market never gave monthly closing below 15900 and the trend changed as December itself was the bottom of market.

Although the first leg of my prediction came true, I missed on the second part. Market went up to 18500 from a low of 15900 and corrected severely from there to test the lows of 15900 again June. But it failed to break 16000 levels and moved up from there.

I updated my view on Nifty on 12^th February 2012 “If we look at immediate candle stick pattern we can see that nifty had formed a spinning top. This is a classic reversal signal given that next week’s candle confirms market reversal.  My own assessment is that market may correct upto 4900 – 5000 levels in next few weeks which will be a good buying opportunity. One can go long on market at 5000 levels with a stop of 4700 and a target of 5800 – 6300.”

I reiterated my long call on Nifty on 8^th September 2012 “Unless Nifty breaks below this trend which is at around 5100 on monthly closing basis markets will not correct severely. More over the current month’s candle stick pattern suggest that this month can be good for the market. Investors should go long on index with 5050 as stop loss on weekly closing basis”

On 29^th September 2012 I again reiterated that “I have updated my view on nifty in the beginning of this month when Nifty was trading at 5342levels.  Nifty closed this month at around 5703 i.e. up move of around 7%. Going forward from there are quite a few possibilities. Going only by chart analysis it seems that Nifty should move towards 6350 levels. Although there will be lot of congestion around 5800 -5900 levels.”

These four posts summarize my strategic view on nifty in 2012. As I can infer from my post I started the year on a very pessimist note and remained cautious on markets for major part of 2012 before going long in September when the current rally started. Since my call on 8^th September Nifty had moved up from 5350 levels to 6000 levels.

In 2013 there are two alternative scenarios which I feel are highly possible. The first scenario which was my preferred choice was outlined in my post on 26^th October 2012. First possibility is that markets will top out at previous peak of 6350 and correct from there. Whether the correction will be severe (price correction) or mild (time correction) can’t be determined at this point in time.

As per the second scenario Sensex may move upto 24000 – 25000 levels in current year. In the given chart you can see that Sensex has been moving in a channel since 1990. The upper end of the channel resistance is currently at around 24000 levels. If Sensex breaks above previous high of 21200, we can see markets going to 24000 levels.

I have done sector scan on Indian markets to see which sectors can do well in 2013. I like, Real estate, Infrastructure, metals, PSU Banks, Mid caps and Auto Index. I think CNX FMCG is poised for some mild price correction (and severe time correction). Readers may buy stocks in these sectors. I will follow up with another post outlining the stocks I like in Indian market.

Following are the charts of sector indices :-

CNX Infra

CNX PSE INDEX

BSE CAPITAL GOODS INDEX

Following are the levels of these indexes as on 5/01/2013

 

CNX Infra	2648
CNX Real ESTATE	294
CNX ENERGY	8183
CNX METALS	2955
CNX PSU BANKS	3828
CNX MIDCAP	8746
CNX AUTO	4892
CNX FMCG	15134
CNX PSE INDEX	3002
BSE CAPITAL GOODS	11096