technical view on india markets

hi,all..i am very much pleased the way indices have responded the major supports including 89 week Ema and some fibonacci ratios,,targets of 5158 and 17149 mentioned in the 17th april article were achieved in both indices yesterday,,and that too with huge volumes and very very positive market breadh at 2314:::1588,huge volume is certainly a very positive aspect of the current move ,suggesting that indices MIGHT have made stronger than most analysts expectations,,and any fall in coming days will be viewed as CORRECTIVE and termed as buying opportunity only...i hope happy days are here again..!!!!!!!!!!.important question now is what next???,,here in my technical observation i am trying to explain my views on ,,,the question ,WHAT NEXT????

1)i would like to take all of you a little bit back,,on january 12th when hardly any- one ever dared to mention about a top in indices and possibilty of correction,i wrote IN MY OPINION OUR MARKETS ARE RIPE FOR A DEEPER CORRECTION NOW THAN EVER BEFORE, and i mentioned about possibility of a correction of 3000-4000 points..when sensex was at 20827...the rest is a history,,mind you my article was sent to technicals@reutersindia.net and was published on my blog bhoom2tika@blogspot.com,,, now i want to point-out one important aspect of technical analysis,,when we learn the subject one thing we have to believe in is,,MARKETS ALWAYS DICOUNTS THE FUTURE...meaning markets moove in advance ahead of what is going to happen in the future...after when our markets fell heavily from mid jan to mid march period,,economic data started to come as if india inc. is slowing down,,gdp data of february were drastically lower and than suddenly inflation started to rise alarmingly,and GDP projections for fy -09 came down to around 8% FROM THE PICK OF 9-9.5% IN LAST TWO YEARS,,,WHY THEN ??? the indices made bottoms and rose around 3000 points from their bottoms???,THE ANSWER IS SIMPLE,, a 1-1.5% fall in GDP for the coming,, financial year was very well- known to the markets,,means 1-1.5% FALL IN GDP = 6000 POINTS OF FALL IN SENSEX....thats it,,,and markets bottoming out now means ,,no more worries for the economy in the medium term future !!!!!!!!!!!!!!!,
2)another point i mentioned in my jan-08 article was that the highs of the stocks that we are seeing now will not be seen for 6-8 months,,I WOULD LOVE to change the sentence a little,,although we might have
made a strong bottom,,in my opinion,the highs of jan-08 will not be seen in certain sectors for even 2-3 YEARS,,,WHY?? i can see a long term sideways correction in india in the range of roughly 15000-20000 points as in sensex...india is a great growth story but i think we need a PAUSE,,AFTER a 4 years long bull run,,so the contnuing correction would be prolonged TIME wise and no more PRICE wice...certain sectors will offcource go to new highs while sensex and nifty remains in the broader range...a look at the bse-auto index will clearly suggest what i EXPECT.

3)the current up move in indices have a few important points to be noted,,the moove looks tobe making an upward channel the slope of which is NOT very encouraging,,but actually supports my view of a long term sideways phase,, that i expect.,,the channel target in a short term in nifty around 5300 and around 17800 in sensex...expect some correction in the channle itself to take support at the lower end of the channel.

4) indices and so many other frontline stocks are on the verge ,(today being the last day of the month) of making a very bullish candle pattern on the monthly charts,,in most cases A BULLISH ENGULFING pattern,,the expection of a corrective move in the channel will be taking supports of the same monthly candle patterns.

5) last two weeks move in indices on the weekly charts is even better than all the past deeper corrections,,an indicator called PARABOLIC--SAR,,will generate a BUY siGnal called STOP & REVERSE. in the next week ,,and also a band of 3-5-8 weekly Ema is generating a copy- book style BUY SIGNAL..wekly charts now needs only 1-2 weeks sideways correction to generate buy signals in so many other indicators.

6) if indices remains in the channel my targets would be around 18500 and 5370 -5440 in sensex and nifty for medium term.......................enjoy bjn..Wednesday, April 30, 2008 9925673239