BEAR ATTACK !!!

On Thursday (15/12 ) in KOLHAPURINIFTY group on facebook we have mentioned that  ------
" Today there is breakdown from head and shoulder pattern on hourly chart, target for this will be 4400 ( cmp 4700), word of caution there is major support @ 4639 if this is taken out on daily closing basis then there will be free fall up to 4400. Stop loss for this trade hourly closing above 4840, which will change later on according to future price action."

 On Friday 16/12 nifty made high of 4818.85, which will be now stop loss on hourly closing basis for this trade.


Also since 26/8/10 nifty tested sub 4700 level intraday but closed above 4700 3-4 times, but on friaday it closed below 4700.

Incidently on weekly closing basis on 28/8/09 after 2008-09 bear market nifty first time closed above 4700, and now after 2 yrs it closed below 4700 on daily as well as  weekly closing basis. 

Now for this down move various supports ( according to down trending channel mentioned elsewhere on this blog, long term trend line, monthly S1 according to monthly pivot points, 50% Fibonacci retracement    of  whole rally from march 2009 ) comes in 4400-4450 range and also target for this head and shoulder pattern comes 4400, so it looks like nifty will fall up to 4400-4450 region. 


The Chart patterns are suggesting that this fall will be fast, may be in next week only.


To upload various chart for this view will take lot of time, so if time permits may post various charts later on for this view. 


DISCLAIMER: This Blog is meant for sharing my trading ideas only and no calls to be taken as trading recommendation. Visitors please do your own research or consult your advisers for safe trading.

IS IT RIGHT TIME TO INVEST IN STOCK MARKET FOR LONG TERM INVESTOR?

The last 1 year Indian market is falling / correcting. Major indices ( nifty & sensex ) almost corrected by 27-28% from there peak which is created in Nov 11. Most of the stocks corrected more than 50% from there respective peak. It has been historically observed that our market correct for 12-18 months ( exception  correction which started in 2000  almost continued for 3-3.5 yrs.)  and in this correction it is all ready passed  12 months so lot of investors must be thinking is it right time to invest?
It has been observed that in long term equity has been given best post-tax return than any  other financial instrument. The following 3 ways will give best possible returns in equity market.
1) Doing S.I.P. in 4-5 best diversified equity funds.
2) Investing when valuations are cheap according to fundamental analysis.
3) Investing when bottom is formed according to technical analysis.

FUNDAMENTAL ANALYSIS : - According to fundamentals it has been observed that when sensex / nifty P/E starts trading above 25 our market forms top, and when it starts trading below 12 it forms bottom. At present nifty P/E is around 17.25, so according to historical average our market is just undervalued ( not cheap, to become cheap it has to fall 25-30% more ) so there are fair chances it will correct more. But this may or may not happen you never know, it may create bottom here. So if some one waits for cheap valuation he may miss the rally.

TECHNICAL ANALYSIS :- Technically our market is in down trend since Jan 11. Right now it looks like that if on daily closing basis nifty closes below 4625, it may go down to 4400-4500 and may be up to 3600-3900 level. But once again you never know and it is really difficult to catch exact bottom.
      Technically there is strong support in 4625-4700 area , so it may form bottom around these levels.
Historically it has been observed that whenever previous year's low was broken our market corrected for 25-30% from that level. The 2010 low ( 4675 ) has been taken out intra day on 23 & 24 NOV. but it was not taken on daily closing basis. If nifty gives daily and weekly closing  below 4625 there are fair chances that our market will give correction of 20- 30% from this level.
       So whether long term investor should invest at these level or wait ?

According to our view---- first decide out of investable money how much amount you will not require for at least next 5 years. And invest that much money according to one of the following solutions--

SOLUTION 1) -- Invest that money in equal installments for next 12 months.

                     2) -- (A) Invest 30% of that money at current level and if market don't fall much below current level then remaining 70% whenever there is long term up trend according to technical analysis.
                              (B) Invest 30% at 4400 level and if nifty don't fall much below then remaining 40% whenever there is up trend according to technical analysis.
                              (C) Invest remaining 40%at 3900 level.

                    3) -- Invest only after whenever there is long term up trend according to technical analysis. Which will be approximately 15-20% above from bottom level.
ACCORDING TO PRESENT SITUATION TECHNICALLY THERE WILL BE UP TREND ONLY IF NIFTY CLOSES ABOVE 5400 ON WEEKLY TIME FRAME., THIS LEVEL WILL CHANGE ACCORDING TO FUTURE PRICE ACTION.
 Out of the 3 above solutions we think option 2 is good one.

For investment choose 15-20 fundamentally good companies and invest equal amount or choose 5-6 best diversified equity mutual funds and invest equal amount within them.

 If someone is all ready invested in equity market then he  should allocate fresh money only if his equity exposure is less than ideal asset allocation according to his age. THE THUMB RULE IS 100 - AGE , that much % should be in equity. So if someone is 45 yrs. old then 100 - 45 = 55% should be in equity.
                        
DISCLAIMER: This Blog is meant for sharing my trading ideas only and no calls to be taken as trading recommendation. Visitors please do your own research or consult your advisers for safe trading.

NIFTY IN TRIANGLE

Intraday nifty is trading within triangle as shown in chart below and may make decisive move after 5 min closing above resistance line, or below support line.

LONG TERM INFRASTRUCTURE BONDS FOR TAX SAVING.

Apart from the investments in 80C instruments, additional Rs.20,000 can be saved by investing in Long Term Infrastructure bonds with Tax benefi t u/s 80CCF. These Long Term  Infrastructure bonds are issued by rated companies and are thus considered safe. They also offer coupon which are either paid annually or at maturity in cumulative option. These have a lock-in of 5 years, post which they can be traded on the exchange. The maturity period is generally of ten years. By investing in these bonds one can save additional tax.
One can save Rs 2060 in 10% tax bracket, Rs 4120 in 20% and Rs. 6180 in 30% tax bracket.

Some of the issues which will be available in this month for subscription will be ----
1) IDFC long term infra bond issue opens -- 21 Nov. 11, closes -- 16 Dec 11
2) L & T infra tax saving bond  issue opens -- 25 Nov 11, closes -- 24 dec 11
3) IFCI long term infra bond issue opens -- 30 Nov 11, closes 16 Jan 12

this bonds are offering interest rate of around 9%

Considering the tax saving if one is exhausting limit of 1,00,000 under section 80C, can consider investing additional 20,000 in these infrastructure bonds.

DIRTY CANDLE

This is yesterday's 5 min nifty future chart. Watch the last candle which is bearish ( suggests down move ). Whenever such candle is there and accompanied by large volume, most of the time next day there is gap down ( lower )opening. Even though if there is no gap down opening most of the times next day market closes at lower level than previous day.s closing.
 DISCLAIMER: This Blog is meant for sharing my trading ideas only and no calls to be taken as trading recommendation. Visitors please do your own research or consult your advisers for safe trading.

NIFTY GROUP

Started nifty group on face book, here is link http://www.facebook.com/groups/204419819633492/edit/, in this group will try to post whenever there is interesting happenings in market and not having sufficient time to post in detail or post charts on blog.

Yesterday at around 3:30pm mentioned that nifty will correct at least up to 5010-15 and today within 1.5 hrs of trading it is all ready below 5000.

NIFTY - SHORT TERM RALLY OVER ?

Yesterday nifty opened with huge gap up because positive global cues, but got sell from important resistances.
Weekly trend is still down, so this market is SELL ON RISE , which should be ideally done at resistances. Yesterday it sold off at various resistances which are 1) 200 EMA on hourly chart, 2) 50 SMA on daily chart,  3) 50 EMA on daily chart, 4) 50% Fibonacci retracement of entire fall from 5400 to 4640, 5) weekly R2 pivot.

So now if yesterday's high i.e. 5011.90 is not taken out , it will target 4850, 4700, recent low at 4640 and possibility of making new low since it got sold off from so many resistances.

Whenever time permits will try to post detail technical analysis and charts.

 DISCLAIMER: This Blog is meant for sharing my trading ideas only and no calls to be taken as trading recommendation. Visitors please do your own research or consult your advisers for safe trading.