For all those who did not believe in the ‘Sell in May’ adage would have started to take it seriously. For those who are unaware of these phenomena, this means that usually the investors Sell off their portfolios and then start building their portfolios again in September. The convention derived from the west, which usually sees investors displaying ‘Why not ditch stocks, shift into bonds and take a break from financial fretting as summer vacation nears?’ attitude. However, as far as we don`t look at the returns over the years, this would remain a hypothesis.
Now, turning our attention towards the Indian Markets , the ‘Sell in May, and Go Away’ theory would find many buyers, however, our readers had been already alerted by this correction post the relief rally, through this post, when the markets were comfortably gliding at the levels of 19600.
Here again, we post our view on the markets for the coming days and hoping that we would read the market correctly, once again!
The market scenario looks murky and again the D- Street seems to be spooked by dismal domestic cues and lack of cues from the global front.
However, there is little positive news lined up this week or at least the time we enter the expiry week.
We start off with the crude, which tumbled off to the pre - Middle East Crisis price levels, mainly due to renewed statement by the Chinese Govt. on the crude consumption and an unprecedented strengthening of the dollar.
Also, the bets on Euro gaining strength against the dollar in the beginning of the year, have reversed. This is due to the renewed fear about the Euro crisis. In short, as everyone was one side of the boat, the boat, eventually, seems to capsize!
With the U.S. Dollar strengthening, the Commodities (mainly Silver & Gold) which are seen as alternative form of investment are due for some correction.
Thus, the two phenomena, which spooked the Markets i.e. Rising Crude Prices which fueled inflation, and the Commodity markets attracting investors, seem to be cooling off!!.Also, the IIP numbers and the Inflation numbers have shown improvement, further supporting this claim.
However, this went unnoticed as the markets geared up for the Assembly Polls taking place in the major constituencies of Country today. As far as the exit polls are to be believed, UPA government looks all set to retain power. Nevertheless, Markets have already factored in the impact of an election outcome. There could be 100-200 points’ movement further today. Issues like inflation, GDP growth and scams will lead to short-term volatility in the market. Thus, the markets can expect some relief on the political front too!
In a nutshell, we may again witness bright trading sessions this summer, with the cooling off Crude and display of people`s faith in the Government, which would bring FII and other Investors back to the Indian Stock Markets.
On the basis of the above developments on the macroeconomic front and the chart below, we expect the BSE bellwether Sensex to be range bound for a few trading sessions broadly within the range of 18600 – 18300. If the 18300 would not be breached, and if the markets cross the 18609 mark, we may see the markets moving up to the levels of 18928 in the shorter term, and if this rally sustains, then we may see the markets moving on towards the levels of 19300 – 19400.
The projections have been made on the basis of the bullish ascending triangle pattern which has been displayed on the charts. The bullish crossover of the 13d EMA over the 34d EMA could be used as an indicator for initiating fresh long positions, along with the level of 18600. If the pattern fails, we may see the markets correcting to levels of 18100 – 17910!
And if this happens, we may safely conclude that although the May adage doesn't work perfectly all the time, its worth keeping it in the back of your mind!!!
Now, turning our attention towards the Indian Markets , the ‘Sell in May, and Go Away’ theory would find many buyers, however, our readers had been already alerted by this correction post the relief rally, through this post, when the markets were comfortably gliding at the levels of 19600.
Here again, we post our view on the markets for the coming days and hoping that we would read the market correctly, once again!
The market scenario looks murky and again the D- Street seems to be spooked by dismal domestic cues and lack of cues from the global front.
However, there is little positive news lined up this week or at least the time we enter the expiry week.
We start off with the crude, which tumbled off to the pre - Middle East Crisis price levels, mainly due to renewed statement by the Chinese Govt. on the crude consumption and an unprecedented strengthening of the dollar.
Also, the bets on Euro gaining strength against the dollar in the beginning of the year, have reversed. This is due to the renewed fear about the Euro crisis. In short, as everyone was one side of the boat, the boat, eventually, seems to capsize!
With the U.S. Dollar strengthening, the Commodities (mainly Silver & Gold) which are seen as alternative form of investment are due for some correction.
Thus, the two phenomena, which spooked the Markets i.e. Rising Crude Prices which fueled inflation, and the Commodity markets attracting investors, seem to be cooling off!!.Also, the IIP numbers and the Inflation numbers have shown improvement, further supporting this claim.
However, this went unnoticed as the markets geared up for the Assembly Polls taking place in the major constituencies of Country today. As far as the exit polls are to be believed, UPA government looks all set to retain power. Nevertheless, Markets have already factored in the impact of an election outcome. There could be 100-200 points’ movement further today. Issues like inflation, GDP growth and scams will lead to short-term volatility in the market. Thus, the markets can expect some relief on the political front too!
In a nutshell, we may again witness bright trading sessions this summer, with the cooling off Crude and display of people`s faith in the Government, which would bring FII and other Investors back to the Indian Stock Markets.
On the basis of the above developments on the macroeconomic front and the chart below, we expect the BSE bellwether Sensex to be range bound for a few trading sessions broadly within the range of 18600 – 18300. If the 18300 would not be breached, and if the markets cross the 18609 mark, we may see the markets moving up to the levels of 18928 in the shorter term, and if this rally sustains, then we may see the markets moving on towards the levels of 19300 – 19400.
The projections have been made on the basis of the bullish ascending triangle pattern which has been displayed on the charts. The bullish crossover of the 13d EMA over the 34d EMA could be used as an indicator for initiating fresh long positions, along with the level of 18600. If the pattern fails, we may see the markets correcting to levels of 18100 – 17910!
And if this happens, we may safely conclude that although the May adage doesn't work perfectly all the time, its worth keeping it in the back of your mind!!!
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