Nifty has
built a powerful roof over last 6-7 years and now market participants
are desperately looking for force (election results) that can break this
ceiling
.
Where’s the roof? – 6400 at Nifty
Here’s how Nifty Weekly Chart has behaved in last 6-7 years
As you
can see in the chart above: Nifty has made 3 unsuccessful attempts to
break past 6350-6400 in last 6 years. First subprime crisis broke the
back of market in Jan 2008, and then in Nov 2010 – the corruption+
inflation threat broke the market down from that same level. Now
emergence of AAP post state elections seem to have acted as a lid to the
6350-6400 ceiling.
Now as we
move closer to elections and depending on market perception on who will
form the next Govt: Nifty’s future course of action may follow. But as a
market participant take the event of breaking out above 6350-6400 with
total seriousness.
Just look at the way S&P behaved on its breakout to new high
S&P500
also broke out above 12 year High of 1530-1560. Post Breakout,
S&P500 made a small pullback to 1560 before taking off and rallying
to 1800. That’s what breakouts do. It results in sharp move in short
period of time.
Market
will do what it has to do, we can only guess.
The Big picture level to
remember: Nifty breakout above 6350-6400 will lead to massive upside
move in market in short term. So, keep an eye on this event
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The Breakout stock is Aditya Birla Nuvo.
Here’s why the Aditya Birla Nuvo stock looks attractive
As you
can see in the chart above: Aditya Birla Nuvo broke out above 1026 on
weekly chart in Nov 2012. A year has passed and stock has done nothing
except consolidation above 50 week moving average. The stock is once
again pulling back to 50 week moving average and it looks like the
perfect launch pad for the stock to Multi year breakout move.
The stock
is Buy as of now and will be hold as long as it holds above 1020. A
break below that would lead to review. Remember, Breakout stocks deliver
strong gains only when one is prepared to hold and ride the stock as
long as it behaves well.
Here’s one example of Breakout: Lupin
We covered LUPIN when it broke past 495-510 in March 2012 and see a year and half
later – stock is at 986. Breakout stocks are investment stocks and gains
are made only when one is prepared to hold and ride it
Emerging
markets have been out of favor for some time now with a well defined
resistance at higher end. 2014 has not started well and in just few
days, the emerging market ETF is down 5%
There are
two popular Emerging market ETF: 1. the Vanguard FTSE Emerging Markets
ETF (VWO) and the 2. iShares MSCI Emerging Markets ETF (EEM). Let us
look at EEM
Here’s the Chart of EEM
As you
can see in the chart above, EEM has been trading between 36 and 45 for
two years now. Remember, everyone chases performance and right now
considering how lackluster emerging markets are performing – there is
not much excitement. As per recent data, investors have pulled out $11.5
billion from emerging markets in the fourth quarter of CY2013. On other
hand, they have poured almost $116 billion into developed markets funds
during same time
Here’s what one should do:
Keep an eye on EEM for decline to 36 (expect support there) and expect momentum above 45.
MSG GIVEN ON JAN 2 ND
BUY SINTEX 3000 SHARES @ 37-37.5 SL 34 TGT 44-45 (HOT) NOW HIT 40/75 PROFIT 10500 RS
STILL LOOK GOOD FOR 44-45 LEVELS
