On Monday, our markets remained almost unchanged on the back of outcome to come on fiscal cliff from United States. Even though the broader market activity was very thin, few mid-cap stocks along with PSU banks performed better than expectations. Bank of Baroda, PNB, Gitanjali Gems, PC Jewellers, TBZ and mainline real estate stocks.
From here on, immediate basis levels like 5,880 and 5,920 are going to act as a major trend decider levels for the market. On the monthly charts of Nifty and Sensex, the market has formed Doji formation which is a sign of abnormal activity to come in the coming month.
Over the past six months, the market has managed to form a series of higher top higher bottom on monthly chart, which is also a plus point for the long term trend of the market.
As per time theory and analysis, January 2013 will be the most crucial month for the Indian market. The highest of the month will play act as a trend decider level for the market and on the dismissal of highest level of January 2013 will lift the market beyond 6350 levels in a shorter span of time (in few months). The overall appreciation after the break out should be in the region of 15 per cent to 20 per cent in the long run.
The dependence on currency has increased and clarity of multi-year bull-run for equity markets will only come to known after the completion of February 2013. We are expecting currency to appreciate if it fails at 55.50/56 levels. Indian markets will enter into a multi-year bull run if Indian currency breaks the resistance at 51.
In brief, the dependence is more on the trend of Indian currency. As per price pattern and time theory the highest level of the January 2013 will play trend decider level for the market (more upswings above the highest of Jan 2013).
For investors, our advice is to invest at each 200 points decline on Nifty from its recent top like at 5750, 5550 and so on. We are specifically bullish on Media, Private Banks, NBFCs and Consumer Durables. We feel that these sectors are untouched with a global development.
Stock specific: for next 12 months (Technical)
Buy REC: The stock is to do well in the coming year with a price target of 350 on the higher side. The stock is forming rounding bottom on weekly chart and break out level is at Rs 252.
Buy Hindalco: This stock is diverging positively on weekly basis and is out of resistance zone which was around Rs 120/125 levels. The rise may exceed up to Rs 160 over the next few months.
Buy Tata Global: Currently, it is into corrective mode but overall performance is indicating at rally up to Rs 190 over the next six to eight months. It may fall to Rs 150 or Rs 153 levels that should be buying opportunity for long term investors. Strong bullish impulse on weekly chart may help the stock to attract buying at each support.