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Watch Nifty
Ø World indices, Nifty and sensex have all closed beyond the key resistance levels. While a confirmation ( in terms of one more close) is still awaited for Dow & Nasdaq - the Indian indices are set to scale new highs. A huge upside potential awaits although with volatility and corrections along the way. We will attempt to advise investors on short term corrections and also a deeper correction which would ensue after the current bull run.
Ø While it is not our aim to dampen the festive spirit when the sentiment is gung ho, we also feel that it is not wholly inappropriate to throw in some caution around these euphoric times. The present bull run has good strength which could take the indices like Nifty to new altitudes - say 7000 ( +/- 5%). After attaining these heights, we expect huge corrections which would make the 2008 fall feel like a "minor correction". The correction is expected across all markets and irrespective of the fact that India is economically well off. The correction could last a few years time and has - without sounding too alarmist- the potential of wiping out all the gains between 2000 and 2010. We would give our investors early warning signals and advise them to be in cash at the appropriate time.
Ø Commodities :
o It may be recalled that on 01/11/10 we had envisaged silver to touch 38000-40000. We had also advised when silver was around 37000 that it could be accumulated in larger quantities on a reaction of 1500-2000 points. It reacted 1200 points to touch 39,500 ( almost near our first target of 40,000).
o Precious metals along with the stock indices have the potential to hit new highs. Here again, a word of caution. After silver and gold achieve their targets - with silver hitting around 60,000 (+/- 10 pts.) , we can expect a steep correction in these metals also like the stock indices. We will re-visit when the prices peak out.
Ø Nifty's resistance for 08/11 is likely around 6350 ( +/- 10 pts.)
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