Saturday, December 1, 2012

Outlook For December 2012

Well time indeed is flying and we are on the verge of ending another calendar year!!!

First a review of Nifty and BankNifty charts on a Daily / Weekly basis

Nifty Levels

On the upside, IMHO the steam can only go upto 5944 levels for now. As I have maintained throughout the year, the 'Secular Bull Market' that a lot of analysts are talking about can only come after Rollar breaches the 48.25 levels. However, if Nifty closes above 5944, then bulls have it in them to spring a lot more surprises on bears [In the beginning of November itself, the outlook was that if 5740 is breached on upside, 5880-5944 would be the logical destination]

At a minimum, the next leg down will hit 4531 if not lower; one can expect a repeat of the Nov'10 to Dec'11 pattern repeating in the coming year 2013 i.e. a nice 8 to 13 month corrective pattern. Please note that the correction is expected in 2013 and this correction can be far more severe and faster than the 2011 correction!

Banks are sitting in piles of Non-Performing Assets and these negatives have still not been priced in. Kingfisher Airlines and Suzlon are just tips of the iceberg that have come up over the last 2 months. For the record as per an Economic Times survey, the Corporate Debt Restructuring activity and deferred payments in 2012 period have crossed the cumulative restructuring from 2001 to 2011 period!!!

Whilst banks are advertising a lot for retail loans, corporate loans are in bad shape; business credit extension activity is alarmingly decreasing and interest burdens are going higher. The amount of activity in the dot-com phase are also a signal of troubling times to come. Exactly 12 years ago, the same mania for dot-coms were prevalant all over the globe and like-wise in India. Myntra, Jabong, Olx, Community Matrimony etc etc are not at all encouraging signs but a warning of troubles to come. When the interent bubble burst and had its effects on India, India also witnessed a lot of airlines going under water!

2000 + 13 [Fibonacci Number] = 2013; Internet Bubble Burst in 2000
2008 + 5 [Fibonacci Number] = 2013; Housing Bubble Burst in 2008
2010 + 3 [Fibonacci Number] = 2013; Corrective Phase for Nifty that preceded a euphoric rally

2013: Time will tell what the excuse is going to be!

Europe's troubles are far from over; things are only worsening and at some point of time next year, Germany and Finland will in all likelihood pull out the plug and opt out of the Euro. Whilst there is a fiscal cliff discussion happening on US markets, one should not be surprised to see a huge surge in defaults on education loans in that market.

That is the bigger picture in my personal view and back to Nifty for Dec '12
5408 still remains a strong support and as long as that holds, bulls are safe.

Critical Dates
6th December 2012
20th December 2012 - Very very important time period begins around this date

No comments: