Thursday, November 12, 2009

NIFTY: Targets Met, Markets to Go Into Doldrums


The yesterday's move completes the minor "rally" target on the Index and the market is exhausting its energy to create major swings. The fundamentals are not going to show too much of a change over next few months. By now, everyone is convinced about the recovery. Things are not as bad as they were supposed to be. In fact, from now on, it is going to be just a mundane update on economic numbers as far as this part of the world is concerned.

As things stand today, practically all the important information is available and discounted. Growth targets are now well known and a consensus is emerging there. We all know general inflation is not a concern (the most fallacious indicator at the moment in India), food and primary article prices are going through the roof (jeopardizing the growth engine and long term growth prospects by skewing the income distribution), interest rates are going to stay high and so on and so forth. No surprises on any side.

So all the rallies and dips are just a way for the market to finally settle for a relatively low volatility price range. None of the variables that move the market are likely to change much over next few weeks. On top of that, international money is going to completely cease movement come December as the investor/trader/fund manager community heads for the annual break.

This makes for a very dull market over next few weeks. Of course, die hard punters will keep on trying to find direction for this market. But there isn't much juice and every move is going to dissipate more and more energy.

Clearly, time to trade ranges so long as the market shows some energy. Then shut shop and enjoy the winters and the holidays.


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