Too early to start nibbling, let the downsides play first: Jai Bala
ETMarkets.com
Synopsis
“This bull market correction in 2022 is likely to last at least for another couple of quarters. We will have intermittent bounces that will make the market volatile. The theme is an overall correction for 2022, but the bull market is intact. When the markets undergo correction, one must have cash to implement at lower levels.”
By ET Now
“Among midcap IT, I like MindTree, Nucleus Software and in the auto space one can look at auto ancillaries. But there is ample time to wait. That is the point I want to reiterate. I am very bullish on the medium term but I am patient enough to let the downsides play,” says Jai Bala, Chief Market Technician, Cashthechaos.com.
In November or late October I said the market is undergoing a bull market correction and the markets are heading towards 14,000 on the Nifty. So, it is a bit early to start nibbling if you are a just-in-time guy like me.
Basically the nearest support for the market is about 16,830. Now once that is broken, in the short term, we will see about 16,100, which will probably break the December low. So looking at the global indices, the picture is of more volatility. My interpretation of the global structure is that the equity markets in the US will break the January 24th low and go below that and then see a bounce back.
This bull market correction in 2022 is likely to last at least for another couple of quarters. We will have intermittent bounces that will make the market volatile. The theme is an overall correction for 2022, but the bull market is intact. When the markets undergo correction, one must have cash to implement at lower levels.
You track the charts of gold, crude as well. How are the charts reading looking right now?
As far as gold and silver are concerned, $1,880 per ounce is a very important level for gold. Once that is taken out, we are possibly looking at record highs for gold but whatever happens, this week I am looking at the gold and silver market to have one more drop below the October low and then go to record highs.
As far as the dollar index is concerned, it has got an unfinished move towards 98-99 and the final leg is starting from 95 odd. So I am bullish on the dollar, bullish on gold and that will be a move towards safe havens. So, let us see what the market does but do not pre-empt and wait for gold to cross $1,880 and silver $24.75.
If there is a further 10-20% fall from here in the equity market, what would you like to nibble for good returns over the next six to eight months or one year’s time?
It will be IT. I am very bullish on IT for the medium term but it has got some more corrections to work with. So, I will probably look at on the IT index about 28,000-27,000. There is ample time to wait but if one is looking to play for the medium term, it has got a lot of upside.
I would look at the IT index to go up to about 55000 by 2023 but one has to be patient and that is the strongest pocket. I am bullish on the pharma index also but it has got short term downsides to work with.
In the midcaps, what is looking good to you?
I like MindTree, Nucleus Software and in the auto space one can look at auto ancillaries. There is ample time to wait. That is the point I want to reiterate. I am very bullish on the medium term but I am patient enough to let the downsides play.
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How bad do the technicals look globally or would you start nibbling in right now?In November or late October I said the market is undergoing a bull market correction and the markets are heading towards 14,000 on the Nifty. So, it is a bit early to start nibbling if you are a just-in-time guy like me.
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This bull market correction in 2022 is likely to last at least for another couple of quarters. We will have intermittent bounces that will make the market volatile. The theme is an overall correction for 2022, but the bull market is intact. When the markets undergo correction, one must have cash to implement at lower levels.
You track the charts of gold, crude as well. How are the charts reading looking right now?
As far as gold and silver are concerned, $1,880 per ounce is a very important level for gold. Once that is taken out, we are possibly looking at record highs for gold but whatever happens, this week I am looking at the gold and silver market to have one more drop below the October low and then go to record highs.
As far as the dollar index is concerned, it has got an unfinished move towards 98-99 and the final leg is starting from 95 odd. So I am bullish on the dollar, bullish on gold and that will be a move towards safe havens. So, let us see what the market does but do not pre-empt and wait for gold to cross $1,880 and silver $24.75.
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If there is a further 10-20% fall from here in the equity market, what would you like to nibble for good returns over the next six to eight months or one year’s time?
It will be IT. I am very bullish on IT for the medium term but it has got some more corrections to work with. So, I will probably look at on the IT index about 28,000-27,000. There is ample time to wait but if one is looking to play for the medium term, it has got a lot of upside.
Stocks Recommendations
I would look at the IT index to go up to about 55000 by 2023 but one has to be patient and that is the strongest pocket. I am bullish on the pharma index also but it has got short term downsides to work with.
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In the midcaps, what is looking good to you?
I like MindTree, Nucleus Software and in the auto space one can look at auto ancillaries. There is ample time to wait. That is the point I want to reiterate. I am very bullish on the medium term but I am patient enough to let the downsides play.
