Nifty Prediction 2016

Why Indian Stock Market is falling sharply?

Nifty has seen 7% correction in January 2016 till date. There are so many factors for this downfall, but the main reason is Liquidity. 
     In Jan 2016 ,FIIs were net seller of Rs.12737 crores . China problem was very well known from Year 2014 to mid of Year 2015,So China crissis is not main cause for India Down Fall.


Actual Reasons behind this downfall

1. First of all, when US FED hinted that they are going to raise interest rate in December 2015. If you look at FII data in Indian as well in emerging markets from May-2015, they started pulling money from all markets. Because of this, money that came from US has to go back, due to rise in interest rates in US. So, without FIIs money support, market was not able to move further positive and had seen selling pressure on every positive movement.
2. Second reason is Crude. As crude price fell to 12 years low, many crude producing countries felt heat in their budget. Saudi reported highest ever budget deficit in its entire history. So they had no option but to start selling oversees assets which they have invested mainly in Equity/Currency and Government securities to meet their budget requirements.
3. Around 60,000 crores has been pulled out from Indian markets since May-2015.                                                                                                              Till January month of this year, DIIs were trying to nullify the effect of FII by investing on every dip. But problem started for DII when retail investors started to panic. Retail & HNI money reduced in MF since last few months and that’s the problem right now. 

When would this volatility stop and market will make bottom?

No one in market can predict perfect bottom or perfect top.

Some clues from history : Nifty should stabilize at 7200-7300 levels. when we compare this cycle with year 2011-2012, correction period was almost 1.5 years i.e. same as of this downfall. Also price correction also done around 15-20% from high.

         So, Nifty could have another correction of say 100-200 points from here and with local as well global supportive factors, bottom should form around these levels.

What if Global cues worsens and Nifty breaches these levels?

      If Nifty breaches 7200 levels with global cues, then market will see sharp downfall and that downfall would be supported with big panic in the market.Presently on Nifty charts, below 7500 levels, two Head and Shoulder breakdown occurred. Now as per this pattern, Nifty targets are set at 6700-6200 levels. First pattern target is 6700-6800 below which Nifty will go to 6200 levels, where it will find its bottom.

       Currently Nifty PE ratio is around 19.65. At 6800, Nifty PE ratio will be 18 and at 6200 it will be around 15-16. Normally big correction ends when Nifty PE ratio is between 14-16. So we are firmly sure that 6200 will be rocks solid bottom for Nifty, if anyhow, it comes to those level.

When would New Highs be seen in Indian Stock Market?

Next bull run in Nifty will start only if Nifty will close above 8200 on monthly charts. If Nifty will close above 8200 on monthly basis then next target for the bull run will be 11230 for Nifty.

Strategies should be followed for 2016:

For long term investors: Invest 30% amount in market at this level and remaining amount at 6800 and 6200. As Indian growth story is intact there is nothing wrong for long term investor to allocate money at this level in good stocks.

For short/medium term traders: Buy now if Nifty closes above 7500 with stoploss of 7300. If Nifty breaches 7200 then chances are that it can test 6900-6800. So, around 6900-6800, one can buy with stoploss of 6700 on closing basis. And if in case Nifty see 6200-6300 levels then buy blindly without any stoploss and hold it.

Conclusion:

Nifty Support levels: 7200-6800-6200. Resistance levels:7500-7800-8000.

If Nifty closes above 8200 monthly basis then bull run will start which will bring Nifty to around 11,200. Till then, Nifty will be in bear grip.

Long term Investors should divide their Investment amount in three equal parts for every support zone and hold it for few years.

source : investing