The interesting aspect of the forecasts of 2011 are exactly as they were around this time, last time around. Other than Nomura, there are very few sober forecasts of the Indian markets for 2011. We tend to be far more cautious than the consensus. There are high indications that the Emerging markets are at an advanced stage of a massive bubble. I am not sure if it will burst in 2011 or 2012 but when it does, it could send the Asian region into a tailspin.
Bullishness about the Indian markets is all pervading. However, the Charts speak another story. The chart below of the Kagi Weekly Nifty Chart (the Benchmark National Stock Exchange index) clearly shows that distribution that is taking place in the Indian stocks is at a historically high level of negative divergences, which have always been associated with long-term trends.
I believe that over the long-term the optimism about the Indian markets may be over-optimistic. This is not to mean that the markets are about to crash. They still have a lot of trading momentum which could take the index to even as high as 6800 - if the bulls are right. But from there it could be quite a cliff downward. Who knows what impact a breakup of the Euro would have on the global markets.
No comments:
Post a Comment