Wednesday, 25 April 2012

Gold may touch $7,000 per ounce before end of uptrend

According to Bank of  America Analyst MacNeilCurry, gold prices would need to double in less than a year to show the kind of extreme momentum that would signal the end to the long-term cyclical uptrend. "Until we see price action take some kind of massive speculative blow-off, where prices effectively double in a year or less, I have to maintain a long-term bullish bias."

The technical strategist added that gold's price could double in a shorter time frame, and that he was watching momentum most closely for indication of the kind of speculative fluctuations that would signal an end to the secular bull trend.

"That says to me, we'll probably see a move in gold, before all is said and done, to between $3,000 to $5,000 (per ounce) and potentially $7,000 per ounce," he said.

Using Elliott Wave counts on a logarithmic chart dating back to 1969, Curry's analysis points to a long-term target for gold at $6,081 per ounce. Gold has met an initial wave target at $1,801 an ounce, but momentum is much too subdued to doubt the uptrend, he said.

For example, gold's recent fluctuations have transpired amid very low volume. Friday's was the lowest so far this year. The chartist identified an intermediate price goal at $2,982 channel resistance, but warned, "The risks are to the upside."

The second major signal necessary to predict the cyclical uptrend was over is extremely high volatility. "If you go back and look at daily price highs at long-term tops across commodities, you should see daily ranges at high prices of about 10 to 15 percent, potentially 20 percent."

Tuesday, 24 April 2012

India can give 10-15% return in FY13: Foreign brokerages

Although CLSA has cut its target for the Sensex to 19,000 from 20,000, it still maintains its "overweight" rating on the index.
While the foreign brokerage firm has turned less bullish on the market due to adverse macro developments over the past few weeks, it still expects 10-12% market returns over the next one year, helped by valuations.
Meanwhile, last month, Goldman had set a March 2013 target of 6,100 for the Nifty index. That means around 15% upside from the current levels. Goldman Sachs had upgraded Indian stocks to "marketweight" from "underweight".
However, Sakthi Siva of Credit Suisse is neutral on India at this point in time. "We tend to favour markets that are in the cheapest four club. India actually joined the cheapest four club on January 3 and we upgraded India on the back of that call. But fortunately or unfortunately, India then put on about 25% in US dollar terms. So, as a valuation model it has since dropped out of the cheapest four club," she elaborates. 
Siva’s call is not to chase the rallies and buy the dips. "Every time there is a market correction or a dip, we are happier to recommend buying on those dips," she adds.
Challenges:
Goldman says oil prices remain "the most significant risk" to its "positive" view on India. Also, policy inaction can hurt the market sentiment. Global uncertainty is another concern that India has to deal with. The concerns in Europe will also probably persist for a while.
Given all these challenges, it is prudent to be cautious.