In our previous post (January 2012) about Volumes in Indian markets following Elliott Wave Pattern we had mentioned about the Volumes in Indian markets Correcting in a Zig Zag fashion (in figure yellow dotted line). But as the beauty of the Elliot wave pattern lies in the flexibility, the patterns in Volumes started adapting to the new situations built up in India due to the overwhelming majority to a Single party in the recent elections and started to correct in a fashion called as Flat correction (in figure Green dotted line) instead of Zig Zag correction as previously mentioned. As I said above the beauty of Elliot Wave patterns lies in its flexibility this (current correction pattern) might as well change due to some solid positive external factor which might change this pattern to a Impulse Wave rather a corrective (flat correction) as mentioned before. But for time being it looks like this is going to be a flat correction in Volumes which makes the market more or less a moderately bull for next 2 qtrs and activity might pick up drastically after that. The volumes in this moderately bull market will not dry down but will remain in a range bound fashion chasing good quality stocks on a selective basis.
The Simple rule in the market should be to select good quality Large caps, Mid caps which are performing on a consistence basis and go long in it. Avoid stocks with controversies, with huge debt burden in their balance sheets and stocks having other fundamental issues. The mantra should be – Be a Responsible Bull. Don’t be an Aggressive bull or a Cautious bull or an Aggressive bear or a Cautious bear.