MarketStar Capital

Hello Folks,
The last month of year 2012 is here, and so is the decision time on the US Fiscal Cliff debate. Knowing Obama’s positive track record with such political logjams, we should not worry too much because he will somehow sort out things before the deadline.

December usually ends without any major market falls, as funds avoid rocking the boat in order to protect their year-end NAVs. So its rare to see a sell off in December. But its common to see a sell-off in January. So if December goes smoothly, then we must prepare for Jan 2013, when the real underlying market forces will come out.

Jan-Feb are always loaded with momentum, action packed. Once the market takes a direction in Jan, it usually continues till end Feb. So if the markets start correcting in Jan, it may be a deep correction. So let the good times and jingles of December not lull us into peace or laziness. Major market action is just 1 month away!

Notes for December 2012:
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1. USA: Dow Jones Index – As mentioned in previous newsletter, we bought the Dow Jones on closing above 12,800 and we will remain long above 12,800. In S&P500, we bought on closing above 1380 and will remain long above 1380.

2. India: Nifty Index – We have been long above 5550 and it has given a very good gain, with Nifty now at 5880, at 1.5 yr high. We will remain long above 5750.

3. Hong Kong: Hang Seng Index – We had gone long at 21,000 and it has done well from there. We will remain long above 21,500 and will exit on a closing below this level.

4. Cash: Holding cash as Gold (not selling in near future), with 20% portfolio in Gold.
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Best Wishes,
Shankar