Nifty target@22,800 by year-end; we are in a middle of a 3-6 month consolidation, says CLSA’s Laurence Balanco

economictimes.indiatimes.com:

Laurence Balanco of CLSA says Nifty has completed this topping pattern that had formed between August and October – the classic head and shoulders reversal – and that still gives a downside target around 22,800. The midcap sector has also rolled over from the rounding topping pattern that we have had for the past six months and not yet met the minimum downside targets. There is no evidence of slowing in downside momentum and the relative underperformance continues. Be patient and wait for those opportunities to develop.
Balanco also says that while we have been down for roughly a quarter, the consolidation can take another quarter. So, this is a process of three to six months which will give us a platform for a resumption of the longer-term uptrend.

Let us understand the way the world is getting divided. There is an emerging market basket which is moving lower and then there is a developed market basket which is moving higher. I am mainly talking about the US market here. Do you think there is a sizable disconnect between what the developed markets are doing versus where emerging markets are moving? Could that extend for another quarter or so?
Laurence Balanco: It is quite interesting.

If you look at the longer-term charts, the emerging market versus developed market ratio peaked back in 2010 and we have seen an extended period of underperformance. A large portion of that has obviously been the China de-rating. But quite interestingly, since the November 5th US elections, there has only been a handful of markets that have managed to outperform or produce positive returns and that has been Singapore, Turkey and the UAE.