GLOBAL EFFECTS

Dear Investors

On Tuesday markets opened with a ‘Yawning Gap down’, within minutes

of opening Nifty lost Around 100 points  There was a state of

‘Frozen Fear’ in market for first few minutes leading to a sharp fall

in Nifty to 5373

All happened in minutes on the back of news about fear of

Radiation spread around Tokyo. During next few hours Nifty

Recovered some ground to loose again on the news of weak

European Markets

 At the end Nifty closed at 5449, well above 5400.

Levels during the day;

Open: 5420 / High: 5497/low: 5373/close: 5449

What Next

t it is difficult to predict market movements

As long as there is a flow of bad news from Japan, Europe and Middle

East. Indian markets have shown great resilience but ‘Global Effect’

is creating a state of fear In traders and investors all over the world

.

Though Nifty recovered from day’s low and closed above 5400, one

can not be confidant that Indian markets will scale higher levels

on Wednesday, as Dow Future was 200 points down.

As there are very few long Positions in market Nifty is not falling

Beyond certain level

Most of the trades are ‘Day positions’ which get covered before close

.

Similarly markets are not gaining higher levels because there are

Minimal shorts in cash market, so no question of covering leading

To higher levels.

 F&O positions are hedged on both the sides, covering of positions

intra day Or at the end of the trading session is responsible for

high volatility with in the range, 5380-5600.

For markets to scale higher levels two things must take place

a)      there has to be substantial short positions

b)      and/or there has to be good amount of cash buying

Similarly for markets to go down there has to be

A)     long unwinding of existing longs

B)     Fresh short built up ., in anticipation of a fall

This situation is making Nifty to trade in a tight range for

Last few weeks

Market is run by the day traders or F&0 traders

 Now the range has become tighter, 5380-5560.In such conditions

It is better not trade for few days than to get into losses.

On the background of a constant bad news flow, it has become

difficult to Time the trend as well as magnitude of rise and fall, so

Till news flow dries and Global and Local situation settles

Down it is better to avoid trades, long or short, even avoid

‘Buy the dips’ strategy as long as bottom is not certain.

Technical View

PIVOT FOR NIFTY: 5439(sensex: 18140)

R1 (First resistance) is @ 5506(sensex: 18361)

R2 (Second resistance) is@5563(sensex: 18546)

R3 (Third resistance) is @ 5630(sensex: 18767)

Significance

Market has closed above pivotal level and now for a

Sustained up move it has to trade above R1 (5506)

R2(5563) is supposed to be the key level in going

Towards the 200DMA @ 5669.

All shorts should be covered at and around 5563 and

Fresh shorts can be added once market reaches 5630.

It is advisable to book all long positions below Pivot

At 5430.

S1 (First support) is @ 5382(sensex: 17955)

S2 (Second support) is @ 5315(sensex17734)

S3 (Third support) is @ 5258(sensex: 17549)

Significance

S1(5382) is nearer to the Tuesday’s low so it should

Act as a strong support for markets during day.

Any low below S1 will take Nifty to 5200 levels and

Terminate the on going rally.

All long trades should have 5330 as a stop loss

While shorts can be created at and below 5371

With a stop loss at 5439(Pivot level)

VXI(Volatility Index)

Pivot is @ 26.80, indicating high volatility, even resistance

Levels are lifted above 28/30 indicating higher volatility.

This is the indicator of nervousness and uncertainty in

The minds of Bulls as well as Bears

So caution is the mantra of the day.

DMAs(Day moving averages)

5DMA @ 5504(sensex: 18370)

20DMA @ 5466(sensex: 18226)

40DMA @ 5494 (sensex: 18340)

50 DMA @ 5587(sensex:18650)

200 DMA @ 5669(sensex:18889)

50 Exponential DMA is @ 5568(sensex:18583)

200 Exponential DMA is @ 5604(sensex18689)

Significance

Immediate resistance for the up move will be at 5504

(5DMA) While if Nifty moves below 20DMA (5466), then

A fresh down move will begin.

200 Ex. DMA (5604) will be the next top of the market range

Beyond which lot of selling will take place

Once Nifty moves above 50DMA (5587) logical target will be

5604

Accordingly all long and shorts should be adjusted

COMMENTS

There is a lot of news base uncertainty in market. As long as

All this  does not stop markets will be moving in a range.

It is advisable not to have large short or long positions.

Even long term buying should be postponed till a certain

Trend emerge

Japanese index has bounced back while US markets were

Down ,  giving a mix  trend for the day.

Resilience of Indian markets in bouncing back from lower levels

Indicate that Nifty wants to scale higher levels before falling

Below the low of the range (5330/5604)

We are nearing RBI policy (17^th March) so watch rate sensitive

Carefully (Banks, Reality and Infra)RBI may raise rate by 25bps

(Basic points) but the language of the statement will be

Important so will be RBI's growth projections by Governor  

Stock Specific

There is no change in stock specific list

Go through the list given on Tuesday

Keep stop loss and avoid long term buy.

IMPRESSIONS

 

SHATTERED CONFIDENCE

NO ADVENTURE PLEASE

Thanks

Dr. Vasant Bele

All the views are personal, invest after consulting experts