(Bulls) Hanged Till Death

Dear Investors

On Tuesday trading began on a flat note and continued

Without much move on either side till 11 am. As the Governor

Started reading the details of ‘Monitory policy’ traders and

Investors became nervous. 50 bps rise in rate was

not as shocking as the statements by the Governor in relation

to Inflation, Growth, GDP and banking policies

It was like announcing a death sentence, ‘Hang till Death’ to

The bulls. There was no respite till end and Nifty

Collapsed 150 points to 5550 to recover few points.

There was blood bath in all sector indices, except IT and

Pharma. Banking, Cap good, Construction companies were the

Biggest  looser.

Levels for the day

Nifty: Open: 5689 /HIGH: 5710 /Low; 5554 /Close: 5565

Sensex: Open: 18989 /High: 19024 /Low: 18502 /Close: 18534

Advance: Decline: 721:2138

What Next

Nifty has gone below all short term supports. The effects

Of trauma will continue for few more days. It has to be seen

 How much recovery occurs in next few days?

After a long period of time 'fundamentals' have taken a driver’s

Seat against ‘Liquidity driven Momentum’.

There  are huge shorts built in the system and majority longs

Are booked

Wait till markets get settled at some level for few trading

Sessions.

As the markets are in an extreme oversold position

There will be a temporary ‘Bounce’, which can be used to

Book profitable positions

Levels to watch:

UPWARD: 5609(18686)/5665(18871)/5765(19208)

DOWNWARD: 5515(18355)/5480(18200)/5420(17971)

Technical View

PIVOT IS AT: 5609(18686)

Nifty is below all the short term and long term moving averages

Like 5Day Exponential @ 5692, 200Day Exponential @5615

Immediate resistance to an up move will be at 5640 (50DMA)

And 5665, if crossed there will be selling pressure at 5700, which

Was a strong support before during current down move

Market is in a clear 'downtrend', below the important level

Of 5515 Nifty will gravitate to 5480 and 5420 levels as

 vital supports

Nifty should remain above 5515, which is a important support

Level , 78 % correction of the , 5310-6275 comes at 5509

5310 was the low on Feb.11 2011 and High of 6275 on Nov.

5th 2010 or previous top was at 6338 while the low was at

5177, now 5420 is a good support for the reversal at 78%

COMMENTS

 I have been cautioning investors since last few 

trading sessions against building fresh long

or investment portfolios(Read the last two 'Blog'

posts.. Red Alert and Day(days) of Crisis)

Market in near term is in a ‘Down Trend’

Nifty has broken all important supports while

Moving downward. Unless it moves above 5700

With good volumes on closing basis for 2/3

Sessions we may remain in a range of 5480/5550

Up move may restart if Nifty closes above 200DMA

@5753.

Day traders as well as positional(short term) traders

Should wait till Nifty gets stabilized at some level

Going ahead volatility will be very high.

Market Strategy

-Wait till markets stabilize

- Cover all shorts at 5660

-No fresh shorts unless Nifty closes below 5480

-Long positions can be taken at 5480 and above

 With a stop loss at 5420.

-Fresh shorts can be created at and above 5609

With a stop loss at 5700

-5665-5700 should be treated as ‘No trade Zone’

Stock Specifics

Do not buy

Banks

Autos

Cap.Goods

Infra

As the values may drop 4 to 5%

Buy in

FMCG

PHARMA

IT

Stocks

Colgate

ITC

GE Shipping

RIL

ONGC

Avoid Mid caps for the time being

Long term investments should be

On hold in mid cap as well as large

Cap stocks,  till markets are out of woods

IMPRESSION

KICKED IN

Thanks

Dr. Vasant Bele

All the views are personal, invest with caution and

After consulting experts