Dear Investor
On Wednesday
Just a day before May expiry stock market moved to
A dangerous territory. Nifty after opening on a negative
Note went on falling below 5350, around 5330(5328)
It was some short covering, at the end, which brought it
Back to 5350(5349), a vital support level. The day was
Marked by extreme volatility and selling across the large
Cap stocks with good volume. There was selling pressure
In all index majors as well as mid cap and small cap stocks.
Data for the day
Indices
Open: 5389(17876)
High: 5380(17976)
Low: 5328(17786)
Close: 5349(17847)
Advance Decline: 1115:1665
Turnover: 1 40,000cr.
What next:
Even though it was pre expiry day there was no short covering in
Stocks , on the contrary fresh shorts were added in large cap
Stocks from all the sectors. There seems to be no fresh buying
Either by, FII, DII or retail investors. Since last few trading sessions
Bears have managed to have a ‘Slow poisoning’ of the Bulls, which has
Taken markets to the last supports at 5310. Market is totally
Under ‘Bear pressures’, it has to be seen how it behaves in next
Series?, If Nifty violates important levels of 5310 then we are headed
For a medium term ‘Bear Phase’
Levels to watch
UPWARD: 5380(17950) /5420(18050) /5515(18405)
DOWNWARD: 5310(17680)/5280(17600) /5220(17430)
Technical view:
Pivot at: 5355(17869)
Nifty will have strong resistance at 5382 /5391 levels (5Day
Exponential Average).
To maintain some hopes of an up trend
To continue Nifty has to move above
5 DMA @ 5418
10 DMA @ 5441
20 Day Exponential average @ 5493
Unless Nifty moves above 5506 which is 20 DMA
And 5584 (200Day Exponential average) we are not
Out of bear grip.
There is no trend reversal (down to up) unless Nifty close
Above 5755 (200 DMA)
It is very important that Nifty should hold the vital support
Level of 5310
If falls below 5310 on closing basis, markets will lead to
5177 with minor stops at 5280 and 5220.
Market strategy
-Today being last day of expiry, it is expected to have some
Bounce on the back of short term short positions getting
Covered.
-It is better to be on sidelines, till markets take a decisive
Direction in next series.
-One can carry short positions as long as Nifty trades below
5515
-Fresh longs can be built once Nifty is above 5480/5506 on
Closing basis with a stop loss at 5310 on closing basis
-Fresh shorts can be added once Nifty breaks 5310 with volume
On closing basis with a stop at 5480 and target of 5177
-It is advised to be on sidelines for next few trading sessions
COMMENTS
It is a combination of ‘Global Factors’, Bad Earning Season
Along with lack of policy decisions from government, that is
Allowing ‘Bears to Press Markets’ to the bottom of the on
Going rally. Bears have pressed bulls to surrender their
Support, one by one, leading to the brink of ‘Bear Market’
Important observation is …..
During last few trading session or weeks, even though some
Sectors like Reality, Construction, Capital Goods, Oil and Gas,metals
Were hammered, market was supported by sectors like Banking
And Financials, Auto and IT along with FMCG. This was responsible
For maintaining Nifty above water levels, but at present due to
Domestic headwinds like, Inflation, Interest rates and poor earning
In those sectors along with ‘Global Worries’ these sectors are not
In a position to support markets, which led to this catastrophic
Situation
Weak sectors are becoming weaker while stronger ones are
Loosing strength, that’s why markets are passively falling
To lower and lower levels. Unless there is some drastic change
In ‘Domestic ground realities (like Inflation, Banking rates, Earning
And Government policies) and Global Environment market
Sentiment will remain nervous and will not attract FII and retail
Investors to markets
Nifty moves during last few trading sessions (closing values)
13/5 @ 5563 19/5 @5437
16/5@ 5497 20/5 @5484
17/5 @5440 23/5 @ 5383
18/5 @ 5422 24/4 @5398
25/5@ 5349
……….Can give some idea haw bears have managed
‘Slow poisoning’ of bulls, markets are ‘sinking’ to lower levels without
Much capitulation or panic moves.
One of the main reason is, ‘Very low participation’ of
Retail investors towards cash market. To improve this there has to be
Some change in perception, which is possible, if-------
Monsoon is good
Inflation drops
Rates stabiles
FII start putting money in Indian markets
‘Global problems get resolved
And
Indian government starts acting on policy front
Till that time ‘Markets will be grinding’ down and down.
Stock specific
No trading positions are advised
As long as long term investments are concerned wait for
Some more time till markets settle at some lower levels
IMPRESSION
UNDER PRESSURE
Thanks
Dr. Vasant Bele
All the views are personal, invest with caution and after
Consulting experts
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