Day (Days ?) Of 'CRISIS' .....

Dear Investors

It was traumatic Monday and beginning for the,

‘May Special’, Market opened on a positive note

To drift down during trading to the low of 5687.It was

Below expectation results by PSU banks and fear of RBI

Made traders, nervous and cautious. Breadth was extremely

Negative and volumes were average

Levels for the day:

Nifty: Open: 5766 /High: 5775 / Low: 5687 /Close: 5701

Swnsex: Open: 19224 /High: 19258 /Low: 18954 /Close: 18998

Advance: Decline: 1785:939

What Next

On the back of Rising Inflation

Rising Commodity prices

Margine compression for industrials

Results of manufacturing sector below expectations creating

Doubts about ‘Growth’

Reducing liquidity in system

Rise in consumption part and fall in Investment in economy

All these factors are keeping RBI worried and hawkish about

Growth. and traders and investors nervous

Further course of the market depends on what stance RBI takes

On

Rates

Growth Projection

Policy decision regarding, ‘D regulation of Savings rates.

There are expectations of 25bps rise in rates which will not surprise

Markets, 50 bps will be accepted with some ‘hiccoughs’ but

Anything beyond this will create ‘Crisis’ in stock markets,

The language and Comments on growth in policy statement will be

Equally important.

Today will be the ‘Day of crisis’ for ‘Optically’ as well

‘Technically’ bad market.

Nifty has  Managed to float with difficulty above water levels of 5700. Any

Surprise from RBI will create panic in already ‘sinking markets’

Nifty is trading below 200DMA (5751), It had gone below 5700 and

Bounced back from important support level of 5690(5687).

Now is the day, which will decide fate of the markets for next few

Weeks.

RBI policy will be one of the factors in deciding next course of the

Market, results from ‘Infrastructure and Manufacturing’ sectors

During next few days will be equally important in projecting real

Picture of ‘Growth’ and ‘Economy’

It may not be necessary to believe that after ‘The day’, we will be

Out of woods.

 Technically indices are at a ‘crucial level’, so watch them along with

RBI policy and coming result season

Levels of Importance:

UPWARD: 5721(19070) / 5790(19292) /5818(19385)

DOWNWARD: 5696(18978)/5667(18888)/5617(18725)

Technical View

PIVOT AT: 5721(19070)

Nifty is trading below all important short term and long term

Simple moving averages

It is below 5 DMA @ 5790(19292) and 5Day exponential @ 5755

It is below 20 Day simple and Exponential levels @ 5834(19434) &5777

It is 150 DMA @5818(19385)

Most important 200DMA @ 5751.

All this indicate that the short term looks ‘gloomy’ and unless

Nifty moves above either PIVOT @ 5721 or 200DMA @ 5751 we

Will not be out of crisis.

The all important support is at 100DMA @ 5696(18978) AND 150

Day exponential @ 5667(18888), if Nifty breaks below 5660 then

The next range will be 5600-5550

To continue present ‘up move’ Nifty must remain above 5790/5800

Levels for few trading sessions on closing basis

VXI (Volatility Index)

PIVOT AT: 20.53

R1:21.13/ R2:19.58 /R3:20.58

VXI has closed in positive, this indicate more volatility. There are

Higher possibilities that Nifty will correct further

COMMENTS

 Markets will be divided in two sessions,

 Pre policy and post policy.

The first session will be equally lackluster as it was, for last few

Trading sessions.

All eyes will be on what actions and comments ‘Mr. Magician’ does.

‘Temporarily’ all depends on whether it is 25 or 50

‘Temporarily’ all depends on Hawkish ness and harshness of the

Language

What I feel is………

  Market has discounted all those ‘Temporary Numbers’ and ‘Language’.

Market may ‘temporarily’ bounce back to some encouraging levels on

Nifty

But …

 All will depend on what happens to the results of companies from

 Infra and Capitol Good Sector

Till today result season has not gone according to market expectations

Any further disappointments from these sectors, specifically, Cap-Good

And manufacturing will set the markets rolling to lower levels

So 25 OR 50 , it will make short term effect , but real test will be after

That

So it is not true that once the ‘Day of Policy’ will end the bad days of

Indian stock market, real ‘Days of Crisis ‘ are still ahead

Market strategy

- No trades in pre policy period, if at all you want to

 Take long positions

 Take in Banking and Financials with

 Strict stop loss at 5% lowers levels.

- Do not carry positions for next trading day

 Book profits at every bounce in Nifty and stocks

-Compulsive traders can trade in FMCG and Pharma

-Wait for IT, all depends on what happens to Rupee

On the back drop of rising $Index.

-Do not short for the day as long as Nifty is in a

Range of 5660-5755, fresh shorts are advised below

5617 and above 5834

- Long positions can be created at and above 5790

With a stop at 5617

-Treat 5660 -5721 as no trading zone

-Long term investors are advised to wait for fresh buying

Till market shows a definite trend

-This is not the time to adopt ‘Buy Dips’ and Sell Tops’ strategy

Stock specific

SBI

Kotak Bank

Axis Bank

HUL

ITC

Colgate

Ranbaxy

Tata Metalik

Indus ind bank

UCO Bank

DCB

Sterlite Technology

Camlin

Tutis tech

Summet Industries

GMDC

Orchid Chemical

Biocon

Banking and Financial positions should be with strict stop loss

And with small upward targets

MPRESSION

SKEPTICAL!!!!!!!!

Thanks

Dr. Vasant Bele

All the views are personal, invest with caution and after consulting

Experts