Search For Safety

Dear Investors

Wednesday was the day after ‘catastrophe’ in stock market

There was no pull back but prices continued to fall today

Also. Nifty after opening flat dropped down to important

Support level of 5500 and recovered at the end to some better

Valuations at 5537. There was added selling in same sectors as

It was a day before

Levels for the day;

Open: 5567(18558)

High: 5578(18604)

Low: 5503(18339)

Close: 5537(18469)                    

      Advances 1,112

      Declines 1,727

      Volume (Rs) 14,682cr

What Next

After yesterday’s precipitate fall there was a relative calm

In stock markets. Technically markets completed its natural

Fall to the levels of 5500.Most disheartening thing was.

There was no ‘pull back’ normally seen after heavy selling.

This is indicative of ‘Negative sentiment’ in market.

Nifty has broken all the barriers of important supports and

 Will ‘gravitate’ to further ‘Technical’ levels on downward

Channel.. Markets may ‘consolidate’ in downward range

Of 5400-5600 to fall further. There is dramatic shift in the

Market perception from ‘Buy on dips’ to’ Sell on every rise’

And wait for fresh buying.

Levels to watch

UPWARD: 5575(18602) /5614(18715) /5660(18873)

DOWNWARD: 5480(18205)/5420(18072) /5380(1790

Technical view

Technically market is in a definite ‘Down trend’ and

As stated before, in a downward journey traders and

Investors should watch lower support levels more

Carefully than upward resistances before making fresh

Buying, rather it is better to avoid fresh commitments

Before markets completes the technical fall and settle

At a ‘Lower range’

 Market has changed its direction from ‘Upward’ to Downward’

One.

There will be strong resistance at every higher level like

5575/5614.Nifty has closed below all the short term and

Long term DMAs(Moving averages) like 5DMA@5710 /

30DMA@5768, 100DMA@5690 and 200DMA@5754

All this is indicative of ‘Down Trend’, Nifty

Is below 200 Day Exponential Average @ 5614 which

Will be the main hurdle for any ‘pull back’ from lower

Levels

Technically Nifty is headed for further falls because it has

Broken important supports at 5 Day Expo. @ 5640.

Next levels to watch will be 5480/5420/5380, technically

The on going rally had started from 5310 to reach high

Of 6275, so the natural support is at 5310 because we are

 In a corrective mode. Nifty had a long pause at 5420

Before moving higher levels so it will act as a strong

Support before testing 5310.

It looks that there will be a ‘correction’ of the larger move

Which started at previous bottom at 5177 and

Finished at 6338, Nifty has not formed a fresh high (than

6338) in the on going ‘Up move’, which got halted at

6275 indicative of a ‘lower Top’ (as compared to 6338)

And started correcting. Now the first target in downward

Correction will be 5310 (low of the 5310-6275 move), and

The stops in that are at 5480/5420/5380

If the downtrend does not stop above 5380, a larger correction

Of the original 517/ 6338 will set in. Only time will decide it.

Till that time watch …..

5480/5420 ON LOWER SIDE AND 5617/5660 ON UPPER

DIRECTION.

COMMENTS

It is better to keep away from markets till Nifty settles to a

Logical and technical range and consolidates there for some

Period. There is no doubt that for the time being markets are

In a corrective mode. All pull back should be used to ‘Book

Profits’ or Exit Positions. No fresh long positions should be created

Till there are some ‘Fundamental’ signals like,

Change in

Inflation, Interest rates, Large amount of FII buying, some

Policy changes like, Petrol/Diesel Deregulating, Fertilizer price

Deregulation and good ‘Monsoon’ and so on. Fundamentals have

Taken a center stage and unless there are changes in ground

Realities there will be no ‘Trend reversal’, which looks difficult

In near future

Let us wait for some period for

Markets to correct to the ‘Fundamentally’ right levels and

Then watch for changes supportive for a fresh ‘Up move’

Which looks difficult in near future. Hold all short

And Medium term investments till there are signals of ‘

Some reversal in ground realities like

Falling Inflation

Falling Crude

Good Monsoon

Increase in Government Spending

Policy changes, FDI in retail, Oil de regulation etc

Better results in next quarter

Increase in FII flows

It is time to wait and watch or trade with caution, or

Staggering investment buying at every lower levels

To built a long term ‘Portfolio’

Market strategy:

 Sell every pull back

 No fresh shorts till 5660 or below 5420

All pull backs (Higher levels) up to 5660

Should be used to exit longs or go short

Wait for ‘Consolidation’ (moving in a range)

 In Time AND Price

 Stock specifics

Those who are ‘Day traders’ and ‘Adventurous’ can

Buy all the beaten down stocks and sectors like

Banking, Autos and Reality for a short pull back.

Long term investments are to be on hold for a while

Positional traders can buy in

 FMCG

PHARMA

IT

And

Consumption sector

Colgate

ITC

HUL

Jubiliant Food

Talwalkars

Loveble Lingare

Goetz(Federal Mugal)

Polaris

Tutis tech

Sterlite Tech

Mundra port

GE Shipping

IMPRESSION

DESERTED

Thanks

Dr. Vasant Bele

All the views are personal, invest with caution and

After consulting experts