After scaling a peak on the November 5, the markets journeyed downwards. En route its journey towards south , the markets has taken a few halts , where in we expected to see some reconciliation, but in vain. In the span of 3 months since its departure from the highly coveted 20k mark , the bulls seem to be off the street.
They have been plagued by various issues of Corporate Governance , Political Instability , Inflation , Divergence of the FII to the Developed Markets, etc. The growth story is expected to remain intact with a growth forecast of 8.5 % , slightly buried under the issues which has been used by the bears to cause the mayhem. The same cause (improving demand in developed markets) which was seen as a cause to boost the Indian Economy , is now seen as a threat ( stability in the US Capital markets attracting the hot money ). So, Perception is the only factor which has changed since then!
Irrespective of the innumerable attempts to gauge the market movements , and with none of the seemingly strong supports being respected , here goes one more harbinger attempt!
From the above chart , a price channel of 1,900 points is clearly seen to be formed over this span . Considering a bearish crossover and the negative sentiment prevailing on the street , the current downside which is current seen is up to levels of 17400 levels ( based on historic support ) , once this level is breached the channel support is seen at 16934 - 17038!
A reversal from any of these levels may result into an intermediate rally fueled by short covering or attractive price levels. The long term movement would be confirmed above 18300 levels only.
Here the major concern is that the current carnage is also going to lay the foundation for the Q4 earnings season , which even paints a bleak picture for the fundamental investor.Also,with the probe in various scams ( 2G, Housing ) in progress, certain revelations in the same can further hit the companies involved in the same. The hammering of the stocks like DB Realty , RCOM , RInfra , RPower , SunTV Networks on the news of the alleged involvement in the 2G scam confirms that the nervous mood of the investor.
In such a situation , an optimist would opine 'With Great fall comes a Great opportunity to Buy' , the pessimist would suggest ' Flee! Before a flash crash ' and the purist would say ' Cash is also a position'
But an suggested approach in this situation would be to use a probing and a pyramiding strategy (http://thefallingwedge.blogspot.com/2010/12/time-for-some-gyan-probing-pyramiding.html)to pick up some scrips which have a displayed strong fundamentals over the years , because this is an opportunity to buy certain scrips at a bargain & build a portfolio you dreamt of!
As far as the technical view is concerned,only the test of time would decide its usability or futility!!!
They have been plagued by various issues of Corporate Governance , Political Instability , Inflation , Divergence of the FII to the Developed Markets, etc. The growth story is expected to remain intact with a growth forecast of 8.5 % , slightly buried under the issues which has been used by the bears to cause the mayhem. The same cause (improving demand in developed markets) which was seen as a cause to boost the Indian Economy , is now seen as a threat ( stability in the US Capital markets attracting the hot money ). So, Perception is the only factor which has changed since then!
Irrespective of the innumerable attempts to gauge the market movements , and with none of the seemingly strong supports being respected , here goes one more harbinger attempt!
From the above chart , a price channel of 1,900 points is clearly seen to be formed over this span . Considering a bearish crossover and the negative sentiment prevailing on the street , the current downside which is current seen is up to levels of 17400 levels ( based on historic support ) , once this level is breached the channel support is seen at 16934 - 17038!
A reversal from any of these levels may result into an intermediate rally fueled by short covering or attractive price levels. The long term movement would be confirmed above 18300 levels only.
Here the major concern is that the current carnage is also going to lay the foundation for the Q4 earnings season , which even paints a bleak picture for the fundamental investor.Also,with the probe in various scams ( 2G, Housing ) in progress, certain revelations in the same can further hit the companies involved in the same. The hammering of the stocks like DB Realty , RCOM , RInfra , RPower , SunTV Networks on the news of the alleged involvement in the 2G scam confirms that the nervous mood of the investor.
In such a situation , an optimist would opine 'With Great fall comes a Great opportunity to Buy' , the pessimist would suggest ' Flee! Before a flash crash ' and the purist would say ' Cash is also a position'
But an suggested approach in this situation would be to use a probing and a pyramiding strategy (http://thefallingwedge.blogspot.com/2010/12/time-for-some-gyan-probing-pyramiding.html)to pick up some scrips which have a displayed strong fundamentals over the years , because this is an opportunity to buy certain scrips at a bargain & build a portfolio you dreamt of!
As far as the technical view is concerned,only the test of time would decide its usability or futility!!!
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