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| Alert Criteria: Stocks (Any Indian Exchange); Price at least 5.00; Classic Patterns; Bearish; Daily Events; Pattern Duration at least 25 days. | ||||||||||||||||||||||||||||
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Sensex Technical View :
Sensex moves have been tricky of late with a try on upside break one day and the next day on downside. And this being the bear phase it doesnt take much to break the lows. None of the Sensex bottoms have held up for 3-5 sessions so its clear we may open up to 8800-9700 zone. Technically Sensex has been in a range of 9900 -10800 whereas Nifty 3050-3250. Such a pattern suggests if we break we could see a move of 900 points on Sensex and 200 odd points on Nifty.
Although its not necessary we may do exact levels in near term on the indices but ideally if we sustain below the lows then we could well head to 9000/2850 as per this projection.
Had discussed the long term charts some days back ---LONG TERM ChART --- Link .
In this we have seen 8800 is an important level on supports and 9700 an important retracement. So finally we are nearing these zones and we could get good long term bargains and ideal would be to buy as closer to lower side or stock specific and be patient over the next 6 mths to 1 yr and dont worry about price movements in short term.
Stocks to watchout for :
Bharti Airtel finally seems to trying to stay below 700 and below 650 could touch 600 or lower quickly .
Kotak Mahindra Bank sell below 390 for a tgt of 350-330 .
Steel and Metal stocks did not bounce as markets couldnot go pass 10800. Many have broken recent lows so can remain weak for some more time.
Some important long term levels for Steel stocks --- One can buy 10 % above those levels with 2-3 yr view :
JSW Steel ........... 180 -160 was low in 2006
TAta Steel .............. 180-150 zone in May 2004 .
Market Observations and Thoughts :
The market seems to be going through rough weather and many investors too those who have bought stocks at good value levels but are still seeing 20-30 % erosion in these stocks. My own expectation of a softer landing with 11k holding up has gone wrong ! and i do accept that. Fortunately the cautious strategy of not making more then 50 % commitment at those levels did give us a chance to exit some and will further give us a chance to rectify by buying on lower 9k zone. The rough weather may last for much longer time and its a scenario which has never been encountered in near past and thats why it seems there is a major fear seen in all liquid assets - equity , crude, gold , metals . Finally it seems there is despair , despondency coming into market participants and difficult to say when markets would bottom but in next 1 week i do expect sentiments to bottom out ! .
The only asset which is real estate has not seen a sell-off till now as its illiquid and can see a meltdown in coming months if real estate stocks are a hint then bad times are coming in ... So better not to commit to these sector or take care.
All in all we are in rough weather and lot of turbulence which nobody expected. So in the near term nothing may seem right but with time things may start looking better and markets tend to discount the worse ! . So financial markets may see the worst being discounted but there could be lot many problems in the normal economic world as we discussed last time that there could be salary cuts , job layoffs , etc which has started happening and may remain for next 6 mths to a year ....Fortunately or unfortunately Markets discount the future so we may see more pain but for a lesser time and better time earlier ! as market-men :P ....
GOLD :
Gold has cracked below 770 to touch 720-725 levels from where it can give a bounce in short term or if sustains below 720 can touch the maximum lower side the levels of 690/660.
Crude : 64-65 is a level to watch on downside now below which next support is 50. A bounce is in the offing in near term it seems.
Nifty :: We clearly say in our yesterday post below 3083 momentum once again turn down and we see new low in coming days.. And it is.. Once break 3046 next support comes near 3000 level below it strong support at 2964/2925/2890/2854/2733/2678.. We advice from here please- please avoid short sell if market open too low.. If you don’t want to buy please stay away at least in today treading ... (My personal request for MERA BAHARAT MAHAN KE LIYE).. If market move down may be we see clear upward divergence in daily chart and that’s why its buying opportunity in last 2 support.. (As per our last week post long term channel breakout support level for this month at 2678..)
This thing will break down today. Yesterday we made a new low - 3045.60 but closed up 10 point than the recent lowest close 3050. Whatever, a new low is a new low. Now we will see something like 2875.
In this dfficult time, Satyam shows a higher high - higher low pair (blue spots). In spite of todays price action, the pair is still alive. I like stocks like these which buck the broader market trend. A close below the first high pivot (blue line) will kill this pair.Current scenario: Government may impose import duty to avoid dumping by China..
Import duty on steel was removed and export duty was levied in April 08 to rein in inflationary pressures. Consequently,steel imports between April 08 and September 08 rose by 50% to about 3 mt as prices in China,
Thailand and Ukraine were ruling below domestic prices. With competitive pricing and slowdown in domestic demand, China's total steel exports globally rose to a record 7.8 mt in August 08. However, as international steel prices subsided, landed cost of imported Chinese steel dropped to $700/ton in India as against the domestic price of $750. China-based steel producers, backed by cheaper operating costs in met coal and power, have a significant price advantage over the domestic players.
There is a difference of $150 between Chinese and Indian domestic and export prices (Chinese domestic price is $600 and export price is $700, whereas Indian domestic and export prices are $750 and $850 respectively). Facing an overall economic slowdown, consumers are opting for cheaper Chinese steel, whose share in India's steel import basket surged from 10% in April 08 to about 48% in August 08.
To avoid large-scale dumping and protect domestic players, the government, responding to industry demands, may levy import duty to 15%, remove export duty (currently 15%) and reduce excise duty from 14.4% to 8%. There has been no capacity expansion in the past quarter with key players including JSW delaying the commissioning of their plants by over two months owing to current market conditions. Indian steel makers may have to cut production by 30% and continue to postpone expansion projects if the government does not act.
If govt responds favourably it would help domestic players more Sail and JSW steel ,Whereas it wont make much diffrence to Tata steel .The same CORUS which was once Tata steel's delight is haunting it.Technically
Sail looks much better than Tata steel ,Sail looks like may take support near 80-85.
Tata steel looks like a wave extension case.A Close below 230 will target 200-180 atleast.
Plan your buys accordingly ,My views are for traders.
So much for the rally! After a few days of relative calm, suddenly, the Asian markets got the jitters. This led to steep declines in the Nikkei, then to the Asian Contagion, finally to new lows in India.
The bear market is alive and kicking. We expected that there will be some kind of a relief rally. There was a small rally, but it was just a couple of days.
The Nifty fell again, by 170 points. This is a lot since the Nifty has already halved itself. Unfortunately, it does appear that things will get worse before they get better.
The positive divergence visible on the daily chart has not been cancelled yet. But momentum is far more powerful than divergence. And, momentum is clearly on the downside.
Weekly Nifty
The RSI on the weekly Nifty is currently at 22.5 This is the lowest since 2002. In the period 2001 - 2002 the RSI fell below 25. This was a sign of weakness. It took the market two years of sideways movement before the new bull market started.
It is difficult to say how much time this will take. But, the bear market is not going to end quickly, that much seems evident.
Will Fibonacci support hold ?
After 3800 broke down, I have suggested that there is no support in the Nifty till 2000. This does not mean that the Nifty will touch 2000, it simply suggests that technical points are not available to stop this decline. the market can stop whenever it wants.
A question is: The 61% fibonacci retracement comes in at 2900. Can the Nifty stop its decline at this level ? The asnwer is: Fib support is relevant only if prices stop falling, momentum reverses to favor an upside. Until this happens, Fib support is only imaginary. The difference between visible support on charts (like 2000) and Fib support is : visible support are levels that the index has seen, while Fib support exists only in the chartist's imagination.
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