It was almost a repeat of previous Friday as Nifty plunged over 100 points. The fall looks more menacing if one considers that Nifty had in fact moved up by almost 75 points at one point. It was a panic like situation as sell off gripped almost all sectors and stocks. Nifty had found firm support around 5700 on numerous occasions in the past but it was not to be this time as Nifty slipped below 5700 and closed around 5650. This capped the overall weak show during the week. Nifty has plunged around 9% in past two weeks and this time Indian market has really seem to have de-coupled from the global markets, atleast in the near term. Most of the global markets have gone up in past two weeks and its only Indian and Chinese stocks that have been singled out for selling. The local factors have really caught up and foreign funds are suddenly finding valuations back home much more tempting. The selling that began with the interest rate sensitive sectors has spread to almost all the major sectors. So, Capital Goods was the worst performer last week along with Oil Gas, banking and Realty. IT reacted to somewhat muted performance as well as guidance by Infosys. HDFC came out with good results but was largely ignored as markets plummeted on Friday. This could be the trend in coming weeks as macro factors take precedence. Technically, Nifty has broken significant support at 5700 and could plunge further 100-125 points from current levels. 5830-5850 could now become a new ceiling for coming weeks. Overall structure is weak and its not advisable to catch the falling knife. Market might need to stop falling and then consolidate and currently even the first step (that of fall) does not seem to be over. It would be good idea to take note of the good quarterly performances and then buy these stocks during the consolidation process. For traders there would be technical rebounds but the trend is clearly down and it would be a better idea to use rebounds to trade on the short side.
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