January has a reputation of being a bear-friendly month and Jan of 2011 has only enhanced this reputation as we are down almost 10%, with still a day to go. Well, this thumb rule has surely worked for our markets. Nifty continued its southward journey as it lost over 3% during the expiry week and the carnage spilled over to the first day of new series. All sectoral indices were in red with Realty, Health Care and Auto being the worst impacted. Least impacted on relative basis only were IT and Banking index, both managing to lose less than the Sensex and Nifty. This continued downward spiral has brought as back to around 5500 for Nifty and around 18000 for Sensex. Negative markets have had a negative impact on sentiments and suddenly it seems that nothing could go right for India. This is in stark contrast to late October- early November when it looked as if nothing could go wrong for India. Market is down almost 14% from its recent peak at around 6350. What next? Technically, we are in oversold territory for mainline indices as well as for several heavyweights. Nifty has multiple supports between 5400 and 5550. This whole range of 5400 to 5550 provided stiff challenge for almost 11 months earlier when Nifty was trying to move higher. We believe that now this range should provide atleast a temporary respite for the markets and while it’s almost impossible to pinpoint the levels of support it does look unlikely that we would trade below 5475-5500 for a sustained period. Whether this could prove to be temporary respite or a sustainable support could only be ascertained only later. Banking stocks have seen some consolidation over last two weeks and would be amongst the first ones to see a sustainable rebound. RIL did not find any support around 950 as was our expectation and has seen huge buildup in short positions. It would be prudent to wait for it to stabilize above 950 before taking any fresh long positions. Sesa Goa is showing strength and could be bought on declines.
No comments:
Post a Comment