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Market Outlook -
February 23,
2010 |
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If past statistics are anything to go by then we
are actually getting ready for the next phase of
the big decline. Indian equity markets have
shown the pattern of
distribution-cum-moderate-weakness before the
Union Budget and then a sustained downswing last
for three to five weeks during the post-Budget
phase. This has happened a number of times in
the past since the onset of economic
liberalization in the early 1990s. This time the
pattern is most likely going to be repeated as
well; at least, that is the kind of indication
we are getting from the charts.
The prudent course of action now would be to
lighten the portfolio as much as we can since
the other choice is to face the likely sustained
decline. Now, the last bastion of major support
for the market exists between Nifty levels of
4751 and 4671. Once this 80-point range caves in
to supply pressure we are headed for a big
decline to something like 4400 - 4350 kind of
range.
As of now, to turn the tables on the bears the
Nifty would have to stay above 4963 firmly so
that we can think of any recovery; however, that
seems to be a tall order at the current
scenario. Thus, selling on rallies and exiting
from speculative long position makes sense so
long as the Nifty does not give an indication to
the contrary by staying above 4963.
This next phase of big decline would also
establish the fact that the current trend of the
market can’t possibly be described as bullish;
of course, those prone to indulge in
self-delusions are obviously not counted upon in
this probable change in perception.
For the day, the initial support would be
between 4838 and 4822, and if this range gets
broken then the next support would be below
4800; it is at 4784. Then comes the major
support range: starting from 4751 through 4671.
In between, the level of 4713 would be another
strong support level to monitor.
On the upside, above 4900, if any recovery
attempt is now made it would meet with strong
supply pressure between 4912 and 4963. Attempts
to cross this range would be akin to Sisyphean
struggle for the bulls.
Rajat K. Bose |
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| Notes: |
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All prices relate to the NSE, unless otherwise mentioned. |
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Stop-loss levels are given so that there is a level below/above, which the market will tell us that the call has gone wrong. Stop-loss is an essential risk control mechanism; it should always be there. |
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Book, at least, part profits when the prices reach their targets; if you continue to hold on to positions then use trailing stops to lock in your profits. |
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Don't chase a stock, if you are unable to buy a stock because it hits circuit levels on successive days, don't buy that. |
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The analyst and his clients may or may not have positions in the securities mentioned above. |
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Trading involves considerable risk. Trade at your own risk to the extent you are comfortable. The analyst shall not be responsible for any losses incurred for acting on these
recommendations. |
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Rajat K Bose
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