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Market Outlook -
March 31,
2010 |
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The first round above 5300 this time goes to the
skeptics; bulls are looking a bit tired but they
have made one thing very clear: the major
uptrend is very much alive and kicking; barring
the short-term they are very much in control of
the situation.
Why do we say that? Simple! Even if we were to
assume that day before the intermediate trend in
the Nifty hit a top at 5329.75, the index has
moved up for 50 calendar days and it was a move
of 754.15 points from the low of 4675.40
recorded on Feb 08. This is once again larger
than the previous downswing in terms of both
price and time. In the bargain, it has
established a new high at 5329.75, which, in all
likelihood, would be crossed sooner than later.
Thus, suffer no illusions; you would get to hear
from some valuation-freak-Warren-Buffet
hagiographers, Elliot Wave Theorists and Cycle
Theorists that this time the top has been made
and we should be overly concerned about the
market being too top heavy. It is not! It is
pause before a new high is taken out since there
are too many skeptics in the market yet to throw
down the gauntlet.
In any case, the range between 5235 and 5195
would now act as a rock-solid support zone that
the bears would find exceedingly difficult to
break. However, a test of that zone can’t be
ruled out. We suggest buying again if those
levels were to come putting a stop below 5175
for we believe this is a buy-on-declines market.
To start with, for the spot-Nifty the level of
5265/66 assumes great importance since above
this level bulls would really try to build their
case again and push the market higher while if
the index were to stay below this level then the
bears would try and test the support zone that
begins with 5235. The range for strong support
would be 5235 - 5195 but in between 5221 and
5212 are two key levels to watch. If the index
were to come to these levels it would be worth
your while to cover your short positions if
there are any since from these levels a pull
back rally can well happen.
Similarly, the bulls would not score their point
decisively unless they really clear the zone
between 5310 and 5330. This is now clearly going
to act as a supply zone.
Rajat K. Bose |
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| Notes: |
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All prices relate to the NSE, unless otherwise mentioned. |
| * |
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. |
| * |
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. |
| * |
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. |
| * |
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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