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It is a morning of gloom and doom, somewhat
reminiscent of September 2008 around the time
when Lehman Brothers went bust. Markets, all
over the world, are very jittery and
participants and commentators are trying to
guess as to how much more the markets can move
down. One question that haunts the minds of the
people here in our country is that had our
market already discounted the gloomy development
in Europe and discounted it mostly in
yesterday’s fall in the second half or it has
more to sink this morning. Perhaps the answer,
as they say, is blowin’ in the wind, my friend.
Our guess is that it has to suffer more
headwinds, at least, in the early part of the
session. Chances are we would test 5100 for the
Nifty this morning; the moot point is whether we
close below that level or not. If we do so, it
would be quite damaging for our market for it
would signal a real fissure in the nascent bull
market that began last year early March. Things
would turn wee bit scary to say the least.
If the SGX May Nifty levels this morning are any
indication then we are already below 5100 since
as we write this Market Outlook, the May
contract for the Nifty in Singapore is trading
at 5052 coolly shaving off 79 points from
yesterday’s close. The crucial levels to monitor
for the index would be the range between 5118
and 5125 as closing below this range would mean
a fairly strong signal for further bad days at
least in the interim.
However, the very level of 5053 is a strong
support level to boot, it is unlikely to cave in
further unless fresh impetus to go down is
provided by the so called PIIGS countries in
Europe. Perhaps the continent is signaling a
tectonic shift.
In case of any recovery, we need to watch out
the levels between 5118 and 5125 first and then
the level of 5152. If the Nifty, by any chance,
testing the levels indicated by the movement of
the SGX May Nifty around 5050 manages to move up
and close above or close to 5152 that would
signal at least a short term recovery while any
close below 5118 would mean weakness to
continue.
Rajat K. Bose |
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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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