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Market Outlook -
May 27,
2010 |
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Despite good cues like 15% increase in New Home
Sales and 2.9% jump in Durable Goods Sales, the
Wall Street was on a snapback mode losing 69
points over its previous session at the close.
The Nasdaq fell by 15 points and the S&P 500
sacrificed six points over the last close.
Japanese shares suffer broad losses, as we write
this Market Outlook, taking their cues from Wall
Street. Asia is bit wobbly this morning.
It is the derivatives settlement day of the
month. The SGX May and June Nifty contracts are
both trading lower at 4890 and 4878 respectively
on good volumes. The short covering rally of
yesterday now may give in on the back of weak
global cues. Today, we expect a slide again in
the market. This would be confirmed if the Nifty
fails to stay above 4898. However, all may not
be immediately lost for the bulls till such time
4839 is breached on the downside again.
Major support levels are located at 4780 and
4732 in case a fresh slide begins to take it
down below the last low at 4786. What we
envisage is that even if there is a pullback to
close to 5000 levels for the Nifty the next leg
of the downtrend would be fairly severe after
that pullback and it would snapback Nifty to
test 4675 or even 4539 in June.
Thus, we would not like to recommend going long
in this market other than may be participating
in intraday rallies and that too if you are
nimble footed.
On the upside, today, above 4918-a resistance
level-the zone around 4943 would most likely
bring in fresh supplies. However, liquidate all
long positions and all short term long positions
whenever-either today or in the near term-the
Nifty moves up to the range between above 4974
and 4994. It is very unlikely to sustain above
5000 in any rally now. Press sales and come out
of the market for it might fall considerably and
this current rally is just a pullback.
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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