Finally the crash comes. The market had been resisting it strongly for a long time, but it could not hold it any further. However, the NIFTY pattern is different from the 2008 crash. At each support level, NIFTY is showing a great deal of resilience and bouncing back, even though for a short time. At 10:38 am today, NIFTY dipped to 5693 today and then found some strength. As usual, mid caps got severely hammered.
Under these situations, my strong advice and opinion would be:
1. Do not panic. Remember what had gone up and come down can go up again.
2. Remember that the market is crashing is because there are more sellers than buyers now and that is especially because of all these bad news, the latest being the realty scam. Will the effect of the bad news continue to stay? No, because public and especially investors (market) have a short lived memory.
3. Did anything change in the intrinsic value and fundamental strength of Indian companies? No, I do not think so. Not all will do well in business, but India's consumption story and quality outsourcing story for the globe remains unchanged.
4. I had seen signs that there will be a deep cut after Q2 results and this happened. I am again saying that the markets will revive and test new highs in another 3 months, unless there is a war or something like that.
5. Many companies will post very strong Q3 and Q4 numbers.
6. Do not buy anything now. Do not sell off your holdings. Hold them, wait and watch.
7. Very small amount of averaging can be done, if you have a lot of money. But let the market form a new base first before you seriously average.
8. NIFTY can slide down to 5600.
9. Next support levels for NIFTY are 5729/5591/5419/5368 (last 2 are very strong and rigid support levels for current NIFTY pattern).
10. Markets should show some signs of revival before end of the year 2010. I cannot believe that the year 2010 will end on a bad note for the markets.
On Wed, Nov 24, 2010 at 12:37 AM, powerfulpicks wrote:
In early September, when markets were going great guns, I had mentioned the possibility of a significant correction after Q2 results. On Nov 16th, I had written that NIFTY has a fairly strong support at 5800 and accordingly, at 1:14 m today, NIFTY rebounded from a low of 5825 and finally closed around 5935.
I expect the market to slide down again on Nov 24th owing to a slump in euro and owing to the global market uncertainty because of the tension between the Korean nations. Bears and short sellers will most likely have a good time today. How much it will slide really depends on the amount of institutional buying that takes place to support the market at the lower levels; not much support can be expected, since mentally, everyone is now prepared for the 5800-level to be breached.
The present round top formation of the NIFTY gets complete on NIFTY sliding to 5600 and this is where the NIFTY may head if negative global cues are continuously received over the next few days. Next support levels for NIFTY are 5840/5729/5591/5419/5368 (last 2 are very strong and rigid support levels for current NIFTY pattern).
So are the markets doomed? Good days are gone? No, I do not think so; not with the kind of growth prospects the Indian economy is showing. If the world economy revives, one of the most major beneficiaries will be the Indian companies; however, the world economy should show some strength and at least a feel-good factor.
I still think revival will start happening somewhere around Christmas and our markets will possibly reach new highs somewhere in Feb-March 2011. One should stay invested and avoid panic selling and also not be rash or too early in averaging.
6530 by April 2011 is quite a possibility and extrapolating a bit more, I still expect NIFTY to reach 6800 (SENSEX 23000) by end of calendar year 2011.
When a market is consolidating, sitting and watching is a good strategy for positions you already hold, but only if the script has good growth prospects in the future and it is still under-valued. For scripts that has already run up quite a bit and there is no compelling reason to stick to it for the future, profit booking should come naturally. Fresh buying should be done only in a very limited scale. At present, it is better to avoid high amount of buying, till the market stabilizes.
Powerfulpicks wishes success and safety for your investments in the days ahead of us. But stay cautious.
No comments:
Post a Comment