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Archive for November 2010

Extreme Volatility..

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Hello everyone,

Indian indices witnessed an extreme volatile session today, with the range for Nifty/Sensex being close to 2% each. Such volatile trading sessions have been a rarity since the last few trading sessions. Nifty managed to close above 1% from the intraday lows, Nifty / Sensex closed at 5999/19930, jus below the psychological mark of 6000/20000.

In the opening session markets took cues from global markets, specially Nikkei and Hang Seng showing solid strength. But due to weakness in banking stocks, the markets cracked very sharply to hit 5925 levels on Nifty.

The auto sector however showd solid strength, with Hero Honda, tata motors, Maruti, TVS showing solid strength.

Technically Nifty looks to be in a channel, with the nearest support for the Nifty placed at 5850-5880 levels. Nifty candestick pattern shows good lower shadow, which indicates that there has been strong buying from the lower levels. Volumes overall were a slight concern. Nifty has managed to take strong support at 55DMA(fibonnaci level).

Banknifty still remained under pressure, which will be a cause of worry for the markets. Realty maintained its streak of losses and underperformance wrt to benchmark indices. The o is 1:2 which is still negative for the market also suggesting that today’s rise was probably not a healthy rise in terms of participation amongst all stocks.

I think in these times of trading range, it is always preferable to play stock specific, and keep stop losses strict.

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Written by Kunal Bothra

November 18, 2010 at 11:55 am

Markets Bleed

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Down-graphNifty and Sensex registered their biggest % fall since the last few months. Benchmark indices shed more than 2% in value. Stocks whereas have registered more than 10% on an average since the last 5-7 trading sessions.

The selloff was widespread, as no sectors were spared. What was frightening was the pace of the selloff. Also with a trading holiday tomorrow investors would want to unwind their positions, given the kind of selloff seen in the global (China especially) markets.
The advance decline ratio of 1:11 itself suggests the entire picture.

The European markets opened on a negative note, and seeing the selloff in global markets, these indices too extended their losses. During the time of writing this article, the European indices were trading 1-1.5% down.

Dollar index maintained its strength and was trading above 78.5 levels. Silver MCX was down 750 Rs and is trading below 39k levels.

Top gainers in the trade today included Educomp(8.5%) and BataIndia(4%).
Satyam carried its downward trend from the ADR prices, and was down more than 11% in today’s trade.

Whether today’s sharp selloff is just to trigger stop losses for all, or whether it is a signal of what worse is to come, would be clear only in the coming few trading sessions.

Written by Kunal Bothra

November 16, 2010 at 12:08 pm

Where do we go….

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What catches our eyes in this morning’s newspapers is whether yesterday’s rally was the end of the fall or just a dead cat bounce.

Let us just dig slightly deeper into what entailed the markets in yesterday’s trade, to draw a picture of where it’s heading in the near term.

Taking a glance at the inflows, the FII’s were net buyers yesterday, and the DII’s numbers were flattish. The trend since the last few days has been FII’s selling, with mixed activity from the Domestic Institutions. This indicates that there is a definite air of caution amongst the investors, either they prefer profit booking at higher levels on Nifty or they prefer to stay out in times of confusion.

If we look at the option activity, we are seeing the Open Interest buildup in Nifty calls have seen a buildup in Options from 6400-6500 to 6300 levels for current month, which signals that investors have mellowed down the probable rise in the market for this expiry. And 6300 levels seem to be a threshold for strong supply. In the put side, the 6000 put has consistently seen a strong buildup in open interest, which probably indicates that the fear begins to creep in below 6000 levels in the market.

Technically the chart setup suggests that the uptrend has taken a setback, with a dip in RSI and MACD being in the sell mode. Only a breach of 6230 levels on the upside could signify that this fall was just a blip in the rally, and market will resume its uptrend. However on the downside 5930 levels would be a crucial support.

Generally the markets look very fragile when they are testing the support as a multiple attempt in a short span of time. The tendency then becomes to break the support, create confusion amongst the investors and traders, and then resume the next move.

Whether there is an actual change in the global scenario with China, being the volatile market it is, facing strong selling pressure. The picture would enfold going forward, but to make a conclusion now can lead to misinterpretation of the markets.

Trade with caution, and play stock specific. This should be the ideal strategy for the day.

Adhere to your stop losses.

It is always good to accept your mistakes and come back strongly rather than being rigid and not learning from them

 

Written by Kunal Bothra

November 16, 2010 at 6:42 am

Posted in Morning Markets

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