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Confidence likely to come back into our markets

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CONFIDENCE LIKELY TO COME BACK INTO OUR MARKETS

With major boost coming from Italy accepting the austerity measures, the global markets romped their way back to register strong gains on Friday. Bulls were in clear command, and that would likely be the trend for the Asian markets as well. Last week, even though a truncated one proved to be a blessing in disguise for our markets, as on Thursday 10th Nov, the Asian markets saw a sharp cut, with Hang seng notably down more than 1000 points. However, our markets were closed on Thursday, and on the next trading day we managed to relatively outperform the Asian peers. IIP numbers were also announced on Friday, and it was not a strong set of numbers, however, the new question which lingers in everyone’s mind now is “Whether the worst is taken care of in terms of IIP?.” Technically markets are still trading above their critical support levels of 5150 on closing basis, and if all bodes well for the market, this retracement from the 200 DMA ( 5400 levels) on Nifty, might well be over and done with, and we could now start inching back towards that level of 5400. Look closely and there is a definite confidence coming back into the market. The probability of upside moves has increased, and now breaking 4700 seems to be difficult. It would need an extremely strong negative event to break this support level for the markets now. Now the critical question remains, how should we trade our markets now? The dramatic events in Euorpe appear to be settiling down – atleast in the short term. This should be a boost to the global markets. We could also see the Asian markets showing short term rally. Ideally for all long positions the stop loss should now be placed at 5150 levels. And the next few days will be very critical for the market, especially the first test to 5280. As you can see from the short term channel on Nifty, the resistance is placed at 5280. Above that we can convincingly say that the market would likely head to 5400 levels again.

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Written by Kunal Bothra

November 14, 2011 at 12:52 pm

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