Sensex Technical View :
Sensex moves have been tricky of late with a try on upside break one day and the next day on downside. And this being the bear phase it doesnt take much to break the lows. None of the Sensex bottoms have held up for 3-5 sessions so its clear we may open up to 8800-9700 zone. Technically Sensex has been in a range of 9900 -10800 whereas Nifty 3050-3250. Such a pattern suggests if we break we could see a move of 900 points on Sensex and 200 odd points on Nifty.
Although its not necessary we may do exact levels in near term on the indices but ideally if we sustain below the lows then we could well head to 9000/2850 as per this projection.
Had discussed the long term charts some days back ---LONG TERM ChART --- Link .
In this we have seen 8800 is an important level on supports and 9700 an important retracement. So finally we are nearing these zones and we could get good long term bargains and ideal would be to buy as closer to lower side or stock specific and be patient over the next 6 mths to 1 yr and dont worry about price movements in short term.
Stocks to watchout for :
Bharti Airtel finally seems to trying to stay below 700 and below 650 could touch 600 or lower quickly .
Kotak Mahindra Bank sell below 390 for a tgt of 350-330 .
Steel and Metal stocks did not bounce as markets couldnot go pass 10800. Many have broken recent lows so can remain weak for some more time.
Some important long term levels for Steel stocks --- One can buy 10 % above those levels with 2-3 yr view :
JSW Steel ........... 180 -160 was low in 2006
TAta Steel .............. 180-150 zone in May 2004 .
Market Observations and Thoughts :
The market seems to be going through rough weather and many investors too those who have bought stocks at good value levels but are still seeing 20-30 % erosion in these stocks. My own expectation of a softer landing with 11k holding up has gone wrong ! and i do accept that. Fortunately the cautious strategy of not making more then 50 % commitment at those levels did give us a chance to exit some and will further give us a chance to rectify by buying on lower 9k zone. The rough weather may last for much longer time and its a scenario which has never been encountered in near past and thats why it seems there is a major fear seen in all liquid assets - equity , crude, gold , metals . Finally it seems there is despair , despondency coming into market participants and difficult to say when markets would bottom but in next 1 week i do expect sentiments to bottom out ! .
The only asset which is real estate has not seen a sell-off till now as its illiquid and can see a meltdown in coming months if real estate stocks are a hint then bad times are coming in ... So better not to commit to these sector or take care.
All in all we are in rough weather and lot of turbulence which nobody expected. So in the near term nothing may seem right but with time things may start looking better and markets tend to discount the worse ! . So financial markets may see the worst being discounted but there could be lot many problems in the normal economic world as we discussed last time that there could be salary cuts , job layoffs , etc which has started happening and may remain for next 6 mths to a year ....Fortunately or unfortunately Markets discount the future so we may see more pain but for a lesser time and better time earlier ! as market-men 😛 ....
Gold has cracked below 770 to touch 720-725 levels from where it can give a bounce in short term or if sustains below 720 can touch the maximum lower side the levels of 690/660.
Crude : 64-65 is a level to watch on downside now below which next support is 50. A bounce is in the offing in near term it seems.