20:13 September 26, 2009
Street anticipating a correction. There is high open interest on the derivative side Market technical momentum indicators overbought.Ivs r very low and a sharp rise in ivs can correspond to sharp moves in the markets. So are we poised for a good correction? In my view Indian stock market is a mid cap stock in the large cap stock market universe of the world, that too a high beta mid cap stock. We over react to world cues on both poles-. As of now the world cues continue to be positive so we continue to outperform. There is a Fibonacci cluster for the US markets towards the end of the month, at that point a shift in momentum/trend can happen. Either the trend will reverse on/around the cluster date or will get stronger. Accordingly we can have a 10% improve or downmove-4450 or 5400 in October.
There is a lot of money waiting on the sideline and now people have seen the fast and furious pull back rally from March. So I am not concerned of a fall to 4450 (which is approximately 10%). Obviously at those levels many will give a call of 3800-4000 like last time. I would go and buy at those levels. What would I buy? High betas like metals, real estate, infra and capital goods and even banking.
If markets rush to 5400 select profit booking would/should be done at every step.
Today being the first day of a new expiry, in the face of mildly negative intraday global cues, we closed reasonably well. Pointers to the positive undertone is the strength in mid- caps especially banking and infrastructure. One could see large cap committed money flowing to safer sectors like pharma. However real estates did not give up. Midcap real estate counters were strong. Large caps real estate counters also traded with a mild positive bias thanks to some mink brokerages upgrading select large realty scrips.
Private banks have been quiet last two weeks when PSU banks were running. You could see resurgence even as psu s banks continue to shine. High midcap betas in toll collection and infra, GSPL, KS Oil have closed with good accumulation patterns. Pharma can give another 10% upmove. . Metals will underperform in sync with the move in dollar index .large cap technology showing mild correction after yesterdays end of expiry short covering .Fertilizer stocks and sugar closed with positive accumulation indicating a move coming in if the market overall breadth sustains. Tea stocks showing a similar sign. Hotel and entertainment stocks also showing positive bias Can some on tell me why are the airline stocks going up-can understand a spice jet but KFA and JET? Some scrips leave u asking questions even as a technical analyst.
Moves are going to be sharp and furious and traders will find it a challenging period despite all the “information” and technical analysis. The ultimate gainer will be a person who not only picks the smart stocks but is willing to hold to his stocks for a period of minimum six months to three years even in the face of adverse and challenging market volatility. Investing in tranches will prove to be a wise strategy