Nifty Watch: - Today Nifty open with gap up at 5542, and then faced a big decline almost after open. We saw an one sided trend, with the Nifty finally closing almost a 100 points lower at 5423 point, giving a decline of 119 points from its open. Today’s close (and low) is the lowest point of nifty since 31 August 2010.Today’s market ends the rally which started from Sep 2010. Thus, in a period of six months, the markets have come full circle, first going up, and, now giving up all the gains.
Trend:- The Market is in an intermediate downtrend. We have the pattern of lower highs - lower lows and also market is trading below its 200 days and 50 days moving average.
The Nifty has not yet touched the level of minus 45 on TA Insync (55-5) which means market is still not oversold.
Level:- Looking for support first at 5380 and then at 5220. The resistance comes at 5470 and then 5540.
Summary:- Today’s market made a new low since August 2010. A large consolidation during June – August had a low of 5350. If the Nifty were to break below this low, we would be in a bear market. We feel that lower levels are coming. The world is de-rating the Indian markets. Even today, the Nifty sells at a PE of 21 while most emerging markets sell at much lower PE ratio. We have to accept the fact that the India Story while remaining intact is no longer a glamour story. Investors can wait for lower levels and base building while traders should go with the intermediate trend which is down. Traders should also be ready for a sudden, sharp relief rally that can come about any time.
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