Blood spill all over the Street

Yes, finally the Indian markets have seen some healthy correction. It was a long wait for the Bear’s to get in to the controlling power. Markets men which were really bullish about the markets in the month of Jan 2010, might have really lost money, big time. But the readers of Informed Investors and this column definitely have been saved from this carnage. This writer from the start of this Year had been continuously informing the markets are heavy and in the near future we can witness some serious correction.

It was also informed in the past the markets are trading at a very high PE around 24, which is almost at the same when the markets were at its all time high. And its too risky to trade at these levels. Since then the markets are falling the markets now are trading at a PE of nearly 20.

Global markets too corrected heavily in the current week. Things were looking good till mid of Jan; however the lending restrictions in China sparked worries about the Global economic recovery, knocking down equity markets around the world. Besides merging markets, developed markets like US & Europe were down. US markets fell on back of declining in retail sales, disappointment in Corporate Earnings, rise in jobless data & Obama’s proposed new restrictions on banks. Jobless data in Europe is also on rise. Housing market has not improved much and is exerting a negative impact on the wealth of households. Furthermore, high debt-servicing to disposable income ratios rule out the possibility of leveraged consumption, especially in the US. All these suggest that consumer spend in developed countries is likely to remain weak.

Last week CRR have been increased, some more and same kind of modification in the credit policy will be done in near future. Budgeting expectation this year are not extraordinary.

Technically speaking Nifty had broken down below its support level of 4800 levels. We have seen that the Nifty in the month of Nov 2009 topped out at 5185 levels and starting correcting to make a low of 4806, but bounced back again to make double top at 5185 levels again. But pulled back again to make a high of 5300 mark. Which is an again big resistance level (marked in the chart). This was also mentioned way back before everyone. Markets set on to the sell mode from there onwards. In the last week, Nifty fell down to make a low below 4800 level but bounced back the very next day. On Wednesday, when the Nifty bounced back to make a high of 4949. And closed at 4931.85, that till also I had mentioned in my blog that the Nifty will not sustain at the high levels.

Finally the Nifty is down below the 4800 mark. Nifty for the week closed at 4713 after making an intraday low of 4692. Nifty opened with the gap below the trend line. This trendline I had drawn long time back. (Kindly check my previous articles also). www.technicalsvishaldangaich.blogspot.com

In the last article I had mentioned that the Nifty will bounce back but will not sustain. Nifty from 4860 levels bounced back to face resistance 4950 levels. From then the markets are on the sell mode. Nifty will continue to fall to find support at 4660-4608 levels. Nifty will find stiff resistance at 4800 levels. Check out for the MACD chart pattern. RSI is almost near the oversold zone.

FII’s continue to press their sell button. In last 3 weeks FII’s sold stocks Net worth Rs.11,500Cr.

Last weeks’ call

BUY HDFC with SL of 2306. made a high of 2526

Short HUL Below 251. with Sl of 255 made a low of 227.

This week’s call

Sell ABB below 778. SL of 790.

Sell Baja Auto below 1670. SL of 1680.

Sell Bharti Airtel below 300. SL of

Sell Carin below 252.

Short DLF with SL of 312.