Markets closed Negative with record volumes on expiry date

Last of the expiry date Markets were amused with the volumes. Volumes in the Markets were at its peak making a record in the history of the Indian markets. Total Volumes crossed Rs1.92L Crs. F&O contributed Rs.1.66L Crs.

In just 3 trading days in the week and the 1 more left, markets witnessed severe volatility. Nifty lost nearly 3.5% wow basis. As mentioned in my last article that we might see some more correction and close below 5000 levels will take the Nifty to the next level of 4944-4850 levels. Nifty made a low of 4825 and closed at 4868. Selling was seen across the board as all the sectoral indices ended lower. The top losers were the BSE Realty, Metal, Auto and Bankex indices. Bear waited for this for a long time and finally its here.

Global Markets too corrected for most in the week. US markets corrected on the week housing sale numbers and rising unemployment numbers. Obama has indicated that he will create more jobs to control the unemployment rate. Obama has also indicated US companies to restrict exposure to the Chinese markets. Last week the Chinese Government increased the Interest rate. Indian Economy is too showing strong GDP & IIP growth. Inflation still remains the main cause for the Indian Government. Still the there is no increase in the interest rate. According to me there should be increase in Interest rate and there can be steps taken ahead for the removal of stimulus package. But I am not sure when that will come, but surely it will be done in near future.

A fundamental of the Country and the Company is very much important for any stock market to run successfully. Many seems to be turning too Bearish on the Indian markets. Fundamentals of any companies are the first and the foremost thing that has to be seen, but technicals give the proper buying and the Selling price of the particular script. The reason behind writing about this is, Indian markets are not fundamentally week now. GDP & the IIP growth are accelerating. Indian markets have bounced back sharply in the last 1 year. I had talked about PE at which the Indian markets were trading. Few articles I had clearly mentioned that the Nifty and the Sensex is trading at a PE of almost 24, which was as similar to the PE at the peak of the markets. So in the short time the Markets have triggered the Sell buttons, just because the Indian stock markets seems to be slightly over priced.

Nifty for the first time after the Month of November closed below the lower band of the Bollinger Bands. Whenever this is down, we can expect some pull back rally. Nifty on 28th Jan 2010 closed marginally higher at 4868 levels after making a high of 4929. In the past also it has been seen that the 4800 levels acts as a good resistance and support. Nifty may find the same support this time also. Nifty close below the same will take the Nifty to the next level to 4600 levels. Nifty closed the 100DMA. Nifty may bounce back to face resistance at 4954-5000 levels. RSI has fallen down to the oversold zone. Nifty will find support at the trendline. A clear Head and Shoulder pattern had been formed in the RSI pattern in the last week that too triggered the sell off. Markets might bounce back in the coming week, but no major position is advice.

On the last day of the week Markets opened by strong even after the carnage seen a day before. But slipped in the red zone in the post lunch session. Wewap selling in the end too lead some volatility in the market. Huge short were rolls in the current month with record volumes in the history of Indian markets.

In just 2 days of the week FII remained Net seller to the tune of Rs3200 Crs. But DII were buyers of Rs.2190Crs.

Last week calls Update
Short ICICI Bank below 834 SL 840. Low of 780 was made
Short PNB below 900 SL 915. Low of 850 was made
BUY Tech mahindra above 1137 SL 1125. Could not trigger the buy price of 1137.

This week’s call
Buy DLF above 3 with SL of 317.
BUY HDFC with SL of 2306.
Short HUL Below 251. with Sl of 255.