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The Unwanted Rally

July 3, 2008

Okay, its going to be too much of fluff.

Yesterday, when markets rose around 600 points on the back of tremendous short covering, for a moment, I was praying such thing should happen again. And again. And again…

Yet part of me, knew looks are deceptive and stock markets are past masters of this game. Putting some humor, into my chats, I punched in these lines at, my status message.

Alter Ego 1: Thou Shan’t Miss the Next Rally!
Alter Ego 2: The One going up, or the one going down?

Today, it tanked at an intraday low of 700 points before recovering some of it, in a 200 points upward rally. It closed at 500. Nice!

At these times, volatility in such small time frames is the least thing to expect. Traders are already beaten, royally tortured and sent home with a bloody nose. And this is not only a bad news for ‘bulls’ but ‘bears’ as well. Volatility of this order, does nobody good.

But then, the big question is till when will it last?Present, 3925 levels of Nifty looks extremely oversold. And it can’t stay this long, this low in these times.

Okay, I digress, somebody was telling me today, that government is trying to incorporate Sensex and NIFTY in the Wholesale Price Index in order to cool down the inflation! [okay that was meant to be a joke].
But I think you get the point. Both, Sensex and Nifty are zooming deep inside the oversold territories, thus confirming a bull run, in a very intermediate state. But bull run,nevertheless.

Analysts on the street are even mentioning the levels of 2700 as the levels to talk about.But thats increasingly negative. It looks really pessimistic to me and I would rather not bet my money on it. A rally of around 10% plus, can be coming soon and may get over even before you blink. Because there is no denying that, markets are rocking(figurative speech that of a boat) really wildly.August, I believe is the time to watch out for. And you may probably think of offloading dud stocks in this next upcoming rally. I am expecting oil to flatten out for some time [citation needed] , and expecting it to trade sideways for a significant part of the next month. So a green rally at least will not have a dampener. Especially in these times, when a green rally itself looks so weak. But nonetheless, August can have some interesting action on the cards.

Just a parting point though. In April, when the stock markets were staging a recovery, Jhunjhunwala stunned every bull in the market, talking about his ‘more-pains-left’ theory. I don’t know, if he visits any traders forum or not, but definitely, he received a lot of flak. Sensex was hovering at 17k levels in those times. 🙂
So,you got the point? 🙂

The author, Soham Das takes a passionate interest in economics,electronics and environment [coincidentally,all three Es], not necessarily in that order. When he is not blogging on markets, technology and their business issues, he spends his time conceiving and executing projects for a hi-tech electronics startup based out of South India. Talk to him at Jump Up! He is listening]

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