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Market Sentiment Review

October 16, 2008

As much as I am eager to put some chart on this post, but my charting tool has to wait for some more time, to get hold of the latest data.

Yet, some reviewal of the final trend is in offing. At the risk of sounding too certain, I would like to hereby put this disclaimer right at the very top: Caveat Emptor!

The spectacular rise on Tuesday and Wednesday, this week was a mere reaffirmation of the trend, being effectively bearish. The inability of the market to make higher highs confirms one final reprisal of the death note! 🙂

In a less punkish language that would be, another retesting of the lows. While trading today, on a day which marked the beginning of this end, Sensex broke important levels with tremendous force. 10,900 levels were broken real hard and this should effectively see some new lows being formed.

Nifty once again closed in the bid-offer spread of 3333-3342 levels, which earlier broke the important support level of 3365-70. This fall in short means that Nifty may close this time near to 3200 levels or even less. The resistances are gone for a quite some time down.

Yet, all is not that bad and sundry as it looks. With the Sixth Pay commission being enacted, it will raise the spending and purchasing power of a whole range of the society. The middle class will have more money to spend, which should translate to better consumer sentiments. By the end of this quarter we should see some good IIP numbers. Moreover, with the opening of the PNote controls, hopefully the liquidity which were showing declines since last October, will improve. And again, there are quite a host of FIIs sitting on the sidelines waiting for the sentiment to show some stability. Hopefully, once the market enters a flattish period, some buying pressure can be seen.Already Center, SEBI and RBI has taken the issue of liquidity crisis extremely seriously. Unprecedented among them is the action of two CRR cuts in less that a week.A further cut of SLR [short term lending rate] by around 200 basis points will see an infusion of around 70,000 crores in the system, relieving the financial sector by some degree.A far more important sidenews is there, which will in a nutshell open up a whole new chapter in the capital control regime of India. With FMO in serious consideration of opening up the pension funds for equity investment, a liquidity of far higher magnitude will be observed, hopefully by the end of election.

So if you really ask me, then my money is on some serious liquidity injection, improved industry numbers and some bullish movement by Jan-Feb. On the money! Lock Stock and Barrel.

Verdict:

Short Term: Bearish

Mid term: Neutral

Long Term: Bullish

To be uncertain, is to be uncomfortable. To be certain, is to be ridiculous

-Old Chinese Proverb

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5 Comments leave one →
  1. Paulraj Madasamy permalink
    October 16, 2008 10:58 am

    real cool stuff.. understood this post 😀

  2. Soham Das permalink*
    October 16, 2008 7:04 pm

    🙂

    I feel validated 😀

    But on a serious note, today was a day when bears literally drew blood, only to see, bulls taking control over the last part.

    This extremely high volatility in a single trading session is something savvy traders should be beware of. Many times, I have noticed that an increase in volatility tends to mark a bottom formation.

  3. Paulraj Madasamy permalink
    October 16, 2008 11:57 pm

    duly noted 🙂

  4. October 18, 2008 3:16 pm

    bears really sucked the blood out of many…a look at DLF’s share price over the last few months should be enough…

  5. October 19, 2008 1:15 pm

    The issue is [lets accept it] realty has suddenly gone out of the window. High interest rates have proved to be as much a damper as the lack of buyer interest

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