Markets fell to its lowest since November 2005 after witnessing significant selling pressure despite inflation touching its seven-year low. It was a scary session for the markets led by cash based selling in heavyweights from oil & gas, capital goods, banking, FMCG and power sectors. Incremental flows remained negative at FII desk and they have been net sellers for the 13th consecutive day.

Markets had regained some losses in the afternoon session but low inflation and RBI repo cuts were not sufficient to keep key indices from tumbling as economic worries continued to persist already hesitant investors.

Commenting on markets free fall, experts say it’s difficult to predict the markets now. However, they are sure that the markets will drift lower before stabilizing.

Lowest closing for Sensex since November 2005

It was a lowest closing for the 30-share BSE Sensex since November 2005. It has touched an intraday low of 8,166.97, before closing the day at 8,197.92, down 248.57 points or 2.94%.

The 50-share NSE Nifty shut shop at 2576.70, down 2.59% or 68.50 points, after hitting a day’s low of 2564.10.Where are the markets headed?

E Mathew, Director, Mathew Easow Fiscal Services, believes that people have thrown fundamentals out of the window and are focusing more on the technicals. According to him, the next major support for Nifty will be 2,550 to 2,570.

Sajiv Dhawan of JV Capital Services, is of the view that coupled with complete lack of buying interest despite some support by domestic institutions; markets will probably drift lower before stabilizing.

Technical Analyst Ashwani Gujral, believes that markets are getting into extremely strong supports. “Levels of 2,500-2,550 are something like 3,150-3,200 on the upside, so maybe it is time to cover some shorts.”

Gujral is scared of the fact that there is lot of put writing happening at 2,500 levels. If that level goes, momentum will increase on the downside. Today was a key test of strength and when market reacts like this on good news, one can be sure that lot of people are selling, he added.

Ajay Bodke, Senior Fund Manager, IDFC MF, believes that market is in the process of bottoming out. He feels that in the next couple of quarters, one could clearly start seeing the current insipient signs of recovery in the consumption led sectors gathering pace. The monetary and fiscal stimulus measures being announced by the government in three tranches are starting to make a clear impact in the consumption led sectors, he added.

Rajat Bose, rajatkbose.com, is of the view that support levels in the Nifty will be seen every 100 points say 2,390 after 2,487 now.

Sudarshan Sukhani of Technical Trends, said one can now brace for something like 2,000 levels on the Nifty.

How should one trade now?

Sukhani advices to short the rallies. According to him, the right approach for a positional trader is to wait for these one-two days rallies and then take a punt – sell call or sell future.

source: Moneycontrol

Tags: calls, daytrading, free calls, intraday, tips

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