Major Indices: Sensex : 15757 Nifty : 4761
Intermediate Trend: Sideways
Key Technical Levels: 16452- on the upside; 15300- on the downside
In the previous review when the Sensex was at 15644, we had stated, “downside is restricted up to 14677-14500. “Smart money” is active on the buy side and Shake out process (towards recovery) is on; Long term investors should buy around 25-30% of equity on every dip”. As expected, literally, the Sensex has shaken out the investor’s confidence with wide swings. It has surpassed our initial target of 16111 (actual 16236); equally failed to close above 16111 and then tumbled to 15300(slightly down from our “key” level of 15350).
Despite of strong adverse sentiments, negative hype by media, confusing “statements” by major players, the Sensex seldom tested its previous low of 14677. Even though the sentiments were favorable (for bears), the bears had failed to push the markets towards a new low. That itself is the first indication that the bulls are fighting and actively protecting their turf. The clear trend is likely to emerge, after the completion of this shakeout process. Odds are in the favor of the bulls (80%). Expect a fierce battle in 15300-16450 area, before shifting of the control, decisively. Anything below 15300 will weaken the bull’s fire power (read short term stop). However it’s unlikely to happen, given the circumstances (described in our last few reports since Sensex touched 14677). Further, the bullish counter attack will not gather required strength, if the Sensex failed to surpass 16452 in the next 5-7 trading sessions. Once done, the bears will get slaughtered.
Conclusion: Intermediate trend will turn bullish, once 16452 surpassed on closing basis. In the extreme short term, again, expect 15300-50 to act as a (last) support, if holds then first target for the bulls is to close above 16452 & then 17020. Even if the bulls manage to close this week above 15950, its better.
Rate of Inflation Vs Sensex
Last week, there was a hue and cry after the figures of rate of inflation was revealed. The media and analysts were active in predicting its impact on the markets and on (poor) Sensex, which already has shed around 30% of its value since Jan 08, for various reasons.
Has high rate of inflation is really a worrying factors for the bulls?? Study of the movements in rate of inflation vis-à-vis Sensex, since the start of Bull run in 2003, reveals some stunning results. Look at the following chart:-
Whenever, rate of inflation is at its peak, the Sensex, invariably, & notoriously, makes a “trough” rather than ‘top”. At least for the last 5 odd years, a spike in rate of inflation is giving stimulations for the fresh up move.
Will it be different this time, when we are already down 30%?? If not, please don’t shoot me.
Whenever, rate of inflation is at its peak, the Sensex, invariably, & notoriously, makes a “trough” rather than ‘top”. At least for the last 5 odd years, a spike in rate of inflation is giving stimulations for the fresh up move.
Will it be different this time, when we are already down 30%?? If not, please don’t shoot me.
