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NIFTY and sensex rise-What next?

Monday, August 20, 2007 Leave a comment Go to comments

Today’s market action was not very surprising after US and other global markets staged some sort of recovery.

In fact if we compare NIFTY’s performance with the rest of the Asia, we actually didn’t do that well. We are up just 2.5% whereas the rest of Asia was up 3-5% . Clearly the bulls are little nervous and are getting out of markets on every rise.

425o acted as good resistance on the upside but it was good to see a little less intraday volatility. Looked like nobody wants to bet big at this stage. I am also observing that lots of stocks which were showing momentum have fallen by the wayside and couple of new stocks are shaping up to move higher in the next upmove. Large caps are not looking that strong except for an odd RIL or SBI.

Couple of possibilities going forward:

a) A “V” shape recovery to new highs : Very low probability

b) Market consolidates between 4100 -4350 levels – High probability if volatility starts to come down.in that case we might have already seen the bottom at 4000.

c) Sharp correction downwards- Medium to high probability in case of another “negative” event. A breakdown of 4000 levels and testing of 3600-3800 levels

If you are a contrarian and aggressive investor, you can go with a)- the risks and rewards are huge.

If you are a conservative investor, then you might want to look for b) and c) and stay away for a while.

Categories: NIFTY Strategy
  1. hart
    Wednesday, August 22, 2007 at 9:07 am

    Tip for long term investors:- Keep investing 10% of your cash in every 500 points fall. You can never know when market can go northbound, so never miss out opportunity on lower levels.

  2. rp
    Tuesday, August 21, 2007 at 3:56 pm

    Thank you. I got the answer

  3. indian_investor
    Tuesday, August 21, 2007 at 3:40 pm

    sagecapital is proved right 100%. Market corrected big time. With subprime not going away and mid term poll scenario looming, expect more corrections. Reduce positions and be in cash.

  4. sagecapital
    Tuesday, August 21, 2007 at 12:27 pm

    Divakar- Why do you feel the “urge” to catch the bottom? Let me tell you its next to impossible!
    Pick your “stock’, ” time frame”, entry and exit points.If these things are clear in your head, then taking a decision might not be that difficult.
    Find me a trader/investor who is 100% correct in his/her “predictions”!

  5. sagecapital
    Tuesday, August 21, 2007 at 12:21 pm

    RP- you have asked a billion dollar question 🙂
    You can read the post “Should one act brave and buy now”?
    Also read “5 simple rules to follow” while investing/trading. Also read “NIFTY analysis” section-right from the beginning.
    More important than “timing” the market is “knowing” what you are doing.

  6. hart
    Tuesday, August 21, 2007 at 12:19 pm

    Analyst use these terms to “explain” things which they themselves are not sure of!

    well said …

  7. sagecapital
    Tuesday, August 21, 2007 at 12:16 pm

    Ya sure. I will try to explain the Yen carry trade.
    Although, I would recommend you not to ‘clutter” your mind with many terms. Analsyst use these terms to “explain” things which they themselves are not sure of!
    Focus on price action and I bet you won’t do bad.

  8. Amol
    Tuesday, August 21, 2007 at 11:25 am


    Can you make one section like kowledge in this blog?
    Where you can put up the ecnomic terms from laymans prespective like what is sub-prime market,cut discont rate,US Housing slowdown,Yen unwinding trade…..etc.

    This terms related to market we don’t understood.It will be great that you explain (Like always) in simple language from investors presctive

  9. RP
    Tuesday, August 21, 2007 at 9:47 am

    Is it advisable to invest now or wait till correction occurs or market goes sideways ?

  10. Divakar
    Tuesday, August 21, 2007 at 7:28 am

    dear sir,
    you told that you fall under conservative category means , you are expecting that the market is going to correct more from here.


  11. sagecapital
    Monday, August 20, 2007 at 9:43 pm

    I’d fall in the conservative category.

  12. JK
    Monday, August 20, 2007 at 9:33 pm

    What type of investor are you?

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