Sensex Technical View :
Long Term Technical View :
On a longer term chart Sensex is sustaining below the lifeline and being a 5 yr trendline it has to be seen whether market close below the line for 1-2 months to confirm a slowdown of the pattern where in markets would hit new highs after touching the lifeline. Such a conlusion can only be taken after 1-2 months from now and what is seen generally in this channel is markets bottom out near to May so we can review the long term multi year view by end of .
Points to note before that time period is Sensex should sustain above 14200 area which is 38.2% of the 5 year run.
If the index closes above the lifeline which may roughly be 15500-16500 till May then we can say that sensex is still in the newer high pattern and which a rally can be likely from June or later . So once the scenario clears in next 2 months we can come out with targets and view for the year ahead .
Only if markets start trading below the 38.2% retracement we can term it to be a breakaway from the channel and would see a sideway move for a much longer time and a slowdown or rationalization of the growth we are into .
Strategy for long term patient investors should be to buy on declines around 14200-14700 and be patient and calm in the as ideally Bear markets start dying when pessimism starts living up.So the bottoms are generally due to sentiments and one cannot exactly find a bottom so can start buying slowly on dips from here. But those who buy do have a downside risk of 15-20 % from current levels so be ready to digest it or wait for a reversal and change of trend which may take quite some time.
Fundamentally India growth story continues to remain one of the best in the world to put money in but every rally should also have good corrections to clean up the excesses and more the excesses heavier the correction which can be termed as one of the reasons for a sharp drop.
Sensex Short term View :
Sensex continues to slide down slowly and ideally should find a bottom in the zzone of 14200-14700 on a closing basis and traders can still wait to get back to excessive trading till the markets dont stabilize and on a time wise basis we could see a bottom formation and stability by April 1-2 week as that would be the 13th week from the Jan lows. Strategy continues to be same to be on cash and wait.
Sunday Thoughts .....
Just picked up the title line from a feedback mail of a client some days back ..
Sometimes by doing nothing u can gain more....
This has been the motto for last 4-6 weeks to stay on cash, generate cash and be ready but do nuthing as the markets have still not healed and we are in no hurry to trade.
Its always been difficult for traders or rather compulsive screen traders to avoid the market in such volatile and weak days with majority of the days being either a gap down or a gap up with hardly any opportunities to take a positional call and intra day too... And as always i say Its not necessary to trade ...
Its said in markets u never try to beat the market as markets are supreme and all one can do is follow it the right way. So follow the trend ...
Certain things which people do other way in a falling market...
In super fast moves one does tend to sell some qty to book partial profits and conserve gains... May sell 100 of the 500 . On market crashes does one sell partly to reduce expsoure ??? conserve capital.
When somebody advises to buy say RPL or ne other stock and pat comes the reply I hold RPL from 60 and now its at 75 tell me some thing else. Why doesnt one buy more of the same stock as , u buy for gains and not the name right ??? .. Like In business a hotelier would rather open more restaurants to make a chain of gr8 ideas then try to open a garage in an uknown place...
But when a stock corrects from 100 to 50 people do like to average a losing trade ??? But do we add more of a winning trade and running stock on every fresh move ???
If we hold a stock at 100 say 100 shares where we loved the stock with a 2 yr view and why at 50 does one buy only 50-100 shares but should rather buy more as u get double the no of shares at ur initial allocation ...........Is it that one has suddenly turned bearish or was it a wrong investment we got into ??? Has the company collapsed or did we paid a wrong price for it ..
These are some questions which can give one a good review of the thinking process while investing....