Sensex Technical View :
Sensex has taken a quick retreat from 11900 and has already touched 10700. This is a much quicker pull down from an extreme short term resistance which implies lesser strength. Sustaining below 10700 or even 10500 then the recent low of 10200 could be next support which if broken then the most important support is 8800 and 9500-9700 which is fibonacci level. Ideally a long stop loss should be placed at 10200 /10500 depending on risk apetite and time period for a trader. Investment buying further should be done only in 8800-9700 zone or wait for a turnaround signal and buy at higher levels.
Another thing is although Sensex may have not made a new low just happened to check that many index and non index stocks have actually went on very close or made new lows which is not a gr8 sign and ideally one should prefer to wait before taking a trading call and for investments it has to be slow and staggered in the range of 8800-9700 . Also in many stock specific the charts are at a crucial stage ... Will discuss with charts in next post .
So the real question that lies is whether markets want to bottom out at 8800-9700 or take a short at 12300-12900 first ... Next 3-5 sessions would give more clarity technically and fundamentally.. So ideally wait before taking quick decisions.
Market Observations and Thoughts :
The relentless selling continues from FIIs and redemption pressures for MFs, panic selling and all sorts of pressures have still remained in place. Although investors may have started buying in small lots but one needs to be cautious with their choice of stocks as not all stocks may bounce back sharply and regain ground. Real estate,cap goods , commodity stocks with high debts, pvt banks should actually take longer time to get back into good days. PSU banks as being mentioned since a long time are best to park money with high dividend yields. The view of avoiding pvt banks , real estate , cap goods since months has left us better placed !!! ...
So even if one has started buying at sub 12k levels and have seen 10-20 % dip in stocks even after staggered buying and if one has deployed part of the cash then should now wait with the rest either for 8800-9700 or a sustained sideways or consolidation followed by a turnaround to further take long term investments. Short - term trading , averaging , re-entering after bounce -sells or selling and re-entering will need to be used in investments already made to optimize the cost of acquisition and money management too.
Stocks to watchout for :
ITC recent low of 155 is very crucial for short term.
RIL low of 1480 , RCOm low of 225-230 , Punj Lloyd 180 , LNT 850 , Renuka Sugars 59-60 below which if they close could see 5-15 % correction.