Sensex —- When in Doubt Stay Out !!
Sensex Technical View :
The moves in the last few sessions and the volatility is giving no sense of direction. Although the worse case levels of 15500 zone is still holding up but any recovery is not sustaining.
Upside resistance at 16100/16600 remains to be strong. Lot many indicators are pointing to positive divergences but no confirmations yet ( Will post chart next week ) . So ideally and technically the markets should attempt a move to 16600-17000 levels but it is still elusive.
So as of now continue to wait and watch. Hold stocks which you are convinced of in medium term. Short term trades need to be very quick and small so its better to reduce volumes.
Some Thoughts :
The Sensex drop from 17700 to 15650 is a good 2k points but in % ge terms would be 10-12 % and that would have definitely hit portfolio of many people. It would be ok to see a 15-20% drop in the portfolio from higher levels.
But the drop could have been higher for people who did not make money in the last 3-4 months of rally in midcaps. Also few weeks back had consistently been mentioning to book partial profits and take some money out of the market. If you had done so then its time to get the money back at 15700-15000 levels and again look for pulling it back at 5-10% move in next few months.
The hit in such a drop is mainly to leverage. As i had mentioned some time back that only time we used leverage was at 15300 dip and 16600 and the view was to book profits and reduce leverage moment we touched 177000. So if you did take a hit in this drop make it a point on next bounce you reduce leverage and start avoiding it again !!
Stock Specific :
Buy Ajanta Pharma on declines to 150 stop of 140 tgt 180 in short term.
Tata Steel buy in dips from 525 to 500 stop of 490 target 570 in 1 mth.
Apollo tyres buy in dips to 54 stop 52 tgt 59-62.