Technical Analysis of Indian Equities by Nooresh

Midcaps/SmallCaps can continue to Rally with a subdued Sensex/Nifty

SensexSnag-18000

 

Sensex --- the band of 18000 was a problem for a very long time. When it broke that it did 21k. Next time it broke it went to 15k.

Basically a 3000 point move on either side.

Will this break again be a trend changer ?

Now lets look at the small cap side.

 

Bse Small Cap Index --

 

During this period of 18k the band came to 80000-9000 for the Small Cap Index. But in the recent falls post Feb and August decline we have seen a huge erosion in small cap prices.

 

Is it possible to see a rise in Small Caps in a large way like 2009 where Index kept stopping at 18k but Smallcaps kept roaring ?

Also Small Cap is yet to catch up? Good possibility Index stays sideways and rally continues in the smallcaps

 

SmallCap-8000

Expectation is we may see stock specific action for next couple of months even if the benchmark Index – Sensex/Nifty correct.

 

Also with the huge crash in last 1 year in midcaps i see a lot of long term investors or even normal investors booking out at small gains even in really good stocks. ( Just an example one of my friends sold of Nesco at 10% gains from 550 to 620 itself and is now feeling left out ). This pattern generally is seen at start of a turnaround. Finally the same set of investors jump in after standing out for long !.

 

So if one is convinced about the long term then should hold on and ride with a trailing stop loss. Also what if this market rallies like 2009 ? the best way to do so is a trailing stoploss or only booking partial profits to reduce cost. Also we believe the current breakout is a long term trend change so its now a Buy and Hold to Buy on dips.

 

Dsiclosure: We continue to remain invested very much and the focus has shifted to smallcaps/midcaps over the last 2 weeks. Investors should bear in mind that smallcaps can lose 10-15% drop pretty easily in a bad environment and gain 50% also quickly. So please do your own research and asset allocation.

Article by Nooresh Merani

Nooresh has written 2569 articles.

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{ 6 comments… add one }
  • Akhil February 15, 2012, 23:15

    Hi

    May i request you to please update views on Chambal Fert as of now.I have bought in Fut @92/-
    Nifty rallying but Chambal didnt.

    Higly oblidge.

    Looking for your reply.

    Thanks & Regards
    Akhil

    Reply
    • nooresh February 19, 2012, 11:45

      Akhil

      Need a close above 94 on it

      Reply
  • x February 16, 2012, 12:13

    U dint cover ur fav. Stocks dis time around IFCI , neyvelii , indian hotels , GMDC and can I buy aditya birla at 900

    Reply
    • nooresh February 19, 2012, 11:45

      Aditya Birla Nuvo , Neyvyeli, GMDC look interesting

      Reply
  • Atul February 16, 2012, 14:07

    Hello Nooresh Sir,

    Any view on Supreme Infrastructure as a trading /investment bet…

    Chart looks interesting if it can cross 250…

    Reply
    • nooresh February 19, 2012, 11:44

      Hi Atul,

      Have not beeen tracking it

      Reply

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