Update for 10th December 2010

Nifty Futures Close Below the 100 Day MA !

The last post was titled "Nifty Heavy Weight Stocks Also Turn Losers !", but this author couldn't have anticipated the kind of  losses suffered by the market on Thursday. Even though the previous posts could report about the lack of volume, all round negative market internals and a deteriorating Put Call Ratio ( PCR ), the losses were beyond expectations. It seems that the excesses of the recent bull market and especially the operators and FII led the vertical rally from the  5550 level to the previous high of 6300 plus levels, is being set right by the market now. Now, on observing the all round losses suffered by many traders and investors, this author is forced to reproduce some quotes from the post dated  9th September, 2010,  which talked about the then bull fury and it's possible excesses and after effects.       

Excerpts from the post dated  9th September, 2010

"Any breakout above the trend channel may be associated with a mad scramble to get in to stocks by the retail crowd. The tipsters and talking heads will have their time in the lime light. Analysts will start finding new reasons for buying stocks at high prices.  Euphoria will prevail. And no resistances will stand in the way of the mad bulls. All the dud stocks may become the favorites of the masses once again. And when the  bubble bursts, another set of traders and investors will learn their stock market lessons. ( To read another short description of this scenario, click here to read the post dated 23rd August, 2010. )   

To those readers who might  be wondering why this blogger is hell bent against another super duper rally in the stock markets, let it be made clear that this blogger is not hell bent against any rally or otherwise.  It is only because this blogger likes an orderly stock market which leaves some scope for appreciation for the buyers in the long term. If the market overshoots on the upside, it will lead to all kinds of non sustainable investments and this in turn will lead to bad markets tomorrow. Higher stock prices makes dubious companies raise capital for questionable  projects which will fail at the first signs of economic hurdles. In the end, an overpriced market is as bad or far worse for the economy than an under priced market. In fact bubbles leads to wealth destruction than the claimed wealth creation."

  Nifty Futures - Intra-day Chart     

Update for 9th December 2010

Nifty Heavy Weight Stocks Also Turn Losers !

It was reported in some of the previous posts that market lacked volumes at just above the 6000 mark of the Nifty Index. It seemed that trading at the recent top was very sluggish and lacked enthusiasm. It was also opined that Nifty future may try to move out of the narrow range in the early part of the week. The last two  posts also reported that market internals, as seen by the advance decline ratio, seemed to be very negative and traders may exercise caution. It was also stated that a reentry in to long position is not advisable because of  added risk. The Nifty heavyweights seemed to be unaffected by the overall negative market mood on the back of the new found strength in the oil and other commodity stocks. Even though Nifty future was expected to test the 6030 level as indicated in the previous post, finally, the prevailing negative mood caught up with the Nifty heavy weight stocks too, on Wednesday.  By the time market opened on Wednesday, the late positive momentum of  previous day seemed to have been vanished in to thin air. Nifty futures opened some 35 points below the last traded price because of the negative indications. The open remained as the day's high and the morning session's trading was mostly centered around the 5940 reference rate. 

 Nifty Futures - Intra-day Chart