Update for 13th December 2010

 Nifty Futures Recover to Close Above the 100 Day MA !

The last post conveyed that the Indian market is going through a peculiar situation on the back of the rumors and other pieces of bad news and therefore, any clear analysis of what happens on a particular  a trading day is beyond anyone's capability. However, it was also clearly stated that Nifty future has 'some support at the 5725 to 5750 area being the previous low and from the top line of the  previous trading channel.'  The indicated reference points  for Friday's trade were at  5650, 5750, 5830, 5860 and 5900. The intra-day  chart of Nifty futures is given below to examine the last Friday's market action.

  Nifty Futures - Intra-day Chart     

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