Update for 3rd August 2011

The Drift has Started Again ?  

It seems that the drift has started again on the back of the triggers provided by the international markets. The immediate support for the market is in the area between 5350 - 5400. The next lower support is around the previous double bottom at around the 5175 - 5200 area. As the downtrend has been continuing for a long time by now, sudden steep falls are not expected and hence the author is forced to use the word drift in the title of this update. Market may drift for some more time and in the meanwhile may respond to short term triggers, both negative and positive. Therefore, trading light and part booking of profits, if any, seems to be best solution to overcome the drifting markets.

Nifty Futures Daily Chart 

Update for 2nd August 2011

Same Old Story Continues !  

I had indicated in the yesterday's post that failure to clear the 5550 -5560 level may see the Nifty futures testing the lows. It was also said that in the absence of any triggers, some back and forth trading may be expected. The kind of trading seen today morning also proves that this scenario is playing out so far. The reasons for this kind of trading are the following. ( a ) The medium term trend is still neutral to down due to the rising interest rates and inflation and the consequent slowing growth and profitability, ( b ) In spite of the aforesaid reasons warranting lower stock prices, the best of Indian stocks are still retaining somewhat premium valuations on the expectations of long term growth while most other stocks are still on a correction path, and ( c ) These diametrically opposite factors have lead to the sideways kind of trading and a breakout in either direction is beyond anybody's call right now.  

Nifty Futures Daily Chart