Sunday, January 20, 2008

Markets Down, Panic Up

In the past week the markets have lost a good 500 points on the Nifty and nearly 2000 points on Sensex. The swift downfall in the two indices has rattled a large number of investors.

As we have very often pointed out the surest way to win in the market is to control the emotions of GREED and PANIC. Investors who can conquer these will in the long run conquer the markets.



The question facing most of our investors now is “What to do now?” Well, there is no easy answer to this. The markets will do what they have to do.

We are in a long-term bull market. So far the market has not given any indication that the long-term trend has changed so we must assume that the primary trend continues to be up and hence any correction in the market should be taken as an opportunity to buy particularly for those investors who had missed an entry earlier. But any buying should be done only after one gets a confirmation that the Short-term trend has turned up. It is not wise to buy in a falling market.

We at SURAKSHIT SECURITIES have been trying to give you honest advice for the past seven years. We are now embarking on many new initiatives. First of these have been sending out a Newsletter to our clients. We hope it is proving of educational value to you. We shall welcome suggestions from our esteemed clients on how we can provide them better services. Do feel free to put up your suggestions on this site or else write by e-mail at sspl.mahesh@gmail.com.

Col. (Retd.) Mahesh Sharma

Nifty seems to have broken out of the channel shown by the blue lines on the daily chart of the market index. The Nifty fell by more than 200 points on Friday and almost 500 points in the last week. Such a sudden decline can bring about a relief rally. If any relief rally comes, it should find resistance near 5800. Prices above 5800 will convert this resistance into support. Crossing 5800, at this point of time, looks like a distant possibility. The Nifty may find support near the thick black line, which has been providing support and resistance to the Nifty since the last year or so. This line currently stands at 5500.

Hindustan Constructions has corrected from a high of 276 in the beginning of the month to 190 on Friday, a correction of more than 30%. 190 also happens to be a good support for this stock. This may be a low risk buying opportunity since our stop will remain very close. One may consider buying near 190 with a stop below 180. It seems as if the stock may find some resistance near 220, though, the target remains much higher.

Volumes decreasing with each successive top remains a sign of weakness in Petronet LNG. Though, 100 is a support for this stock but in the absence of buying volumes, it could easily be broken. Once below 100, it may continue to fall till it reaches 85.

Happy investing!!!