Market On 11-02-2008

Hi Friends,

The coming week is most crucial in terms of Indian stock market as we will know whether the markets will take the supports near 200 dma or at 4870 or will retest the earlier lows or will make new lows.Some of the strongest sectors that were the pillars of this bull run have given complete control 2 bears.Prominent large cap stocks that have lost most in this bear run are related with brokerage and Finance related stock.We are now seeing a similar fall in private banking space.On Friday three private sector banks came near to technical breakdown levels.

Axis bank below 960 will be in bears zone

Kotak bank below 800 will be in bears zone.

Icici bank below 1010 will be in bears zone.

Hdfc bank below 1380 will be in bears zone.

This stocks are reacting on the downside when icici and axis were expected to be the best performers in 2008.This makes me worry.Some sectors like cement stocks are looking good to take a bounce.It is again worrisome that index is being supported by stocks that are showing technical bounce from oversold zone.Index at this point should had been supported by stocks that are fundamentally strong like LNT and RELIANCE.But it is finding supports from defensive plays like Fmcg and by laggards I.T space.
sensex eod charts show an island reversal pattern being made on tuesday.This pattern in itself is not bearish or bullish but the market shows a good reversal from the trend when this pattern is made.This is the second time in my trading career that i have seen this pattern in a bearish market.The first time being in 2000 dot com bubble.On 11th of april 2002 the same island reversal was observed in nifty.Interestingly the reversal is observed in sensex but not in nifty.
Technically we should not observe the Indian markets alone without the global context.Globally markets are in crucial stage.All are nearing there recent lows.If they maintain those lows we have chances of rallying if not than we should gear up for a fall thats unprecedented in the history of the Indian stock markets.
R power is listing on monday and we believe markets will be highly volatile.

The global Financial storm refuses to relent and is becoming more and more aggressive with each passing day.We are now facing a full fledged recession and it will be a recession not limited to just usa.The under-performance of finance stocks in India can be attributed to the global sell off in the equity markets.I have a strong belief that in coming two to three quarters we might see a big consolidation in global financial mart.There might be some big financial corporations that wont survive and we will see them getting merged with there counterparts.It will be on a global scale and scene.
Coming back to the Indian markets the selling pressure witnessed yesterday makes the scene scary for small cap and momentum stocks technically.There was a good amount of buying witnessed in these stocks in last three days.Everything got sold off yesterday.Technically we are oscillating between the 100 dma and the 200 dma.I believe with the current state of affairs it might just be difficult for our markets to hold on the 200 dma.If only we recover above 200 dma then a fall can be best forgotten.Else its time to be highly cautious.Technically some of the finance and brokerage stocks are showing breakdowns.Stocks like India infoline,Motilal oswal and Reliance capital.Have lost nearly 40-60% from there peak levels.There is a talk of a real estate correction in NCR region.Although the news reports are unconfirmed,Charts suggest that it might be correct.I will say its ripe time to stay away till 5521 is not crossed.
Global markets are near supports and they should now witness sideline move or strict correction.Markets that are closed due to chinese new year might witness good correction once they reopen which might trigger a second round of global selloff breaking the previous lows.

Nifty supports 5044-5012