Be Careful what you wish for because you might get it. The market has pulled back. Can it quickly stand up and run again or market may take some time to recover. Good Morning. Here are few observations for the day
Market Observations
- The most bearish thing a market can do is Go down…rest everything follows.
- A big sell off does two things: A. It creates doubt in mind of traders; and B. It gives an opportunity to investors to buy at lower prices.
- The debate that’s going to happen over next few days: How Big or the Shallow the pullback will be? At What level market is going to find support?
- The near term support for Nifty stands at 5420-5430….which is 85 points from current levels.
- FIIs continue to be bullish. Yesterday, they net bought Rs. 829 crores worth of stocks in cash market whereas DIIs net sold Rs. 1329 worth of stocks.
- In Futures market – FIIs net sold Rs. 346 crores worth of Nifty futures and Rs. 696 crores worth of stock futures.
- Most of the Global markets yesterday pulled back. Reason: There is no fresh catalyst for the market
- The job of the market is to move from one worry to another. With Greece news out of the way: What is the next thing market can look for?
- The Wall of Worry is now going to be centered around Economic Recovery in the world and the pace of the recovery. Geo-political risk and Crude prices may remain a joker in the pack.
- Market may continue to rise Wall of Worry because the stock market remains “cheap” relative to the bond market. Ten-year Treasuries yield about 2%, while S&P 500 earnings yield about 7%. This is the main support for higher stock prices going forward.
- Another Bullish argument: S&P 500 earnings have rebounded to above where they were in 2007, but the market is still about 10% below that peak.
- What about Bearish argument?: It’s same old story. Sovereign Debt is a major issue and the problem has not been resolved. It’s only pushed down the road and will come back to haunt us.
- Coming Back to India market: Nifty is down 1% for the week. So, much for weakness
- Today is F&O expiry and one thing that will be there on everyone’s mind: Will there be follow through decline?
- SGX Nifty suggests flat start for the day. But what is surprising hefty premium on March Futures. March Futures is trading with 55 point premium…..weird
- Post expiry: Indian market will enter very news heavy month – Election results, Budget and Government action on Key reforms.
- Yesterday, SBI took the biggest hit and was down more than 8%. SBI has a stiff resistance at 2500 and it can look for support around 200 dma i.e. 2020.
- Most of the high beta names pulled back quite sharply yesterday and it was selling across the board.
- Surprisingly Tech sector remained strong and TCS flirted with all time high at around 1250.
- Keep an eye on stocks that have made life time highs recently. They might be great buys on declines.
- Sectorally, the Bull market seems to be emerging in Power stocks. Adani Power and JSW Energy looks great on declines.
- Trading is a business of probability and uncertainty
- In Trading, you need to accept that you are dealing with chaos on day 2 day basis.
- The only way you can be successful in the chaotic environment – look for small windows of opportunities that market throws up on consistent basis
