"We have advised that year 2008, will be tough year for the equity markets, especially, secondary markets; which is being experienced in all markets including ours during the past one week. Without any indication a correction of more than 10% from the recent tops has taken place by last friday, and the pain seems to be not over, as there is no reduction in overall outstanding positions in derivatives.
US indices, Nikkie have clearly pierced 200DSMA and have entered bear phase, which is exerting pressure on other markets, due to large scale selling by FIIs. Whether it is short term bull market correction or long term bear phase shall be confirmed by this month end, as two important events are going to decide the rate sensitives, and outlook on the economies. FOMC meeting on 29& 30th and RBI Monetary policy meeting on 30th, shall be watched keenly for the cues by analysts.
Tech sector results of Infosys, Wipro and Tcs are in line with expectations, but still there are no takers, hence continue to slide and make new lows. Results from indian corporates are good and continue to show confidence in better performance, the expectations of investor friendly budget or popular budgets, since it is going to be the last budget from UPA, as their term ends in 2009, shall be built into the February 2008.
Nifty & Sensex have breached 50DSMA and made a bearish cross over (20DSMA (6096.50) being higher than 5DSMA(5967.06) offer supplies from trapped investors, hence any relief rallies from here on shall meet resistance at these levels. We recommend a strategy of "Sell on rallies" if one is a nimble short term trader, so that the cash levels can be used to pick up the same stocks at a lower levels.
Strategy for the Day: Buy 5600 calls on weakness and 6000 puts on rallies for quick returns as a strategy for this week.
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