As anticipated our indices have opened gap down, and unabated selling through out the day persisted. Nifty opened straight away below crucial support of 5110 and held for some time around 200DSMA placed at 5056 and further selling once European markets opened for trading around 2 p.m. broke this level to see breaking of 5000 mark on Nifty and crucial 17000 mark on Sensex, finally both indices closing below the 200 DSMA for the first time in 2008. In all earler corrections of the current bull rally which is 5 years old now, indices have breached this long term support intra day only, and bounced back quickly above it immediately, which whether will happen this time, is a big question?
In the earlier scenario, the participation of players, sentiment, news flow and liquidity were supporting the bounce and markets went on to post gains and make new highs, whereas the current scenario is exactly the 'opposite' Thus, can we call it a bear market from now on? Definitely it is the first sign of on set of a bear market, and the length of the bearish ness can vary anywhere from 6 to 18 months from now on, in our opinion, for the sentiment to come back with participation and volumes. It is mostly the institutions who are at play right now, thus technical levels play importance, the institutions do not trade, and indulge in buying at key support levels and selling at key resistance levels, and also indulge in churning of portfolios to tune the tax proposals and look for defensive bets in bearish environment, and exit where the valuations are high and astronomical, due to over owning phenomenon.
4800 on Nifty is the important level for this month, where one can expect support to emerge from institutions, since by that level nifty should have corrected 8% from February closing, would offer substantial on a bounce or relief rally. 200DSMA is placed at 5056 will offer first resistance, and 5110-5140-5180-5225 will all become supply zones, on any rally due to the melt down seen in March already by trapped bulls. Trading hours are extended till 4.15p.m. from today till 18.03.2008, due to sun outage, with a break at 11.45 hrs to 12.30hrs in between on NSE which is a period generally associated with volatility as per the experience faced earlier.
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