Owing to global weakness our indices opened gapdown to register new lows for 2008 on the last day of September 2008, month and quarter, which confirms how bearish the markets have been in the year so far. The sentiment among all class of investors is at its lowest ebb, still capitulation situation is yet to be reached, where equities will be 'no no' to every one, and under such mood generally bear markets bottom out, and consolidate to form a base for reversal of trend. So far indices are making new lower tops and lower bottoms continuously and moving in a downward sloping channel. Nifty registerd 3715.50 low which is not any technical low, though the bounce from this point due to huge short covering lead by banks, rate sensitives and tech sector lifted Nifty to 3960 levels. One interesting feature need to be remembered is so far nifty moved in the band of 4000 to 4500 in the last quarter, and whether the band is shifted lower to 3500 to 4000 is be seen during October month, in which case, the bearishness will continue further, with intermittant relief rallies and bounces. Nifty closed at 3921.20 yesterday, thus, posting month on month losses, more than it posting quarter on quarter on losses for consecutive 3 quarters is most disturbing fact for bulls.
The trend is resembling the situation in 2002 when indices have posted 3 consecutive quarterly negative returns, post 9/11 crash world over, and the good news could be the markets consoldiated for one year from there on to rally into a strong bull phase where indices posted 7 times gains in just 4 years. Thus, in my opinion, one year down the line from today by next diwali this bear market cum base building should be completed, from where we should see the 'mother of all bull markets'. Long term investors using every weakness to accumulate quality index heavy weights will have multifold gains in future.
VIX has closed at 37.19 with volatility raising once again, put-call ratio is below 1 indicates that bottom formation may be in place. US markets had relief rally as other markets too had yesterday night, on the hopes that some other plan to save the current financial crisis/mess will be taken up by the authorities by this week end. Asian markets are trading with gains, and Singapore Nifty futures are quoting with premium of 48 points currently shall give positive opening today initially, and Nifty shall face selling pressure at 4000-4040 level as our markets are closed for Gandhi Jayanthi holiday tomorrow, (02.10.2008), as traders would like book profits and do not carry overnight positions, in these high uncertain volatile times.
Range for the day: Nifty might move in the range of 3820 to 4020 today.
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