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Nifty/Sensex – Correction or a Breather. A 100-300pts cut in a 1000 points rally is Logical not Scary


posted by NOORESH MERANI on Thursday, February 23rd, 2012


Nifty-technical-view

Nifty Technical View :

The rise has been one way and a correction is natural but the move from 4600 to 5600 is 1000 points and suddenly people are not ready to accept a 100-250 points correction.

Generally corrections can be 23.6%/38.2% or even lower but one can at least expect 23.6% once a top is confirmed.

Such a correction level would be 5380-5400 and 5200.

In the near term yesterdays low 5490 and 5430-5460 could be supports for the day. There are many supports in this range so i would just wait and watch and react with the market.

Overall the strategy is pretty simple Buy on Dips icon smile Nifty/Sensex – Correction or a Breather.A 100 300 points cut in a 1000 points rally is Logical not Scary :) ( easier said done unless you have made good money over the last 1-2 months )

Above all its time to be stock specific. Today index is down by 100 points but stocks are down 7-10% broadly which clearly shows we may necessarily not see precise levels on Nifty and buying or selling should be on stock specific levels.

Strategy:

Todays fall as suddenly created a scare among participants. Have got queries what to do now – ? Sell ? etc and so on. Reason being not many bought at 4600-5000:) and late entrants who did not gain in January are scared to lose some money.

This is what a 1000 point rally does to any Investor/trader even a 100 point or 10% drop scares icon smile Nifty/Sensex – Correction or a Breather.A 100 300 points cut in a 1000 points rally is Logical not Scary :) big time.

As a trader one may take a hit of 5% stoplosses in this period but it would not matter if you would have made regular 15-25% trades over the last 1-2 months.

Today was a day of few stoploss hits icon smile Nifty/Sensex – Correction or a Breather.A 100 300 points cut in a 1000 points rally is Logical not Scary :) for us too but losing a bit out of supernormal gains keeps you grounded and prepared for the next series of good trades.

The strategy is very simple now be stock specific and buy on declines. Cover back sold quantity at lower levels. ( example if sold NESCO at 740-770 buy back the same at 680-620 gradually)

Be very stock specific and dont be bogged down by an Index level. ( Were you left waiting Nifty 4200/3800 and so on ? Well then now why wait for 4800-5000-5200 if you have a medium term horizon keep particular stocks on radar)

We continue to maintain the view that any correction to 5200 will be a buying opportunity if it comes. But will stick to stock specific approach as Index is just 30 stocks icon smile Nifty/Sensex – Correction or a Breather.A 100 300 points cut in a 1000 points rally is Logical not Scary :) and our spectrum is 3000:)

Also i would be a little brave to say that this is the only time since the last few years where over the next few months if i were to Buy a good quality stock and maybe got in at higher levels will prefer to hold on/average even after 10-20% cut icon smile Nifty/Sensex – Correction or a Breather.A 100 300 points cut in a 1000 points rally is Logical not Scary :) ( Else strategy was to be strict with stoplosses even on investments) . Only For the reason that the Medium to Long Term trend has changed and we may not see 4530 and 15000 levels.

Stocks to watchout for :

A new stock Bombay Burmah Trading Corporation is added now to the long term defensive favorites like Godrej Inds, Smartlink, Nesco, Abnuvo,BOC and so on. Investors with a 1-2 year view may keep accumulating on declines.

Numeric Power Systems looks an interesting bet on dips to 250-230 if it comes.

www.nooreshtech.co.in

posted by NOORESH MERANI on Thursday, February 23rd, 2012


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