Friday, 24 April 2015

Market Brief

It was a pathetic week for the markets and it had a dismal close, Nifty down by 300 points that is about 3 and a half percent. The market internals (breadth) were very poor and almost 4 out of 5 scripts corrected by about 5-10 percent. All this happened on the back of domestic turmoil, below normal rain forecast, failure of Union Govt. to clear Land Form reforms, farmer suicide woes, and poorly reported corporate earnings led to this corrective action. However, market in terms of Nifty, held the very crucial level of 8240 which was the low registered in March 2015 and incidentally being 200 DMA (Moving Average). May be market is in search of some positive news flows to bounce back.
Looking at the market moves and the internals, it appears that markets will remain volatile and choppy. On the back of any positive news flows, markets could attempt a pull-back rally, perhaps would test the crucial resistances of 8450 to 8550, but it can come out of the woods only if it manages to close above 8700, until that markets will be in the control of the bears. Market is so vulnerable and frail in short to intermediate term that any bad news from here on would see the down-side and in that event market would test the low of this year of 8060 registered in January. The fall would get accentuated if the Nifty closes below 8000 and we should be prepared for a protracted correction in the market.

Under these market conditions, investors should remain cautious, and as earlier suggested exit from fundamentally weak and high debt leverage companies in the rally. Since the market is in a long term bull markets, long term investors can use deep declines to buy well managed growth companies.

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