Markets ended the Day, Week and the Month on negative note, primarily due to non-clearance of policies by the Union Govt. in the Parliament, corporate results below expectation, hail storm damaging the crops, earthquake in Nepal posing threats to Northern India, and selling off of equities by FII’s due to some retrospective tax and non clarity on tax issues were instrumental in bringing the markets down. The undertone for the market remains bearish with short and intermediate trend being down for quite some time now, however, the long term trend is still up and the Bull-run is intact.
Technically, market is trading below the 200 Days Moving Average of 8270 on the Nifty and that is not good news. More down side to the market appears to be a reality, though, in extreme short term, small throw-back rallies are not ruled out. The market internals (breadth) are extremely dismal with the ratio of 4:1, i.e. with every 4 stock, 3 stocks are declining. In terms of level, in the following week, if the market trades below 8140, it will straight away test 8065 on the Nifty registered on January 7th, 2015, and below that it may swiftly test 7960, the low registered on 17th December, 2014. These levels can act as outside support for the market. On the higher side, in the best case scenario, market may test 8350 to 8450 levels. Unless there is a drastic positive change in the fundamental scenario in the micro or macro environment, the markets will consolidate for a protracted period and decline further.
Investors are sincerely suggested to exit the weak and under-performing stocks in rallies and use declines to buy fundamentally strong shares from Healthcare, Information Technology, Consumers and Consumer Durable Goods and Auto Ancillary.
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