Tuesday, April 20, 2010

Risk reward does not favor the bulls any more

It is an intermediate downtrend! The Nifty closed below 5235, which was my closing level for the change of trend.

The story of Goldman Sachs will not end here.It is the beginning. There was balatant financial manipulation of the markets for the past few years when investment bankers were given free rein in the garb of  'capitalism'. Everything was going well for them but their plunder was disturbed by the crash of 2007. Now, the governments and the world focused on them. Since the priority was to save the world, retribution and reform had to wait. But that time has come. There will be significant retribution as well as reform. Everywhere, including India.

Let us take the example of IPL - the Indian Premier League. IPL came in the limilight due to the Tharoor episode. Now the issue will take a momentum of its own. And, the investigations will be taken to its logical conclusion.

This is what democracy is about. We are slow, but once some wrong doing is detected, the wheels of justice start.

How does this affect the markets?

Almost all world markets are driven by 'hot' money. Tht money will probably come under intense scanning and probably dry up. This will lead to volatility, upheavels and churing in the financial markets. Eventually, the traightforward traders & investors will survive which will be good for the long term health of the market. But, in the short term, I expect a lot of confusion.

In the Nifty, I am taking the 5400 level as a barrier. The expected breakout did not happen. The market will go in a bubble phase if the Nifty were to break above 5400. Therefore, any long positions should be taken if and when this happens.

Currently, the strategy is to sell on rallies, focus on individual stocks which will be acquired only on dips and watch the market. To most traders, my suggestion will be: for some time stay away from derivatives.


Shazia said...

Hello Sir,
Your advice as much heeded as well as appreciated!!
What is the target for the short term according to you in the nifty in this downtrend?

rajamani said...

Hi sudharshanji , i use 10ema as my pivot point for trading and as of now 5275 is my level to watch out for bullish breakout. kindly give your views. Could you brief us how 5235 as your level for breakout .regards-rajamani

sunny said...

Does it have to do with the W-shaped recovery speculations? Cause once the scanner is over goldman, it will take many other large firms as well and just like all historic fraud cases, the confusion will keep increasing with new developments. Being a very small retail investor, should I enter on attractive dips or completely stay away from the market.

kk said...

respected sir

UNITECH made descending wedge pattern in weekly charts, and broke out with huge volumes. likely to go 115 in medium term.
waiting for your comments

sahil said...

This will lead to volatility, upheavels and churing in the financial markets.
wow volatility, money is made only in volatility. I miss volatility too much

ushabalaji said...

Thank you sir for your guideline regarding Nifty levels which will be of more importance in this volatile markets.

Rajagopal said...

Dear Sudharshanji,

Read someone quoting you that your expected level for the current expiry is "5100". Is it true? Are you expecting this level,considering we have only 4 trading sessions left? I concede anything can happen in miniutes.

Kindly advise.
Warm regards,
S Rajagopal