Tuesday, October 19, 2010

All is well

I will be on Bloomberg-UTV on Tuesday 9 AM, Thursday 9 AM and Friday 3 PM.

The Nifty is now in some kind of a correction. In my reckoning, the Index needs to close above 6150 to suggest that the correction is over.

Corrections are inevitable, just like death and taxes! All markets correct, therefore investors who want to put money in the market should always wait for a correction before buying. What actually takes place is just the opposite. Newcomers in the market rush in to buy when theree is frenzy in the market - usually at the top.

Now, is this a correction? No. A correction should retrace at least 50% of the prior move, which gives us 6300 - 5300 = 50% of 1000 points, around 5800. (all numbers rounded off). A more realistic measure should start from 4900 which is the point from which this leg of the uptrend started. That gives us 6300 - 4900 = 50% of 1400 points - 700 points, bring the Nifty to around 5700.

I cannot say if the current down move will lead to such a correction. But a correction of this magnitude will come, time unknown.



Huttesh said...

Correction Started! But Sir, What makes you to predict this. Is this is from any chart and trend analysis?. Because I think the recent sudden up move has beaten most of chart and analysis trend.

I guess we need to look at the current FII money which is pushing this market. Until and unless any signal of freezing of FII liquidity, I dont think Correction Starts?

Your coments please


Siva Sunku said...

Sukhani Ji,
Why should I wait for 50% retracement to confirm correction? Fibonacci retracements do suggest a support at 38% (around 5920 per rounded off figures). So, can I go long if 5920 holds and I see Nifty increasing afterwards?
Can I go short if it goes below 5920 with a stoploss at 5920 ?

Pls. suggest.


rajiv malik said...

namaskar sukhani ji,

6000 and 5980 are levels which are supposed to offer firm support. or else talking about fii flow and india story and investors and institutions sitting on the sidelines as they could not get in, they missed the rally, buy on every dip, market to move up, every correction to be bought....bla bla bla......will all be a thing of the past. who will then come and buy if this market starts falling like a pack of cards breaking all supports in a jiffy tomorrow ?

so far market has bounced up every time it was beaten down in the recent past. why should it be any different tomorrow ? and if it is different, then all bla bla bla about the strength of the market should not be discussed any more.

if market breaks 5980.....how can we hope it to touch 6300..6350 and 6700....levels being gossiped around ?

gaurav_gandhi1986 said...

can u give me the levels of support and resistance for nifty in this correction

Rajvir Chauhan said...

Newcomers dont lose money buying at rallies, they lose money when rally ends, corrections starts, professional start booking profits and trend reverses. And you are recommending exactly same