Pi asks "Does the previous high act as resistance?. If a trader is bullish and buys at 5900, why should he suddenly turn bearish at 6350, previous high?"
My Notes: Markets have memories. Therefore, investors and traders who did not sell when 6350 was made in January 2008 (trader remorse), may be ready to sell out this time. In anticipation of such selling, other participants may also like to stay out when 6350 approaches. Now, all technical methods must be taken in context. In a trading range market, previous highs will be significant resistance since traders are not optimistic on the market anyway. In the current environment, 6350 may at best offer some minor resistance, because traders are sensing strong upside momentum, therefore new buying is likely to overcome trader remorse.
ilan has a number of questions:
What is decoupling and resilance? Most stock markets follow a common trend. Here, most international markets go in the same direction. When one market takes a different direction, it is said to be decoupled (similar to a train coach which is disconnected from the train). Because U.S. is the largest market, decoupling is compared with the U.S. The talk is that the Indian Market is decoupled, meaning it will go up even when the U.S. market does not. I doubt this. All markets are coupled, except for short term decoupling.
Resilience. "Resilience" is the positive capacity of people to cope with stress and adversity. This coping may result in the individual “bouncing back” to a previous state of normal functioning. Means: when the world markets fall, in India, we fall a bit then bounce back quickly - so our market is resilient.
Is India an alternate investment option, like Gold? excellent question. I believe that emerging markets as a class have become an alternate investment. This means, investors in the USA think of allocations to Stock markets, emerging markets, gold, silver, bonds etc... now differentiating between markets in advanced and emerging economies. This means, it is not India but emerging markets that are a seperate class. It is always possible for money to flow out from India to Thailand, Brazil or similar.