State of the Market|Reading the Psychology of the market

Budget speech is behind us; and with it the budget noise. Market reacted with a sigh of relief that Government is on right path be it fiscal deficit or boosting consumption. But what Next? Globally, world continues to look uncertain, and hence its time to go back and focus on Global cues. Dow kitne geera ya up hua?

Nifty: Trapped in a range

Nifty has been trapped in a small range between 200 dma and 100 dma for more than a month now.

Source: Chartalert [www.chartalert.com]

One question: everyone is asking - when will Nifty breakout of this small range? As you wait for breakout/breakdown, keep an eye on Friday’s - budget day high of 4992 - level quite close to 100 day ma.

S&P 500 ready to cross over above 50 dma/horizontal resistance level.

S&P 500 is right at the horizontal resistance level - please see in the chart below. The big question: Will S&P 500 conclusively cross over the resistance tonight or over next few days? If the answer is YES, then one will have to assume end of correction for US equities at least in near term.

Source: Stockcharts

CBoE VIX - fear index has already slipped below 20 indicating market is poised for upside breakout..

It’s not only S&P 500 - Brazil is also knocking upside resistance

Brazil market slipped below an important support line of 50 dma and now it is trying hard to cross over that resistance line.

Source: Stockcharts

When a market breaks down below an important support line - it may turn sideways for long period of time. It is highly probable - Global markets are setting themselves up for long sideways movement.

ITC - Budget news completely priced in?

Budget was very uncharitable towards ITC and as a result - stock had a huge fall. The stock is standing at important support level of 200 dma.

Source: Chartalert [www.chartalert.com]

Will there be more follow through selling? OR stock offers great opportunity for long term investors who were waiting to buy on declines.

Reliance Capital: One day spike or Change in Trend?

Reliance Capital spiked up on Finance Minister announcement that the Reserve Bank of India is considering giving additional banking licence to private sector players and non-banking finance companies (NBFCs).

Source: Chartalert [www.chartalert.com]

The stock spiked but does it change the trend of the stock. Remember, Reliance Capital is a technically weak stock and moving in a range between 700 and 900

HDIL: Hoping for Support.

HDIL has been one of the strong stocks in real estate sector. At a time, when most of the stocks are trading way below 200 dma - here’s one stock that is still holding its head above important support level of 290.

Source: Chartalert [www.chartalert.com]

As long as stock does not slip below 290 - one can be hopeful for upside move in the stock.

Let me know how you found this edition of market observations. Please suggest how I can make this note more useful to all of you.

Disclaimer - The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers

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