State of the Market|Reading the Psychology of the market

After impressive last week for bulls, we are about to enter event heavy week - RBI monetary policy, F&O expiry and more earnings. Events do not change the trend of the market but they can make the market choppy. One should be bullish but be prepared for random action this week

Market Observations

1. Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there
2. The sad part is most of the market participants are always looking for answers on where market is heading next. Trust me….it doesn’t matter
3. It’s not the market forecasting that matters….what matters is open and opportunistic mindset.
4. Good News: US market has done a remarkable turnaround; and it seems the downtrend has reversed. S&P 500 is above 50 dma
5. Three data points in US on which traders will keep a close eye on: i. Q2 GDP report to be released on Friday; ii. New Home Sales on Monday; and iii. Case-Shiller house prices on Tuesday
6. Technically, for bulls all that matters - CBoE VIX (Fear Index) collapse below 200 dma



7. Coming to Indian market, on an index level, we are in a bullish market but not a momentum market.
8. Nifty Month to Date is up 2.5%; and last week - the market broke out above 5400 - Nifty logged gains of just 1% for the week
9. Are FIIs happy with our market? Numbers are not inspiring - DEFTY - dollar denominated Nifty is up 1.7% this month; and YTD - it is up 4%.
10. Sector on move: Telecom. On Friday, Bharti and Idea made strong upmove. Will Reliance Communications follow?
11. IFCI - Will the stock breakout or not? The level of 60-61 has always acted as stiff resistance and this time is no different.
12. Yes Bank at 301: Breakout or No Breakout? The stock always give confusing signals around 300.
13. UTV’s decline = Buying Opportunity



14. Fundamental analysts are very bullish on the stock. There are estimates that FY12 EPS will be Rs. 53.
15. One sector which has so far given quite mixed signal on where it wants to go next: Real Estate
16. DLF: slowly and steadily has completed reversal to mean i.e. climbed to 200 dma.


Source: ChartAlert.com
Technical logic says stock may consolidate below this level before making next move

17. That’s what Maruti did post its rally to 200 dma.


Source: ChartAlert.com

18. One more example: Tea stocks. Jayshree Tea at 200 dma. Mcleod Russel also has a similar chart


Source: ChartAlert.com

19. Sugar stocks underwent deep correction last week. Renuka sugar declined from 72 to 63 i.e. 50 dma. The good news: it has found support and on Friday managed a decent bounce.
20. BASF above breakout point of 440-445 appears BUY. Look at the complete Price Breakout sheet.


Source: ChartAlert.com

21. Karturi Global seems to be on its way to 23. Now, the level of 18.6 should act as strong support
22. Two stocks where trading noise seems to be building up - Bharat Electronics and Engineers India
23. Pocket of strength: Battery stocks be it Amara Raja, Eveready or Exide….all seem to have strong bullish pattern
24. From New Delhi, Mumbai and the IT hub of Bangalore to its second-tier cities of Pune, Indore, Chandigarh and Amritsar, there is a buzz that, while the 19th century was Britain’s and the 20th century America’s, the 21st century surely belongs to India….The Telegraph

Please share your comments on what you think of market observations, market and trading in general

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