After a long gap I am back. The recent movement in Indian and World stock markets have been so unpredictable that the investors all around the world and even trader like me is left in a fix and confused which way to position them selves. Last month Nifty touched 5700 and now again its back to 5400 which is almost a 4% up and down which is not a good signal for long term investors.
Since last week the debt-ceiling drama was played very effectively by US politicians and like in hollywood where the hero diffuses a bomb at the last second, US politicians passed the controversial debt-ceiling bill yesterday which was the deadline for the fed to raise the limit above $14.3 trillion but with a guarantee to cut US budget expenses by $1-2 trillion in coming years. This budget cuts will add more pressure on the already faltering US economic recovery. Then came the all important manufacturing data which was dismal. This data confirmed that the manufacturing all around the world has slowed and thus raising alarm bells of a new global recession.
Since Monday stock markets around the world are falling because of this fear and so is our market following the trend. Today market closed almost 1% down like yesterday. Yesterday was also a false closing at 5454 and thus the market fell today. Today was a perfect False closing at 5404 and hence another negative day for the market tomorrow can be confirmed. But the magnitude of the negativity will be decided by the US markets closing and the opening of asian markets. US markets today started with a big negative tick losing more than 1.5% but as I speak the US markets have recovered and are flat with nasdaq gaining 0.5%. If US markets close flat then most probably our markets tomorrow will be up at the opening and than slip in to the red along the course of the day.
What should investors do?
The best advice for the investors at this point of time is to sell off 50-60% of their existing holdings and wait for better prices as markets have confirmed a downward trend as Sensex has dropped below 18000 and Nifty is on a verge of breaking 5400, an important level. Over the next month long term and short term investors will find good stocks at cheap prices.
What should traders do?
Traders should short sell the market and companies with global exposure like Infy, TATA Group etc., at every rise in the prices and square off at the lowest point in a day. Buying should be minimum and maintained only in Healthcare stock and FMCG stocks. Though the market fell today the open interest in the Nifty PUT options did not come down and open interest in Nifty CALL options actually increased indicating a short selling in Call options of even 5400 clearly indicating that the Options traders expecting a sudden fall of atleast 100-150 points in coming days. So put options of Nifty can be bought with a target of 5300 on the nifty.
Coming trading sessions are crucial and tense as these trading sessions will indicate if the BULL market of INDIA is intact or the sentiment is turned BEARISH.
Have a nice trading day.
