Another View - 11 Feb 08

The coming week is most crucial in terms of Indian stock market as we will know whether the markets will take the supports near 200 dma or at 4870 or will retest the earlier lows or will make new lows.Some of the strongest sectors that were the pillars of this bull run have given complete control 2 bears.Prominent large cap stocks that have lost most in this bear run are related with brokerage and Finance related stock.We are now seeing a similar fall in private banking space.

On Friday three private sector banks came near to technical breakdown levels.
Axis bank below 960 will be in bears zone
Kotak bank below 800 will be in bears zone.
Icici bank below 1010 will be in bears zone.
Hdfc bank below 1380 will be in bears zone.

These stocks are reacting on the downside when icici and axis were expected to be the best performers in 2008.This makes us worry.Some sectors like cement stocks are looking good to take a bounce.It is again worrisome that index is being supported by stocks that are showing technical bounce from oversold zone.Index at this point should have been supported by stocks that are fundamentally strong like LNT and RELIANCE.But it is finding supports from defensive plays like Fmcg and by laggards I.T space.

Sensex eod charts show an island reversal pattern being made on tuesday.This pattern in itself is not bearish or bullish but the market shows a good reversal from the trend when this pattern is made.This is the second time in my trading career that i have seen this pattern in a bearish market.The first time being in 2000 dot com bubble.On 11th of april 2002 the same island reversal was observed in nifty.Interestingly the reversal is observed in sensex but not in nifty.Technically we should not observe the Indian markets alone without the global context.Globally markets are in crucial stage.All are nearing there recent lows.If they maintain those lows we have chances of rallying if not than we should gear up for a fall thats unprecedented in the history of the Indian stock markets.

R power is listing on monday and we believe markets will be highly volatile.We will give trading calls only on tuesday if market conditions improve on monday.If they dont improve then we will prefer giving no short term trading calls this week and all subscriptions will be extended by one week.