Indian Stock Markets - Minor Correction On!!!

9.a.m.:- The Indian markets went up too high and too fast from an ultra-exaggerated low hit recently. Having gone down so much, it was not supposed to have got inflated so much so soon. Hence the ongoing correction. I have hardly any positions and free to trade on either side. However, I will not go short as I do not think it is safe to do so. Sensex opened gap up and flared up to a high of 10945 against my target of 11037 and started correcting, ending at the day's low at 10120. Rumours regarding Reliance shutting down few Polyester Units and lower refining margins caused severe damage to the counter. Volumes were below average. Market depth was negative at 1:2. Surprisingly FII's were buyers in small quantities but DII's sold lesser. It shows heavy profit booking coupled with fresh short-selling.

Asian stocks were upbeat, moving up 2 to 4.5% higher. Europe opened lower modestly, after seeing India in deep red. Closing were 2% or more. Results of US elections though not a serious issue, US also opened lower and drifted down further and closed at the lowest for the day, investors weighing the economy more than who will occupy the White House. Wall Street indices closed down 5.3% on an average. Crude has fallen to close at 65.28 and Dollar has steadied up against Rupee. This morning, Asia started off deep in red too.

Sensex is expected to open lower and will stabilise at lower levels. Public Sector and Private Banks have started announcing lower PLR and interest on loans. Inflation figure to be announced today will be about 10.5% which will arrest further downfall. The correction can reasonably end at 9634 and if broken below, then at 9008. Bulls may have difficulty in looking above 10363-10372 range being strong resistance. All shorts be covered if Sensex breaks above. Also, 9634-9639 may be a strong support where short-covering may be done as the correction may not be prolonged and severe as before. Investment buying at lower levels may be considered. 4 Day Moving Average is bearish and 8 Day Moving average is at 9634 which may not be breached today.

Supports: 9932, 9630 Resistances: 10372, 10533
Likely Trading Range: 9634 to 10363