Indian Stock Markets: It is Buying Time!!!

Worst is almost over! It is just that we want some assurance to that effect. In fact Wednesday's market action has given us just that assurance indirectly. When US bled the previous day and there was blood in every Asian markets, we survived with minor bruises. This indicates that the selling pressure is abating and the bottom is already reached or we are almost at the bottom. After sinking 458 points intra-day, Sensex closed at 8451, just 323 points or 3.68%. This is a 34 month low and we are just 750 points away from the recent low. Whereas the market is itching to get there, it is finding it really difficult to make any further slide. In thin volumes, the operators are able to manage to bring down certain scrips, however some others find buyers thus neutralising the manipulative selling. Slowly, the bear gang is getting tired of the operation and may decide to cover their positions soon. Market depth continued negative, AD ratio being 1:3. Volumes were below average. FII's sold about 830 Crores, DII's taking about 500 crores of it.

Asian markets opened with a wide gap down and fell further. At close, Nikkei was down 6.9%, Hangseng down 4% and STI down 3.1%. Europe closed the highly volatile trade almost uniformly between 3 to 3.5%. US stocks too started off weak and fluctuated heavily with high volatility, breaking above the flat line several times. However, Democrats asking to delay the bail-out plan for the automakers was the last nail on the coffin which plunged the US indices to multi-year lows. Initial jobless claims for the week ended Nov 15 jumped 27,000, a 16 year high. Dow closed 5.6% down at a low since March 2003, Nasdaq down 5.1% touching a 6 year low and S&P closed 6.7% down at 11 year low. Crude breached the 50 US$/bbl mark and closed at 49.62. Weakness in Crude attributed to 11.5% fall in the energy sector. Dow closed down US Dollar has gone up against Rupee at 50.18, a historical low for the Rupee. Yen has improved against Dollar at 95.90. Asian markets are trading modestly lower, better than their opening levels.

There is inaction on the part of the Finance Ministry, Oil Ministry, RBI and Sebi. A case in point is the issue of Fuel price. Finance Minister said that crude at $67/bbl is the break-even for Oil Marketing companies whereas Oil Minister said initially that the break-even is at $64/bbl and later said it is below $60/bbl. Now, the Oil Secretary says that Oil Marketing companies are still losing, even when crude has come down to $50/bbl. If this was the case, India would have been bankrupt, if crude was above $150 these days instead of at its one-third level of $50/bbl. Hope, better counsel prevail among the authorities. RBI also is a mute spectator by keeping high interest rates despite inflation has come down to manageable levels. There are no technical pointers to a reversal. However, we will see a swift upmove today, trapping the unsuspecting small bears and inducing a few weak bulls and investors to part with their prize-holdings. Recommend not to sell your stocks at these levels. Those who sold must buy back at these attractive low levels of the day. Investment buying must be done now as you may not get such attractive levels again. Risk-Reward ratio is highly favourable to the buyers. Bear operators may create a wave of selling today and that opportunity must be utilised to buy. Day traders may buy above 8436 or if we open or trade below 8250. Selling may not be a profitable idea as hardly any room is there below the likely opening level. However, those who take intra-day longs will get an opportunity to book it early afternoon. In fact day traders will get several opportunities for two way trades. Volatile two way movements may be witnessed ending the day flat to modestly positive. A close above 8706 will terminate the bearishness.

Supports: 8331, 8212, 7988, 7764 Resistances: 8555, 8660, 8884, 9108
Likely Trading Range: 8190, 8685