Indian Stock Markets: Trend is Bullish!!!

8:30 a.m.:- Sensex will open about the R2 level 9222 and trade around that level. Equivalent Nifty will be above 2800.

8:a.m.- I was a bit over-optimistic on Monday. However, the market behaved more maturely and sensibly.(I thought it will otherwise). Huge surge on Friday was well contained on Monday with an intra-day correction and closing almost flat, without damaging the sentiments. In fact bouncing back from 8702 against the Stop-loss figure of 8699 pin-points that the market has just made an intra-day correction and that all is well. In fact Nifty even closed about half a percent green at 2708. Sensex tested the crucial 9035 level by just touching 9042 but did not sustain for over a minute and fell back. Thus all my expectations of the game above 9035 never materialised, rather got postponed for one more day. But, after seeing Europe and US rallies on Monday, I am more than convinced that my expectations for Monday were realistic. Market depth continued negative with AD ratio being 2:3. Volumes were below average at 58K Crores. FII's reportedly sold worth 560 Crores and DII's bought worth 225 Crores.

Asian markets opened lower on Monday against what was expected and closed lower. Hangseng down 1.6% and STI down 2.5%. Nikkei was closed. Europe opened gap up as was expected and shot up to higher levels and same was maintained due to a green opening in US which opened almost 2% higher even after a huge rally on Friday. FTSE and Cac closed 10% up whereas Dax was up 10.64%. Under a bail-out plan, Citigroup is to get investment and loan guarantees from US government amounting to 326 bn US$. I wish I bought a few Citi stocks yesterday, the stock was up a whopping 67% ending up 55%. President-elect Obama is likely to spell out his economic plan including a fiscal stimulus. Financials are leading the US markets, ending up 18.5%. October existing home sales fell 3.1% month-over-month, in line with estimates. Despite profit taking at the f** end of the session,Dow was up 4.93%, Nasdaq up 6.33% and S&P up 6.47%. Obama declared his Economic fire-fighting Team as was expected apart from declaring a huge stimulus pack to be declared in January. Package will enable 2.5 mn jobs with priority infra-structure spending. Crude spiked 9.1% at 54.48US$/bbl on anticipation of OPEC cut in production, weak dollar and strong Stock Markets. US$ is steady to down, 50.09 against Rupee and 95.84 against Yen. Commodity prices have surged too. Gold is shining with a hefty surge of 4.2%. Indian ADR's were on forefront, Tata Comm up 24.5%, Wipro 15%, Satyam 8.5%, Infosys 8.7% and ICICI Bank up6.5%. Emerging markets zoomed too, Brazil up 9.4% and Russia up 7.7%. Asian markets opened gap up today and are maintaining at higher levels of about 4% up.

Sensex which closed above 4 dma on Friday tested the 8 dma today, however failed to close above that. On Tuesday, we are likely to open well above the 8 dma at 8945 and close above the same to have a well defined rally, call it a relief rally, short-cover rally or bull-run, I do not care. As far as I am concerned, I have rightly asked my readers to buy at the extreme lows and I will be happy to see that they make good profits on those deals and come out victorious. Those who have reposed faith in me have to recover their previous loss and show net positive before the year end. A close above 8945 will signal the bull-trend which will take us well above 10K Sensex and 3K Nifty. Rumour mongers have taken the markets down, merely with the help of FII sellers, much more than any normal correction might have taken. The excesses will be corrected and we will soon go back to the real worth of the stocks, albeit slowly. Investors who have bought stocks or Nifty may sell the same, if we break below Sensex 8750 on Tuesday. Fresh buying is recommended in the range 8760,8800 if available. Heavy Nifty future premium of 30 or more points is likely. Short covering will inflate the stocks more than one may have expected. Futures expiry on Wednesday will accelerate the stocks as operators will cover their shorts in November and create longs in December instead of carrying shorts. Day traders may buy above 8882 and sell below that level. A strong support range exists at 8723, 8757 range and a strong resistance exists at 9536, 9572 range. Most likely that we will even test the higher resistance range. Among our holdings, Tata Steel and Unitech are losers and expected to break even today. NTPC, ICICI Bank, Reliance, L&T, ONGC, Triveni and Nifty are in profits and may be held on. However, one may book profits at the higher range to buy back on a correction.

Sensex: Supports: 8723, 8542 Resistances: 9063, 9222, 9572
Likely Trading Range: 9050, 9389

Nifty: Supports: 2648, 2588 Resistances: 2754, 2800, 2909
Likely Trading Range: 2751, 2853