Indian Stock Market : Are we still Bearish???

8 a.m.:- I was so confident about writing my previous report and same was completed by the time US markets were opened. But today, I am not sure as to what to write. Reason is simple, we have belied logic again. When the entire world was brimming in bullish sentiments, here we are, the only market to dive deep without any reasons. Shame on Indian markets, despite the fact that India is the least affected in the entire financial crisis. Sensex opened gap up at 9170 against my expected 9222, hit a high of 9183 and remained under pressure ever thereafter, closing almost at the day's low at 8696 after breaking the S1 and closed at a 3 year low closing at 8649. Whereas Sensex high was above the previous day's high, the day's low was lower than the previous day's low. Nifty High and Low were both higher than the previous day. Otherwise, closing below 4 dma has caused a worry as the bullishness has been punctured prematurely. However, considering lower volumes, just 56K crores, along with expiry proximity will explain the day's action. Market depth was negative, AD ratio being 2:3. FII's sold nominally, just 262 Crores, most of it being absorbed by DII's, 255 Crores. Thus most of the fall was orchestrated by concentrated selling by cartels, targeting Index heavies. Rising crude price may have also contributed along with the statement of Oil Minister that we have to wait till end December for any fuel price cut. Oil Minister's statement was used to negatively bring down the Oil sector apart from the auto sector, what a contrast? Planning commission's statement that current year GDP will be at lower end of 7 has also been attributed to the fall, How many times we heard this before, is there anything new?

Asian markets fared well, Nikkei up 5.22%, Hangseng up 3.38% and STI up 2.03%. Europe opened modestly lower, naturally after a 10% surge previous session, however galloped to close in the green. FTSE was up 0.44%, Dax up 0.13% and Cac up 1.18%. US stocks started off in the green however slipped to red later, Nasdaq being under more pressure. After record rise in previous two sessions, even a modest negative closing would have been acceptable, but indices closed in a split fashion. Dow was up 0.43%, S&P up 0.66% and Nasdaq down 0.5%. Federal Reserve has injected yet another stimulus of $800 bn to increase lending for home purchases and consumer lending. Third quarter GDP is revised to -0.5% from -0.3% which matched expectations. Consumer Confidences increased larger than expected in November, but still at a decreased state. Home Prices are reported to have fallen 17.4% in September on an Year on Year basis. Crude has fallen back to about $51/bbl, thus easing the Energy sector. US$ is trading 49.95 against Rupee and 95.31 against Yen.

Oil Minister stating that fuel price can be cut only after 24 Dec has become a controversy. BJP has complained to EC that this is a violation of election code of conduct, since State elections are ongoing. These fellows should have insisted that the price cut is given right away, instead of challenging it. These guys do not realise that UPA is eyeing the Parliament elections more than the State Assemblies and that will explain the reason for delaying the event closer to the national elections. Let that be so, why RBI cannot act to tame the lending rates. If yesterday's fall cannot be explained logically, I am hopeful to see a day when the Sensex will go up unexpectedly....does that sound logic? Asian markets today opened mixed. Nikkei is trading down 1.3%, Hangseng up 2% and STI up 0.6%. SGXNifty is marginally in green.

I must summarise that Sensex will do what it wants, rather which way the operator would like it to move. You and me are just 'bakaras'. Anyway, let us hope that the bearish close yesterday will be reversed today. For that to happen, we must bounce from a level not lower than 8451, break and trade above 8846. In such low volumes, it is not a big deal particularly if short-covering happens. A close above 8846 will confirm the uptrend initiated Friday to filter to December expiry. A close below 8838 is enough to confirm that the trend is still bearish. If the bulls can act in a similar fashion like the bears, as and when some short-covering is seen, then achieving a target of 9385 is not difficult. Day traders may use 8843 Sensex and 2694 Nifty as pivots. In case of bullish sentiments, NTPC among second rung counters, may break above 160 today.

Supports: 8502, 8309 Resistances: 8843, 9036, 9385
Expected Trading range: 8515, 9065

Nifty: Supports: 2598, 2541 Resistances: 2694, 2751, 2849
Trading Range: 2600, 2753