The recent trends suggest that nifty holding the 4700 mark is very unlikely. Our markets have weakened so much recently that regardless of how western markets are doing, we’re dropping like crazy. It is not just on the index levels but if you look at a lot of individual stocks, they have crashed to all time lows and that is not a good sign at all. Several stocks are making new lows every time markets dip to lows and they don’t even participate when markets show some relief rally.

My last suggestion in August was to use every dip below 5000 to buy into the markets, but this time things are different. I don’t advice any bottom picking right now. Right now, one should just wait and watch, markets are going down on a daily basis and we’re also under performing the west in downfall which was never the case in the past. I think we should see some more fall before market stabilises. Why I fear that nifty might not hold 4700 this time is if you look at US markets, they are close to 11,800 on Dow and our market will hit below 4900 today. The last time we had dipped to 4700, Dow was trading below 10,500. So any sign of negative news globally and if the west markets give in, we are going to fall along with them and there is just 3-4% before 4700 is breached. Unless we show some strength, I’d guess 4700 is going to break easily.

One thing to note is that markets had topped out when we touched close to 5400 and US markets hit 12200 because a relief rally could only take you to a certain level. Some positive news cannot help markets touch all time highs, it can just bring you out of the over sold region.  So once markets top out, positive news coming gets absorbed with a say “Its priced in” and negative news take markets down. That is exactly what is happening, with each negative news markets are dipping today. The only fact for India is that there is absolutely no positive news coming from anywhere. Rupee has depreciated a lot, earnings were bad, thanks to forex losses and a special thanks to SBI for it’s continued disastrous performance that even led to downgrading of the banking sector.

Another problem for India is inflation remaining high and fiscal deficit going entirely out of hand, thanks to government for not doing divestment at the right time. I’ve got no idea what they are waiting for. If they are waiting for markets to go high in near future to do divestment, well they’re day dreaming. I really think divestment should happen now and fiscal deficit going out of hand should be controlled somehow as it also had some effect on the rupee depreciation.

Coming back to topic, I think guys, you should be waiting for sometime before you further buy into the markets as markets do have to show some more downfall thus stocks could be available much cheaper than what they are today. Just wait and watch and keep some cash on the sidelines to deploy later when market stabilises. Market can stabilise anywhere around 4700 or below that levels, perhaps 4500. We just have to wait and see where it goes.

Related posts:

1. Nifty Should Find It’s Base Around 5000
2. Back To Wait And Watch Approach
3. Markets Are Slowly Sinking
4. What Are Analysts Saying Now?
5. My Views On The Market