Dear Investor,
NIFTY has closed slightly below the support line of 6000. I do not see any panic sell off where this market is expected to bottom. People are guessing bottoms well ahead of time. Right now we are only seeing people leaving the market who got in at 6200 levels. Institutional investors are kind of not supporting these kind of valuations. Well, The market makers have to move the market up and down to keep making money.
Those who are just trading will have tough time under such circumstances. You have to have a long term view of what is happening. What is happening in market and what is happening around you. It needs to be a holistic view of your understanding of your environment. Stock market is just one form of economic picture of real happenings. It also represents a psychological state of people. When people are nervous and breaking down they sell their holding and when in Panic they simply sell out all they have.
I do not want to advocate you hold on to all you have and never sell or book profit. I am simply describing the general behavior of people of how they behave and get caught up in sea saw action of market. I am suggesting that do not invest money that you need in next one year. You will end up selling in corrections like this. Only invest money that you can hold for at least one to two years. Once that is decided then how to pick a stock to invest a stock is all this blog is all about.
Above chart is a picture from 2004 till today. Black like is actual index line and read line is a 50 day support line. In bull market every time market sells off it will kind of stop near this red support line. Based on this indicator out next support is around 5400. If you really look at where is market is from 2500 level to 6000 level. This correction what we are seeing is just a scratch on the surface. Overwhelming number of stocks are turning down but you can't help it. Its the current wave. Keep your shopping list ready. The opportunity will be presented withing next three four weeks. You do not have to really catch the bottom but start picking slowly for next six months target.
Under current circumstances I could only see Lupin and Wochard Pharma standing strong. Rest all the stocks are moving down to their 150 day moving average support line. This is healthy for the market and will present good opportunities for new investments.
Thanks
Anil
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