A Roller-Coaster Ride For The Investors

The stock market opened with a gap-down as a result of continued panic selling due to the US debt crisis. However, in the later half of the session PM's consoling words of wisdom strived to pull the market upwards. Ultimately stock markets ended making a Doji pattern indicating a roller coaster (volatility).
Nifty traded below 5000 levels but managed to trade above these levels with oscillators too lying in the oversold zone.
Moreover, our very own investor guru Rakesh Jhunjhunwala says "the long-term story of India is not lost but markets are unlikely to shoot up after a hitting bottom."
Our legendary investor Warren Buffet states that he has not yet seen anything that suggests another downturn is emerging.

RBI relieved investors....stating that it had sufficient liquid reserves to meet demand for Forex even in stress situations because of the strong fundamentals. Pranav Mukherjee added that markets are in the process of stabilization. The rate hikes were only to prevent volatility in the markets. It was important to bring down the inflation and inflationary expectations and thereby curb demand pressures. Moreover, it warned that in case the economic slowdown continues and there is a strong reading on IIP data, it might have to hike the rates again in September, 2011 by 25 bps.

Gold prices hit the record... due to the equity market collapse, investors were more inclined towards bullion trading to make the record, closing higher to 16490 Rs per 10 gms. The value of Indian rupee degraded due to oil importers demand for dollars and and weak domestic shares.

Revival of monsoon rains.... monsoon showered its blessings in the rice, oilseeds, lentils and cereals growing regions thereby improving output prospects. This fall was estimated last week. However, food inflation continues to rise. It recorded a 4.5 months high at the end of July which attributed to a rise in prices of vegetables, specifically onion and meat and milk products.

Markets across the globe..... European markets experienced a rally at the end of the week as a result of ban on short-selling which resulted in a rebound. US market trading continued to be quite volatile, and the large-cap indexes rose. Gains were far from being across the board. Asian markets ended mixed as the strength in the yen pressured Japanese exporters and China and Australia managed to close positive.

Sectoral performances... Banking sector followed the footsteps of the markets, energy slowed down further, IT and PSU banks degraded nearly 2%, Four wheeler industry experienced nearly 15-16% set back, other all sectors also traded with a negative bias but gave a less negative impact that the above mentioned sectors.

What next....

We maintain our view of 5000 as a support for nifty. Nifty traded below these levels but fortunately couldn't close below. Once this is broken on closing basis the next support at 4800 levels is expected. However, nifty might give a correction at these levels after a consistent fall for last 3 weeks. This is because market was highly choppy and volatile last week, to close almost at those levels where it opened to form a Doji pattern which would be confirmed in the coming week. Moreover the markets are lying in the oversold zone. Now the markets may correct up to 5340-5400 levels and give another indication of a fall or continue to fall further unless economy shows some positive sign.

So let's react after the gurus act.......