Indian Stock Markets: Heading for Recent Low!!!

Sensex opened mildly in green on Wednesday, as was opined by me and improved soon thereafter. I suggested that day traders may buy at the opening and sell after the first lap up. However, there were two laps up taking the Sensex up by over 300 points or 3.3% before relentless selling started, bringing the sensex to the day's lowest point at close, down 163 points. Not so surprising, as anything can be achieved in low volumes and the bears had the will-power. AD ratio was negative at 1:4 and FII & DII's continued the selling.

Asian stocks closed modestly lower too, better than the earlier lows. Shanghai was an exception, having jumped over 6%. Europe opened flat and sunk to the lowest at the end, down 4 to 5%. US stocks too opened flat and fell continuously to end at the nadir for the day, lowest in almost 5 years. Dow closed below 8000 at 7997, 5% down, Nasdaq down 6.5% and S&P down 6.1%. Concerns over the fate of US automakers, disappointing economic data and a bleak outlook from the Fed fueled the selling. October CPI fell by the largest amount on record. New residential construction data fell to the lowest levels on record and provide another weak point for fourth quarter GDP calculations. October housing starts declined 4.5% from previous month. Dollar has improved against Rupee, closing above 50 for the first time. Dollar is 50.02 against Rupee and 95.85 against Yen. Crude has closed below 54. Asian markets this morning have started off with deep cuts.

Nothing much to say about the prospects of our market for the day. Government and its agencies are continuing their lip-service and not doing what the market expects and would support the stocks. Inflation figure may not be lower as expected, it could be a tick higher or almost flat. Hence, an ugly session is inevitable, seventh consecutive day. Day traders may do bargain hunting when Sensex is in 8400-8500 range or if Sensex breaks above 8912 which is unlikely without any concrete news. Look for any such announcements which may fuel the stocks up any moment. Otherwise, we are heading towards the low of Oct 27. Sensex need to close above 9008 today to terminate the bear spell. Investors must not sell, look for investment buying with a 6-12 months horizon.

Supports: 8589, 8496, 8403, 8149 Resistances: 9010, 9100, 9260, 9421
Likely Trading Range: 8390, 8751