The Nifty opened weak today on the back of global markets being down and could never recover from the early setback. It did find some support near our ‘double support’ at 5055 mentioned yesterday but that did not last long. The matters became worse for our markets when both Sensex and Nifty went into a tailspin in the last hour of the day, thus breaking through not only our smaller range shown yesterday, but also through its 200 day moving average. The Nifty finally ended the day well below the 200 day moving average.
The breaking of the 200 day moving average, as mentioned in the earlier newsletters, is not a good sign. As seen from the daily chart of the Nifty, it did close below the 200 day moving average for three successive days before it went back above it. This time also, we would wait for some signals from it for 5 days to see whether it continues to trade below the 200 day moving average or goes back up. Well, for now, we are back in the larger range between 4800 and 5500 and would expect some support near 4800. We were already in an intermediate term downtrend and now we are in a short term downtrend too. Another negative seen on the charts today is that the Relative Strength Index (RSI), shown in the bottom half of the chart, has also broken through its upward sloping trendline.
Our stocks mentioned in the newsletter for yesterday, namely Cipla and Maruti showed good strength today. But, with the markets going into a tailspin, even Maruti came off its highs, yet Cipla is still holding on. Ranbaxy, mentioned in the newsletter for 27 February is going strong.
Till the time the markets stabilize at some level, it does not make sense to build any long positions. So, no new stocks recommended today. As mentioned in earlier newsletters, we are inviting our esteemed readers to send in their contributions in the form of articles to be published on this page. Take this opportunity to voice your opinions to the world about the fall today, the markets in general or anything remotely connected to the markets. Please e-mail your articles and don’t forget to mention your name and location so that you are given due credit for the article that is published.
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