The share marketis expected to stay in a constricted mode in the further times to come. There seems to be the repetition of the same similar situation as emerged after 21st May; 2008, where the market was attempting to take the intermittent resistances from 20DAY MOVING AVERAGE. Again the market is showing the same set of repeated patterns of fizzling out which it once showed with the spurt in global crises which once emerged in the year of 2008. The crises was so intense that the market fell from the close of 5705 as on 18th jan;2008 to close at 4899 after 2 days, a significant fall of almost 810 points.
Currently the Indian market in general as well as the share market is still reeling under the impact of the stiff global impact. The rising crude oil prices as the result of the Egypt crises, acute outflow of the foreign investors crossing Rs.5000 crores, looming inflationary pressures, increase in the government deficits with the advent of subsidies being remitted by it to the oil manufacturing companies which was already under intense pressures of high crude prices squeezing down its profits. Moreover, the weakening rupee, high government yields is other add-ons which are aggravating the situation for the Indian economy.
Technically speaking, the nifty has broken down the 200DMA thereby leading to the formation of the right shoulder of the DOWNWARD SLOPING head and shoulders pattern. However, the downward sloping head and shoulders pattern states that the breakout may not be as intense pushing it down by 500 points, but testing the levels of 5090 from 5533 levels seems to be the call of the situation. On the flip side, 5537 is the first crucial level which is imparting the genuineness to the formation of the head and shoulders pattern. If it breaks above the level, then we can expect a mild pullback in the markets to watch out for 5550 levels in the forthcoming sessions. But if it doesn’t do so, then the continuation of the retracement shall stay in continuation in the later sessions.
Indicators have already entered into their oversold zones. Even if we would be looking at the RSI and MONEY FLOW INDICATORS, all of them have already penetrated beyond their initial support levels in their oversold zones giving no signs of reversal as such. The share market presents an interesting look with this development.
Even if we would looking at the Fibonacci arcs, the market has already gone past 61.8 Fibonacci range giving further adverse situation of the market to come across with for the forthcoming sessions.
So we recommend you stay cautious while choosing the high beta stocks, like BHEL,AXIS BANK etc, for making share investment in the share market which are also expected to face first resistance with 20DMA at Rs.1274 and Rs.2212 respectively. The stock tips in high beta stocks should be given after taking into account the downward flow of the 20DMA. Another retracement is there in line in these stocks and therefore, an appropriate is needed to be looked into severely before taking a call on the stock market dominated stocks.