BSE Sensex: (10338) has managed to close positive and above the psychological 10000 mark. Still looks up. The support for the Sensex is 10110 and the resistance to the up move is at 10527-10763.

Nifty: (3044) the support for the Nifty is at 3000 and the resistance to the up move is at 3083-3115-3239.

Sell @ every up move and stay away. Market will again (surely) touch the bottom i.e. 8100. And as it breaks the bottom of 8100 it may create bottom @ 6500 level as it is the final support.

Hi,

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Market has seen some short covering in this F&O week, as we already posted in our last post. Now Market is going to see some down time in next week. The fear is that, if market breaks the support level of 8320 then market is assumed to see as low as 6500 in this year. And after 6500 there is no support level for market. That may create a big crises. I would suggest you all to wait and watch as market is going to see some more downtime. And if you are really investing for long term, start investing 10-10% of your amount at every downtime of 5-7% of market.

BSE Sensex: (8701) As we said there are tough times ahead and the market cracked, the market still does not display any signs of strength as yet but the Strong support at 8508 is still there and we are now into F&O expiry week, I guess this is action time due to short covering rally.

The support for the Sensex is 8508-8048 and the resistance to the up move is at 9400.

Nifty: (2584) the support for the Nifty is at 2517-2411 and the resistance to the up move is at 2954.

As we discussed earlier, the strong support level of 8320 in our analysis of the market. The market may see real crises of this support level breaks and market then, may see lows of 6500 in comming months. So guys stay alert and still i say to invest small part of your amount at every fall of 7-8%. And This is the real time to go for long term investments. Short term would not provide you with big profits but long term will (surely).

    Shortly we would publish a list of stocks only on EquityPandit.com which is worth buying in this kind of market and would surely pay you good profits.

Many people mail me asking:

- Why market is going down?

- What is this crisis all about?

- Are these crises so big, that the whole world is suffering?

- Where this all money has gone?

- Who created these crises (Financial Meltdown)?

Answer of all these question lies in one story. Which I had written in many forums and blogs and I was really appreciated for this. I know this is quite big story but Please Read whole story till end, It would just take your 5 minutes, All Your concepts would be clear after this story.

Story

Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.

1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.

2) B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.

* The net asset of the country now = 3 dollars.

3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.

*A has a loan to C of 1 dollar, so his net asset is 1 dollar.

* B sold his land and got 2 dollars, so his net asset is 2 dollars.

* C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.

* Thus, the net asset of the country = 4 dollars.

4) A saw that the land he once owned has raised in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result, A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.

* B loaned 2 dollars to A. So his net asset is 2 dollars.

* C now has the 2 coins. His net asset is also 2 dollars.

* The net asset of the country = 5 dollars. A bubble is building up.

(5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.

* As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.

* B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.

* C loaned 2 dollars to B, so his net asset is 2 dollars.

* The net asset of the country = 6 dollars; even though, the country has only one piece of land and 2 Dollars in circulation.

(6) Everybody has made money and everybody felt happy and prosperous.

(7) One day an evil wind blew, and an evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more."

(8) A also thought the same way.

(9) Nobody wanted to buy land anymore.

* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.

* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.

* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.

* The net asset of the country = 3 dollars again.

(10) So, who has stolen the 3 dollars from the country ? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B's net asset is still 2 dollars, his heart is palpitating.

(11) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.

Results after this bubble

* A owns the 2 coins; his net asset is 2 dollars.

* B is bankrupt; his net asset is 0 dollar. (He lost everything)

* C got no choice but end up with a land worth only 1 dollar

* The net asset of the country = 3 dollars.

********* **End of the story; BUT the real story begin here*******

A few points worth noting -

(1) When a bubble is building up, the debt of individuals to one another in a country is also building up.

(2) This story of the island is a closed system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.

(3) An over-damped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.

(4) When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.

(5) If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose but he wasted lot of time. But he will see the value of his money or land goes up and down like a see saw.

(6) When the bubble was in the growing phase, everybody made money.

(7) If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A ) and take part in the game. But you must know when you should change everything back to cash.

(8) As in the case of land, the above phenomenon applies to stocks as well.

(9) The actual worth of land or stocks depends largely on psychology.

I think after reading this story the whole picture might be clear in your mind. The money which was lost actually doesn’t exist anytime. And as I told you in my earlier post the winner is only one, who assume about the bubble beforehand and cash out all his property before the crises starts.

So guys, our assumption, calculation and analysis all are going exact. As our big researches and analysis already calculated that sensex has to go down to 8320 in our post http://www.equitypandit.com/2008/10/indian-stock-market-copy-of-its-own.html I hope, you all had reacted as per our analysis. Now this is the time when I would suggest you all to start buying the shares. We assume that market would bounce to some extent in November. So, grab some good stocks for booking the profits.

Market descended sharply after RBI refuse to make further cuts in CRR or Repo Rate. As market was presuming further cuts by RBI side. Market would remain in negative throughout the day.But still be optimistic as this is good time to formulate a better portfolio.

As we have seen yesterday, market already reached our assumed level of support i.e. 9700 for Sensex and 2907 for Nifty. Now the next support level would be 9325 for Sensex and 2871 for Nifty. RIL’s good result can’t help much.

So market is rushing towards EquityPandit.com's assumed bottom target of 8310-8500, as we already had an analysis in our earlier post http://www.equitypandit.com/2008/10/indian-stock-market-copy-of-its-own.html

Now if the market has to go up then it still requires one UP day and that should be enough, until then, there is tough times ahead.

As we assumed in morning, market was seen in negative index for the whole day. In afternoon, market bounced back by Financial Ministers announcement. But as we told in our post in afternoon, still market ended with negative index. Today market was seen crossing the support point of 10000 but still as we told that next support would be 9700, market was supported by this point. But as we told earlier, market would see new lows in cyclic fashion. At the end of the day:

Sensex: 9771.70 ( -398.20 Points down)

Nifty : 2943.15 ( -122.00 Points down )

 Still guys we assume that market would see new lows in near future. So guys stay connected and book profits.....

Market bounced back from day’s low after the Finance Minister’s announcement on reversing short positions. He said SEBI has asked the FIIs to reverse short positions on borrowed shares. The Finance Minister added that short transactions are likely to be reversed over the next few days. Buying is seen in technology and capital goods stocks. However, the selling continues in metal, auto, selective oil, pharma and realty stocks. Still Market is seem to end with negative index.

Market is assumed to see downtime today. Market may start with negative indeces and  would remain negative throughout the day. Today few second quaterly results of some big companies are also going to be produced, so market would react to those result also. But overall market would be down.
    Time to start investing some of your money. Now start buying some of the stocks of companies with good fundamentals. And I would suggest to go for long term investments (atleast 1 year), so that you guys can make good profits.

As we assumed in the morning market was seen having downtime today. Market is assumed to see more down time in coming days. As we told bear didnot end. Metal index dipped 8% as profit booking was seen majorly in this sector today. Lot of selling was seen in the market. The global cues have played a key role in today's session. Among the Asian markets, the Nikkei sliped 6.79% followed by Straits Times, Kospi and Hang Seng, which fell over 5% each. Shanghai lost 3.2% and Jakarta fell 4.19%. Taiwan was down 1.62%.

At the end of the day:

Sensex: 10169.90 ( -513.49 Points down)

Nifty : 3065.15 ( -169.75 Points down )

 But as i stated earlier, market looks attractive for investment with 1–2 year horizon. So guys, go for long term investments now and stay connected...

 

The Indian stock market to see some downtime today. Yesterday market was up due to short covering. Still bear would be there in the market.

The support for the Sensex is 10300 and the resistance to the up move is at 10919-11542. And the support for the Nifty is at 3000-2907 and the resistance to the up move is at 3324-3496.

       Today some uptime would also be seen in the market trend but it would not last long so guys, take care of timing for today's trade.

Market was seen having good uptime for second straight day, today. As we discussed in the morning and yesterday, Indian market is having better times than other global market. The pullback rally was seen in the most beaten down stocks, mainly in the realty, technology, capital goods and banking sectors. Mid Cap and small Cap stocks also followed the same trend. At the end of the day:

Sensex: 10683.39 ( +460.30 Points up)

Nifty : 3234.90 ( +112.10 Points up )

So guys, today you might have booked a good amount of profit. But Remember guys, bear has not yet finished. For more detail about best investments practices refer our post Tips to invest in best way.

Market is assumed to see some positive spikes today, but indicator suggest both side movements. Still market is in negative zone for medium term and bear market is not ended.

The support for the Sensex is 9700 and the resistance to the up move is at 10919-11542.
And the support for the Nifty is at 3000-2907 and the resistance to the up move is at 3313-3478
So let’s see if government will take steps like this(Repo rate cut and CRR cut) then bear will soon eliminated from the market.

Indian Government is seen to take many positive steps towards Indian Economy this time. A sudden cut in Repo rate was really a big step towards the Indian Economy. This was the first Repo rate cut since 2003. RBI Meeting was assumed to take place on 23rd October, 2008 for Repo Rate cut, but it was surprising as well as good news to see that Today, RBI declared Repo rate cut with immediate effect. Now wait for the second quaterly results of few big companies on 23rd and 24th October, 2008, which would surely be reflected in the market.
This time the government is really coming forward to normalize this crises.

Today, Indian Stock market was seen having uptime. As we posted in afternoon that market would go high due to Repo rate cut, The market trend was seen going towards north. In the end of the day, some selling was seen which led market to end by:

Sensex: 10223.09 ( +247.74 Points up)

Nifty : 3122.80 ( +48.45 Points up )

As we assumed in the morning the market remain positive throughout the day.. You guys might be having good time as you all know the trend of the market beforehand. Our daily analysis are our gifts to our readers.......So guys, stay connected.

The Reserve Bank of India has decided to reduce the repo rate under the Liquidity Adjustment Facility by 100 basis points to 8.0 per cent with immediate effect. It would reflect in trend of todays Indian stock market..

The Stock market is assumed to go up now ( today). so take step accordingly.

Today, Market is assumed to start higher, But second half would totally depend on the second quarterly results of the companies which are going to be produced today. The market would surely react to these results.
Next Supports for sensex are 9700-9325-8508 and Resistance would be 10919-11542.

SPECIAL ANALYSIS

This is the special analysis report produce by EquityPandit.com to help our visitors. We get hundreds of emails daily with the questions:

- What would be trend of market in near future?
- Why market is going down?
- When market would stabilize?
- What time market would take to reach again the previous heights?

For last one month, I and my team including Mr. D.J. Shah (Financial Analyst, EquityPandit.com) is working on all these questions. And finally we were able to make all the questions regarding Stock market, transparent. Behind these following lines, there is a lot of analysis, which was done by EquityPandit.com

Let’s move into the History of Indian Stock Market.

The 1992 Cycle

Market Peaked – April 1992
40% correction – July 1992 (3 months)
Market Bottomed – April 1993 @ 60% of peak level - Total correction
Sensex PE at bottom – 10x
Back to previous high – October 1999

6.5 years from bottom to reach April 1992 highs – Recovery


The 2000 Cycle

Market Peaked – February 2000
40% correction – October 2000 (8 months)
Market Bottomed – September 01 @ 58% of peak level - Total correction
Sensex PE at bottom – 10x
Back to previous high – January 04 –

4.25 years from bottom to reach April 1992 highs – Recovery


So now let’s talk about the present crisis:

The 2008 Cycle

Market Peaked – January 2008
40% correction – August 2008 (8 months)
EXPECTED Market Bottom @ 60% of peak level = 8320 level (We guess)
EXPECTED Sensex PE at bottom – 10x

2.75 - 3 years from bottom to reach previous peaks. (We assume)


From this analysis, you will come to know market behaviors that it will never change its mentality. How it follows its history.
We have taken two terrible examples from the history of market & when We compare its price (%) movement with present one, it follows in a same way in a same time frame.
So it shows that why we need a kind of model which can guess the upcoming moves of market under different circumstances, which EquityPandit.com is doing right now.

Conclusion:-

1) Market flow will depend on FII movement only. Movement Chart is directly proportional to FII inflows or their outflow.(Ex: Year 2000 FII investment increase by 52% @ the same time market increase by 60% n when they withdraw their 53% investment in sep 2001 market was downed by 55%)

2) Market reacted five/Six month before some good/Bad happened actually (Ex: Prices of metals have broken by 38% within this three month but market already taken that factor before six month when prices of all metal sector shares started down by 10-20% and that trend continue now also).

3) In Every down cycle the correction gets higher and higher where recovery time becomes shorter and shorter (See case of 1992 vs. 2000) so this market will take recovery time of atleast 2.75years as per our analysis.

4) It created same percentage of volume during a day or two day before great fall n great jump.