Tread cautiously

All change is not growth, as all movement is not forward. ~Ellen Glasgow.

The sudden sell-off spooked the market but the question is what soured the sentiment? There was no major trigger for the swift selling, except for the dollar’s weakness. The key is to be nimble and alert, especially now with the key indices close to all-time highs. Avoid chasing high returns in the Small-Caps and Mid-Caps as it is risky. Proper homework is a must before entering any new stock(s) in this space.



The opening is likely to be a positive one but the trading thereafter will hinge on how the world markets shape up. Most global markets are in ‘wait-and-watch’ mode ahead of the US jobs data that will be out later today. High unemployment is a major issue in the developed world as it looks to avoid a double-dip. So, naturally the US payroll data becomes an important indicator of short-term trend.

Don’t go by the spurt in China, as it is resuming trading after a long holiday.

There could be more selling as the market is looking slightly overheated. We might see a slightly volatile consolidation this month after a spectacular September. But, the medium- to long-term outlook remains upbeat.

The Nifty violated critical support of 6150 and closed below it. In the near term the trend may turn lower with the formation of a bearish engulfing pattern on the daily candlestick chart and the Nifty breaching lows of the last three trading sessions. Hence, we would advocate a cautious approach in the coming days with levels of 6070 acting key intermediate support.

A fall below 6030 could lead to further drop. Still, 6000 is seen as a strong support as of now. On the way up, the Nifty is likely to head towards 6300 if it crosses 6225. Be warned that a new historic peak for the key indices won't materialise without short-term hiccups.

Shares of Electrosteel Steels, Orient Green Power and Ramky Infrastructure will get listed on the bourses today.