Carnage on Dalal St: Will it hold key 5960 support level?

Source : Moneycontrol.com

The bears once again seem to have played their trick. Dalal Street collapsed under the domino effect from China and the rest of Asia which sold off on rate hike worries. The Nifty ended below 6,000 after losing 133 points on Tuesday while the Sensex took a tumble of 444 points to shut shop at 19,866, the lowest close in nearly two months.

Unperturbed with the kind of fall that has been evident on the indices, Mehraboon Iraniof Centrum Broking says this is an opportunity to look out for companies in which ultimately the growth story is going to remain intact. “India is going to be a prime contender of the foreign money flowing into emerging markets. With this, we are only going to head much higher over the next two-four months. The fall though is unpredictable.”

With the markets threatening to breach 5,980 on the downside, how important is this level according to experts now and what would the support be beyond this point? The support is at 5,960. So another 20 points below that is the crucial level. It is important that the market holds that but if it does not then the next fall or the next target would be somewhere around 5,843, says, Anil Manghnani, modern shares and stock brokers, www.eqwise.in.

“The markets made sharp moves in the Diwali week, when we touched around 5,937 but closed around 6,000 just around the end of October. So the gaps which were created between 6,000 and 6,300 and the fact that it went up so fast is probably the reason why it is coming down sharply and now probably up all those gaps have been filled,” he reasons.

This market started its major rally sometime end of August at about 5350. From there to about 6,338—you take a 38.2% of retracement that come at 5,960 that is why it is an important support level. If it breaks then 5,843 is approximately the 50% retracement of this move which I just mentioned from 5350 to 6338,” Manghnani adds.

In this fall from 6,300 to 6,000 on the Nifty many of the midcaps have lost a considerable amount of ground. Ajay Parmar head of institutional equities at Emkay Global Financial Services feels once the correction starts one will see midcaps see a lot of cut in the prices.