hi there alchemist
could you help me with a information

please tell me what was this selling for
and
who had generated this selling
and what was this panic created for according to you

The selling started because of sell-off in the other Asian markets - especially the sell off in the Hang Seng (Hong Kong).

Amongst the Asian markets, only India and Hong Kong have shown extremely sharp up-moves in the last few days. Thus, both are also expected to correct in a similar manner.

Today, the Hang Seng index closed nearly 5% down from the day's top and 2.5% down from yesterday's close.

India recovered as buying again emerged at the end.

This rally is completely driven by capital inflows from overseas.

The high volumes are scary and may be a sign of a blow-off top.

http://www.investopedia.com/terms/b/blowofftop.asp

Short-sellers are continuously getting trapped and taking the markets even further up. Shorting against such strong momentum is suicidal.

Such momentum is unsustainable. I feel the markets may top-out very soon, but it is very difficult to predict when the top will come.

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I believe the Indian growth story is oversold for short term and against a growth rate of 8% our markets have already grown by more than 800%. I see very sharp correction in the markets and the zeal to by equity should die from the mind of retail investor before markets takes any fresh upmove. I am specially worried about the people those who traet markets as calculators and simplly calculate the valutions of index for next and next and next year by simpally adding 15% for each year into the index

Hi Alchemist,

I read the article http://www.indiadaily.com/editorial/18578.asp

I would like to get your views on this.

The above article says there will be bottom-out. I personally feel that sensex has great support at 12k even if there is a going to be a huge fall in the coming days/months.

Please post your views.

Regards,
Manik2012

I don't see the Sensex going below the 15000-16000 range in next few weeks.

If you see the data for last three years, the Sensex has a good support at its 200 day moving average.

After the May 2004 fall, the Sensex has touched the 200 day moving average thrice and bounced back to continue the rally.

Below is the weekly chart for the Sensex. The green line is the 50 week average - which is approximately equal to the 200 day moving average.



Fundamentally also, at 15000 - 16000 the Sensex will be trading at 15-16 times FY 2009 earnings, which seems attractive considering the earnings of Sensex stocks at expected to grow at 15% per year for next few years.

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