We are not out of woods yet

Yesterday Nifty pulled back to 6000 levels.But the Euro zone problem is still showing no sign of being resolved for some more time . Therefore,  market may remain volatile in short term  with biases on downside. Nifty may correct to 200 EMA which is at 5500 and 5550 was the breakout level of this up move  which terminated at 6330 . Nifty may restest this breakout level of 5550
From here two probability emerge:
1 Market may pull back to recent high and then correct
2 market may correct from here and then pull back to recent high and make new high .
Either way a correction is inevitable and healthy for the market and after a decent correction we will see new high.
Consumption story will play on .  TTk Prestige, Jubilant Food, Bata, VIP, Amar Remedies, Titan , Uflex , Orchid Chemicals should  be on your radar and  correction should be used to buy these stocks.

History Of Nifty Corrections

Nifty is in correction mode. If we go by the history of Nifty it has tendency to correct to 200 EMA . It has done so many times .It has traded below 200 EMA and then bounced back. We are presenting below Nifty daily chart:

Nifty is trading below 50 EMA and you can see it has breached a short term trend line . As per dow theory now the next support is at 5930 which can also be taken as Pivot. If you look at the chart the support area as per the candles is around 5900. If Nifty is unable to trade above 5900 then it may retest 200 EMA.

You can also see that in recent past it has traded below 200 EMA and then bounced back. Therefore, looking at the history one should be prepared for this eventuality. If Nifty on any day closes below 5900 then one should exit from all long positions . At present global and domestic environment are not conducive for a sharp upside . Food inflation is here to stay despite the tightening measures being taken by all the Central Banks. One of the major culprit for this is the climate change which is resulting in fickle weather, untimely rains. Of late , rains in Maharastra has led to sharp rise in onion price. The flooding in Pakistan and Thiland has caused  rice price shooting up .

Happy Diwali

We wish a very Happy Diwali to all our readers.
Markets has already given us reason to celebrate the festival of light.
One should look for Domestic Consumption story as a theme for this year.
We will discuss about it more in coming days.
Nifty has zoomed once it crossed past 6150 , the level which we were talking about for the past one week.

Trade well and trade less

Food Inflation is here to stay

RBI is once again in dilemma over the rate hike . It is on the one hand worried about rising food inflation and on the other hand its  also worried  slowness of growth.
Well, in my opinion it would be a difficult task to tame the rising food inflation. Despite the good monsoon what we are facing globally is fickle and erratic rain fall. In our county we had floods in UK, Punjab which affected paddy crop . We had drought in Bihar and had scanty rainfall in some parts of the country. The area under agriculture is getting reduced day by day and after the Green Revolution there has been no serious efforts to increase the productivity.
Irony of this rising inflation is that the farmers are still not getting the benefit of  higher food price . We will talk about it in detail in some other time.

Today market may remain flat and volatile ahead of the key events.
Keep HDFC and BPCL on your radar.