Nifty for 17 Mar 08

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

As was mentioned a few days back, we see there is a divergence between the BSE and the NSE Indices. The Sensex has already violated the previous panic swing bottom, whereas the Nifty is still holding out.

This brings us to the ultimate question. Which is more reliable? The Sensex or the Nifty! This simple question cannot be answered in a simple sentence. However, I will try.

The Sensex has more followers because of its age. However, the Nifty is more accurate because of its trading. The Nifty Future is traded reflecting the NSE Index, and therefore, I would place more reliability on the Nifty rather than the Sensex.

In any case, whether the Sensex or the Nifty, the sentiment is really fractured, as of now. On both the indices, we do not see any meaningful move, which can allow us to conclude that the short term trend is changing to up.

If the short term trend does not change to up, so will the intermediate trend also remain flat.

Therefore, for bulls, I can only suggest patience. I am still of the opinion that the market could swing from here. I may be wrong, as I have been wrong several times earlier. The market is so oversold, that something has to break. We could see a move up. And this anticipated move may be viewed by the so-called extinct bears of the Indian Stock Market as an opportunity to return. How strong will the bulls be? That remains to be seen.

But I know only one thing about the market, and that is a true age old adage. It takes a lot of money to push the market up because it needs real money to buy, whereas the market can collapse on its own weight because it does not need money to sell. Buy when there is “blood on the streets”.

Trade happy after planning your trade.