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Posted by Shyam as Market News
The Indian share markets broke a very important support level on the last trading session of the week on Friday to go below and close under the psychological barrier of 10,000 level in sensex. We all know how important that level is for the sensex. As I eve wrote about the importance of 10,750 levels in Dow and once it was broken the Dow came down crushing to 8000 odd levels. So these crucial support levels in the share markets are very important in the turbulent times in the market.
For the first time since July 2006, sensex managed to close below the 10,000 level.Sensex lost 606 points or 5.7% to close at 9,975 levels and nifty lost 6.34% to close at 3,074 levels. Indices are now at half of the levels of what it was in Jan,2009. Crude sliding, lower inflation numbers along with the rate cut by the RBI to rein in liquidity in the market could not support the sensex and nifty. All the positive signs were ignored and markets went on a free fall.
Realty, power and metal stocks were the hardest hit ones now. Th next support level for the sensex currently is at 9700 levels in the intermediate term and 3000 levels. But I feel there is much downside left in the markets than what meets the eye now. The next support levels are at 9,000 levels in sensex and 2,900 levels for the nifty. Some analyst are of the view that nifty may test sub 2,600 levels in the next 2 months time horizon.
So really tough times for the economy and markets in general.Meanwhile there is one man who is happily buying into US stocks.Yes, he is none other than the famous investor, Warren Buffett. His one liner is really touching: “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.” And it sums of his theory in a single line.He is one man who sees value in the stocks now for long term investment. And this is the way he made close to $190 billion for his company Berkshire Hathaway Inc.
The US markets too managed to close in red on Friday. It will certainly take some time for the markets to settle in. We might even see a pull back rally of 600-700 points anytime next week or so as the Indian markets have fallen a lot last week. But a strong base or a support level looks a bit distant currently. Only after forming a strong base or bottoming out, we can see the bulls back in the market. And it might even take 6 months to 1 year for the process. Its best time for long term investors to pick front line stocks in every dip and hold for a period of 4-5 years. And the traders need to very cautious as the market sentiments keeps changing every other moment.
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