Dated 20th October, 2008

It was the heavy weights’ turn to contribute towards the downtrend. Biggies like Reliance, L&T, ONGC, RPL, Grasim, Ranbaxy, Nalco, Hindalco and Tata Steel fell anywhere between 10-25% week on week. The market breadth was not as terrible as we have seen in the recent past. There were sharp short covering rallies in some of the beaten down F&O stocks. PSU Banking stocks bucked the trend and remained resilient during this entire bear phase. ICICI Bank, PNB, Satyam Computer, GAIL and BPCL were among the top Nifty gainers.

Nifty may test the psychological 3000 mark this week achieving our target (given on 29th Sep) in just 20 days. We feel that the fall is likely to continue but it requires real guts to go short at this level. One must wait for a small pull back for going short. Going long is a strict “NO” since the overall trend is negative and is likely to remain so for atleast another 2 quarters. There is a possibility that we may witness some euphoria being created before Diwali, but still I feel it should be utilized to sell into stocks. Stocks like Bharti, Power Grid, Lupin, NTPC, Kotak Bank have broken their short term supports and are likely to see further downside. One should not be very aggressive while selling but remain short, never the less.