Nifty recovers to reduce losses - Alex Mathews

We saw an extremely volatile session with Nifty making many highs and low within the negative territory itself and towards the end of the day we saw some good recovery which helped the indices to reduce their losses for the day. Many midcap stocks, which lost ground in the morning gained back considerably. Positively trading US index gave support to our markets later in afternoon session. It was broad based selling that we saw today with many stocks hitting their respective 52 week lows. Heavy selling continued in metal stocks on concerns that the demand from Europe, US and major import China may decline. The Union Cabinet on Thursday had cleared the pension bill but decided not to limit foreign direct investment in the sector; retaining the flexibility to prescribe or change limit through an executive decision and this move is considered a positive move but will have to see whether it will become a bill in the parliament session schedules in December.

Nifty today moved below the crucial support of 4862 and slipped further but the strong recovery that we saw in the late hour of trade helped Nifty to close above 4900. Even though markets are heavily oversold, the technical indicators are yet to give a strong reversal pattern collectively. Falling inflation, decreased petrol price are all positives as far as India is concerned as so we may see a bounce back next week given the oversold situation and due to fact that the November F&O expiry will happen next week.

Asian markets were all trading in deep red tracking overnight selling seen in US markets. Equity markets dipped along with oil price on concerns that Europe"s debt crisis is spreading and as China warns its banks regarding rising bad loans hinting at more strict norms. European leaders are trying their best to convince the investors and public regarding their commitment towards pulling Europe out of debt crisis. EU banks are expected to write down some of the $270 billion of goodwill from their purchases before they can sell assets which will affect their balance sheets. Same is the case with Spanish banks which are holding real estate worth 30 billion Euros that are "unsellable". European markets were in red but have restricted a major fall hinting at a support at current levels. In US however the jobless claims were down to a 7 month low of 388000 from 393000.

Source : Equity Bulls

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