Bungle, bungle, all the way

Way back in January I had opined on the 12,000 mark of the Dow and the impact it may bring if it gets broken convincingly for even a week. (Read my blog http://forexpredictionstoday.blogspot.com/2008/03/quite-in-line-with-what-was-being-said.html ). I had also written about the BSE in my blog on 15th April 2008 ( http://themarketstoday.blogspot.com/2008/04/nervous-signs.html )
And I quote “Eventually.....I stick to my 13,400-13,800 levels to be reached in the coming months although the 14,000 might be a tough psychological barrier to break.” Unquote. Period.

The world has gone for the worse in those couple of months and it seems now that the 13,400 – 13,800 is more of a resistance level than a support (for all the optimists!). The current immediate downside is at 12,500 followed by a further support at 11,600 and 10,500. though my personal belief at this point is that it may be difficult breaking 11,600 if at all. There may be skeptics with their formulas on the 50 percent retrenchment and the likes, but I believe the world (and not WORST) is not over yet. Yes, we have bungled a lot and in lots of places at the wrong times. Yes, Things back home are not that great. And we have lots of things to blame for it. The political saga, the oil saga, the global crisis and so on…. That the RBI is using all weapons in its arsenal to rectify matters is true, but one tends to believe that it is too little too late. Fiscally, we have dug a few small graves ourselves with the Farm loan waiver and the delayed and inadequate decisions on petro price hike. And now you hear of the RBI boldly announcing that things will return to normalcy within 6 months. That, I believe is more akin to acting like an ostrich. Put your head deep in the ground and hope no one will notice your flabby body outside. We as an economy today, are not delinked to the global economic scenario (This one liner that the 10th grader also knows, was for you Reddy Sir). And if economic pundits globally are to be believed, we are in a short recessionary loop of around 2.5 years and starting its timeline in mid 2007. Which actually means we are still left with more than a year upto 2009 end maybe.

So, as I have said above, expect a downslide, that is more and more linked now to the happenings outside as well as within us. Taking cues from not only the domestic political turmoil but also the petro prices and the global (clichéd) “meltdown” (Not to forget the various bunglings at the regulatory and the governance levels). An Oil or political meltdown ( Oil corrected yesterday night to the 138 region) may help in resurrecting the market for a while, but by and large expect a pessimistic market in the days to come. The BSE 30 at 11,600 (on the lower side) to 13,800 is a given with a more stable range of 12,200 to 13,400. The Nifty50 on the other hand should rule in the 3,600 to 4,100 range and more specifically in the 3,800 to 4,000 with a downward bias in both over the week.