Mumbai, December 12: The stock markets crashed for the second consecutive day on panic-selling by investors, plunging the Sensex below 13,000-mark on a 400 point loss triggered by sluggish growth in industrial production.
There was a virtual bloodbath on the back of Monday's crash due to RBI's decision to hike cash reserve ratio for banks, which wiped off about Rs 250,000 crore of investors' wealth in the last three trading sessions.
In erratic behaviour right from the morning, the Sensex fluctuated and fell 600 points in intra-day trading with heavyweights such as BHEL leading the slide after the government released the industrial output figures. It later recovered to close at 12,995.02, a net fall of 404.41 points.
Industrial production grew by 6.2 per cent in October, the lowest this fiscal, on account of a slowdown in manufacturing sector, especially consumer and capital goods.
The Bombay Stock Exchange barometer has fallen by 977.01 points or 6.99 per cent in the three-day slide.
12/12/2006
Bloodbath on Indian market continues
There are very few orderly corections in the Sensex. Combination of players plus lax regulations create such regular panics on this market. But it might be useful to keep an eye on other emerging markets and US market. Pilot fish at work.
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11 comments:
I am buying calls down here in QQQQ. The risk is minimal at this point.
quite a slip that i should have seen coming...my indicators warned but I ignored...still I only think a temporary dip
chart of QQQQ was pretty bearish... was trying to post that this morning but problems with machine
bearish only in the eyes of short term traders
i have averaged my call 44 call price down to 23 and looking for a big, big move in QQQQ
agree - time horizon can mean everything
In order to have an edge, you can't just look at price and volume and label a chart "bearish" like every other Joe Schmo trader. You need other internal sentiment indicators that show extremes. Pradeep, what do you think?
i meant short term bearish, even though i didnt specify - was just a quick message...
that compounded with fed decision, jitters, etc
volatile mix
There are many ways to make money in the markets. On short side if your expectancy level is 10%-15% you will find several opportunities. Those are normal corrections in most stock. That is what many chart readers do.
The problem always is for that 10-15% risk is higher on short side. Second the most important thing is opportunity cost. For any given time period your objective idealy should be to maximise the opportunity. History of market shows that periods in which short opportunity is greater than long, are very small. There is a window of time when shorts work.
So if you are very skillful short, you have to handle OPM to magnify your returns. There is a market for dedicated short managers, but very few have been consistantly profitable on short side.
Massive institutional accumulation going on.
F, whats your time horizon and target price for QQQQ?
QQQQ is going to make new multiyear highs. What I am seeing today is rare. I am carrying very large call positions in the Dec and Jan contracts (all purchased today).
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