The Indian stock markets are in red today after opening on apositive note. The expectations of the investors were quashed as the stockswent on a selling spree. There is nothing to write home about as all theindices are falling with the midcap stocks leading the decline. Auto stocksseem to be the odd one out today as they are barely holding in the green with0.43% gain from yesterday’s closing price.
It is to be noted that a majority of investors, particularlyvalue investors i.e. those who buy out-of-favour stocks and sell when everyonewants to buy them, are sitting on a huge profits and thus regular profitbooking is a healthy sign of a string trend.
Still, since there has been no meaningful correction from somany weeks and this seems unsustainable, thus today’s weakness could indeed bethe first of a massive decline in the markets.
The indices form Bearish Engulfing and that too in an overboughtposition.
Further, technical analysis of NIFTY 50 gives the impressionthat a strong trend is in place with the 20 days simple moving average (SMA)and the 200 SMA rising.
Also, the 20 SMA is near a round figure, which is always apsychological barrier to both rising and falling prices, of 14,000.
However, the distance between the two SMAs is wide and thishints at a decline in prices.
Thus, long-term traders should not be surprised if the NIFTY50 falls to 14,000. Short-term traders are advised to close their positionswhich are in profit. Further, shorting is not advised for conservative traders.