Market fall to continue; 1st Support Nifty@3000 (Sensex@10,000) by Dec'08, if it breaks bottom formation Nifty@2600 (Sensex@8800) by mid 2009.

Looking at the present scenarios, global market will be under pressure and will not listen to any rate cut or any measure to create liquidity in the market. We are dip till the neck and neither retail investors (if they are still alive) nor FII/MF are going to listen to anyone forget about PC or FED speech.

Catch here is almost every one's portfolios are down 60-70% in average, and selling now doesn't make any sense, true, I agree with you but only if you are holding few stocks that too with robust earning visibility. Else there is no point holding any stocks which was once upon a time poster boy of stock market rally like RNRL etc. For such stocks consider any rally — no matter how fleeting — a selling opportunity.

--------------------------------------------------------------------------------------

HBJ Capital's View for Friday....

• Tomorrow Indian Markets are closed, else we could have seen minor bounce after getting positive clue from US due to FED rate cut. This was a good opportunity to build SHORT or buy PUT options.


• On friday, it would be better to wait and watch and take fresh positon only on Monday, it's simple you position on Monday will be again SHORT on Nifty or Nifty PUT Option.

--------------------------------------------------------------------------------------

Ever since this credit crisis began 13 months ago, Wall Street has been hoping that Washington could prevent a great fall — that it had the power to pump up, bail out, maneuver, and manipulate. So as long as those hopes were alive, the stock market held its own ... even as the mortgage market collapsed and even as bank balance sheets imploded. But now those hopes have been dashed.

In 1929 - The Greatest Depression : Whenever President Hoover Tried to Give A Pep Talk, the Market Crashed Some More

After the Crash of 1929, President Hoover called together a group of the nation's business leaders for a special meeting in Washington. His message to the executives went something like this:
"When you go back home tonight, you're going to do the right thing for our country. You're not going to lay off employees. You're not going to stop hiring. You're going to do everything in your power to keep the economy going."

But instead of following his directive, they did precisely the opposite, taking major steps to reduce their work force. Their reasoning:

"If the President is taking the extraordinary measure of calling us to an emergency meeting in Washington ... if the president is so concerned that he feels compelled to tell us how to run our business ... then that must mean the economy is actually a heck of lot worse than we thought it was."

--------------------------------------------------------------------------------------

The same perverse pattern is spreading throughout the financial markets this time. Two prime examples:
On Friday, when the President signed into law the $700 billion bailout package, instead of bolstering confidence, it turned out to be a major blow to confidence.

And when the Fed announced it was taking the extremely radical measure of buying corporate commercial paper, instead of reducing pressure on the financial markets, it merely spread the fear. Even today when FED cut the rate by 50bps, market is showing mixed reaction.

This is not exactly the recipe for a bottom in the Dow or Global equity market. As per the worst case estimate we will see further slide of 20-25% from here with intermediate support coming in between.

So, one can expect Sensex to fall another 1500 points in next 2 months and if 10,000 levels are broken one can see it somewhere around 8,800 level by May-June 2009. Similarly 1st support for Nifty can be at 3000 level and bottom formation @ 2600 level. Not to forget above estimate is worst case because we believe this crisis is also once in decade or century.

-HBJ Capital Team