Ready for an intermediate up trend ?

The Nifty was fairly volatile on the FNO settlement day. The Index fell to a low of 4078 before recovering to close at 4107.

While the market remains inside a range, there is a suggestion that the Index finds support at lower levels. These levels are somewhere around 4070. The Nifty did go to touch this support today, but rallied to close higher.
If 4070 support holds, then we could be looking at a rally that touches the 4300 – 4400 zone. Assuming that the support breaks down, we are faced with another decline to 3800 where support comes in.

The scenario then is:

Assume the intermediate down trend is getting over. Look for a rally to 4300 – 4400 levels. If the support at 4070 breaks down by a close below it, then stay away from long positions.

With all of this analysis, the Nifty remains inside a large trading zone – between 3800 and 4650. Eventually, a move out of this zone will determine the long term trend for the Market.

Panic in America : Effect on India

A large US $ 700 billion payoff is under negotiation in the USA. Most economists / financial analysts are opposing this payment to big banks. President Bush has said that this needs to be done urgently or ‘America will face a painful recession.’
While the Americans will finally decide on what they will do with their financial institutions, the entire world will be affected by the events in the USA. India will also have to face the fallout, if any, of the ongoing crisis.

The Coupling of economies.
No, we are not decoupled. Stocks will be adversely affected if the US markets fall. if the US Markets rally, we should go with them.

End of the Broker – Dealer
In the USA, the Investment Bank model has abruptly ended. In my blog, I have warned earlier of the risks associated with brokers who trade on proprietory accounts. I will explain in some detail.
The Brokerage business will see a major change. Two different segments will survive.

First, the Broker – Banker. This includes all brokerages sponsored by banks. HDFC , ICICI and so on. They have to be sponsored by a Bank. The Broker – Banker will become increasingly important.

Second, the boutique brokerage. This is the small brokerage where all clients know the broker. They have the broker’s cell number. The Broker knows them by their first name. This segment will survive and prosper. The Broker offers top class brokerage services and does nothing else.

The Segment which will NOT survive is the broker who acts like an investment banker. (remember Lehman Brothers ..). This group is in proprietary trading, branch expansion, wealth management, .. You name an activity, they have their fingers in it. If you have a broker who resembles this profile, you may like to shift to any of the two segments described above.