Friday, September 2, 2011

SENSEX up 1000 points in 3 days

Bear market rallies are sharp and swift and is almost impossible to capitalise it entirely. This is evident from the fact that Indian markets had bounced back sharply after hitting 18 months low in Aug 2011. SENSEX rebounded 1000 points in matter of 3 trading sessions (15848 on 26 Aug to 16821 on 2 Sep) and close to 1200 points from the low (15765) it made on 26 Aug 2011.

Stocks which went up were the stocks which went down most in the course of downfall. Rate sensitive, Information Technology and Real Estate were the heroes of this rally. But the bigger question is how much more can we rally?

In an article (Nifty could rally to 5300 levels) I tried to apply dow theory in predicting the extent of possible upmove. By that logic we should tire at around 18000 SENSEX level from where we might restart the journey towards south.

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