Monday, October 27, 2008

Now probability of upper circuit is big in my view:-

Markets fell like a house of cards on Friday and around 2 pm, everybody was wondering about how NSE didn’t apply the circuit breaker and halt trading even after a 10% drop in the indices? The new directive from SEBI says that exchanges should apply circuit of 10%, 15% and 20% to quarterly closing of the index and it should be a point-based circuit. E.g. Nifty closed at 3921 on 30-9-2008, last day of the September quarter, so 10% of this is 392 points which will be the circuit for every day in this quarter. Now one thing to note is that as market moves down, it becomes more and more difficult to hit circuit because of higher percentage moves needed. But other way round happens when it comes to rising markets. So after hitting this low of 8566 on the Sensex and 2525 on the Nifty, can we see some upper circuits in months to come? From 21000 Sensex, it has been BUYER BEWARE but now I think it is BEAR BEWARE!!!