Market will Bounce Back...

The market opened weak and sustained selling pressure saw the benchmark indices, the Nifty and Sensex, lose their crucial support levels of 5,150 and 17,300, respectively. The spot Nifty closed at 5,094 while January futures closed at almost 10 points discount on profit-taking and short build-up.

Put and call options data suggest that the 5300 call continues to hold the maximum open interest (8.18 million shares) while the 5,200 call has added significantly high open interest in the last couple of days. The means the Nifty has resistance at 5,300 and 5,200, which was a strong support, is turning into a strong resistance level. The 5,000 put hold the highest open interest (6.48 million shares), indicating strong support base for the index. The India Volatility Index (IVX) rose 5.43 per cent to 23.20 on account of increase in premium for put options, indicating fresh correction.

Technically, the market has been trading in choppy waters due to formation of a Doji pattern and narrow trading range in the January series. The Nifty slipped below 5,180 and closed at 5,091, indicating a downward breakout

Heavy selling in opening trades saw the Nifty break the psychological 5,000-mark, but regain it at close on good quarterly numbers from market heavyweights

The Sensex opened in the red on weak cues from Asian markets. The index slipped to a low of 16,608 - falling below the 17K mark after 19 trading sessions. Strong quarterly numbers from Reliance and ITC lifted market sentiment and the index recovered to touch a high of 17,000 - up 392 points from the day's low. However, the index eventually ended at 16,860 - down 191 points (1%).

The NSE Nifty, which, broke the psychological the 5,000-mark and touched a low of 4,955, recovered partially and ended with a loss of 58 points (1%) to 5,036.

The BSE FMCG index, led by heavyweight ITC, bucked overall trend and jumped 1.5% to 2,772. ITC added 2% to Rs 249 following a 27% rise in Q3 net at Rs 1,144 crore.

However, Q3 results helped some stocks to gain in an otherwise volatile market. BHEL gained 3.2% at Rs 2,373 on a 35% jump in the third quarter on FY10.

Market heavyweight, Reliance ended flat at Rs 1,053. Earlier in the day, the company announced a 16% increase in net in the quarter ended December 2009. The net profit stood at Rs 4,008 crore as compared to Rs 3,462 crore in the year ago period.

SpiceJet, Jubilant Organosys and Visa Steel gained on turnaround results in Q3.

Some Tips..

Market ends at positive of last 20 month. So many of my frineds wanted to know about stock market so this might be useful for them.

Stock Market:

First you have to understand what is stock market. If you are not knowing any thing, then before investing, observe market for few days. Monitor every up down movements. Make a list of some stocks and observe chart regularly. After that you will be able to understand when to invest.

Entry and Exit:

This is most important. Believe me, I lost my profit so many times because of my mistake in past. Entry and Exit timings are most important in stock market. Always enter the market or in any stock at lower level. And exit at higher level. Now if you buy something and market crashes, thn just hold for some time. Never exit at lower level. Because if you will exit, market will go up and you will buy same stock again at higher levels.

Support and Resistance:

Always look for Support and Resistance levels. Support levels are lower levels which holds stock price at lower level. And resistance is higher levels which dont allow prices to go high.

How to know Support and Resistance??

Observe stock for some days. These levels can easily identified. Lets take an example of Tata Steel. From So many days, if you observe daily chart, it goes up to 585 and can not go higher than that. After some days it goes up yo 550 but stop going down from this level. This process repeated so many times. It goes at 585 for 3-4 times and 550 at 2-3 times. So in this case 550 is Support and 585 is Resistance.

When to Enter and Exit??

Enter at Support level and Exit at resistance. If Support is broken then it may go further down. So exit immidiate in such case if you can not hold for long time. And exit at Resistance level. If you have hope about breaking resistance then also must book partial profit. If it will break this level, then it will go higher.

Like in above example, Tata steel had broken that resistance so now its price is 615. Now new support level is 600 and new Resistance is 625 so book profit at 625 and again enter at 600 level. That should be strategy.