Today will be interesting, crucial day for mkts

Suddenly a bout of turbulence in our markets, last couple of days have not been good, yesterday was a right sell-off, this morning while Asia seems stable enough though, it seems a bit volatile, its not down too much, the US has had another knock, and continuous FII selling for the last couple of days, its making people nervous out here.

Will there be a third day of FII selling?- We don't know, but we are close to very important, and crucial technical levels of 5500 on the Nifty from which we bounced last time. Interesting day for the market, maybe even crucial and then the environment is certainly a bit mixed. That's the backdrop for Thursday trade.  

It's a gray backdrop and there is not even much good news by way of the money flows?

That's the bad news and I think that is making people a bit nervous. The extent of the selling over the last couple of days is so large that we haven't seen this kind of FII selling for quite a few days. Both on the cash and on the futures market there is suddenly a wave of selling. I don't know where its coming from, why its coming but that is making people nervous.

Yes, it's another attempt at an important crucial level; last time it held out so we will have to see whether that holds out today. The global situation is mixed at best but there is been a continuous falls in the Asian markets so they must be close to important support levels as well.

So fingers crossed, its easy to say- yes its going down more after a fall but I think we will wait and watch and take each day as it comes but at some point in the red for sure. I don't whether we will start off lot in the red or we attempt a bounce back but at some point we will see red again on the screen. How we negotiate with a next cut is going to be quite crucial so very pivotal day of trading lying ahead.      

Asian Indices :

Asia seems stable enough, it was weak in the morning now most markets are in the green though just about Nikkei flat, Kospi is flat, Hang Seng is up half a percent, Straits Times up third of a percent but since all those market sold off yesterday this morning there seems to be slightly more greater amount of stability after the US fall overnight so things are not too bad out there.

In the past two days we have got quite a drubbing for ourselves:

We already have, so I don't know whether in the near-term there is a big bearish trade, which is on, it could well be the case but it's a risky trade at this point. The call this morning for traders is whether do you go fresh short on the market after the fall, which is happened already? Do you cut your longs, if you are still sitting on longs, and very deep stop loss, which has still not got triggered? - That is an unlikely situation. But for some people they might still be holding out, till that 5,500 level breaks for long traditional traders or the call is whether you start initiating contrarian long positions?

It's difficult to say what the market will do because we are close to an important support level, we have fallen quite hard for the last couple of days. A pullback can be attempted. I don't know whether it will sustain and even if there is a pullback, do you sell into that pullback, or do you start buying when the markets starts moving up a little bit. These are all very difficult questions and they are fraught with a lot of risk.

So there could be a bit of volatility on the screen today, you may not see a one-way move. In patches you may see green and red on the screen today. But its difficult to say what the eventual outcome will be, but you are getting into that stage where in next couple of days intra-day traders will find it a little difficult and the chances of them getting chopped around are fairly high.

But the market sentiment is being weakened to a considerable extent after the broad-based fall after the last couple of days, and other events around us, like the global situation are not exactly very comforting. We wait and watch one step at a time, let today pass and lets see what the eventual outcome is. But in the near-term, the scales may have just tilted towards the bears a little bit, and the bulls maybe losing their control a little bit on the market.      

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