In my opinion, had the blasts not occurred, the fall would still have happened, though the magnitude would have been gradual. The traded volumes were sharply higher than the 10-day average and the breadth was highly negative. While this was expected, the scenario needs to be watched for a few sessions.
The important support levels for the Nifty will be at the 1235 - 1240 and for the Sensex at 3930 levels.
It is imperative that the indices not fall below these levels in the next few sessions.
A historical analysis of the index movements has shown that in the March 1993 blasts, the markets had bounced back within two trading sessions.
Should the overseas markets be firm and all other factors remain the same, the news will be digested within two trading sessions.
The undertone remains positive and the main trigger in the immediate future will be the expiry of the derivatives series in August.
The outlook for the markets on Tuesday is that of cautiousness as the offloading may continue - albeit with lower volumes. The majority of the panic selling may be already through so a gradual slide may be seen rather than a frenetic selling climax with high volumes.
The recent market out-performers which saw heavy volumes with sharp gains will be the first casualties as nervousness replaces greed.
It will be a difficult task to take exact calls on the markets but investment will be a safer option rather than short term trading. I expect defensive sectors like pharmaceuticals to be in the limelight.
Among stocks, the Ranbaxy counter continues to be on an upturn and gets strong support at Rs 840 levels.
Buying should be initiated at all declines by patient investors with a stop-loss at Rs 830 levels. I expect the counter to show 7-10 per cent appreciation in the near term.
Reliance is a market out-performer and an index heavyweight. Any rally in the benchmark indices will see a higher appreciation in this scrip.
Good support exists at Rs 360 levels, below which the stock is unlikely to go in today
