A key gauge hints at extreme bearishness

Out of the BSE-500 index, Solara Active, Analysts said when 86% of the stocks are away from their 200-DMAs, it is considered a contrarian indicator. "When nearly 90% of the stocks are below 200-DMAs, this kind of a reading usually means there could be a rebound," said Rohit Srivastava, founder, Indiacharts.com. "From a one-to-three week perspective we are expecting a rebound, where the Nifty could go to 16,000 or higher. If that sustains then 16,900 is possible." But, in a bear market such as the current one, the contrarian signal may not work. With foreign selling of Indian stocks continuing unabated amid a weakening rupee, analysts said market recoveries tend to be short-lived due to selling at higher levels. "I'm expecting this rally to fizzle out sooner or later after …
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