Tata Tea is approaching short-term top

When Tata Tea reached the 430 level a few days back, it was clearly time to buy. Not only was the overall market in an oversold condition, this particular stock had reached a 123.6% Fibonacci projection of its previous large decline. From the 430 area, we have already seen over 30% gain, and it is natural to start wondering where we will run into some profit taking. This level comes at 574. The major resistance actually lies at 600, but  am quite happy to recommend getting out of longs above 570. We should see a decline of at least Rs100. Good luck.


  • Ramki

    Yes, I would sell in two stages, one at Rs. 570 and another at Rs 600. I don’t think this is going to run away from us. Even if I am proved wrong, the stock will come back in a few sessions allowing us to get out at break even. However, it is important for traders to (a) have stops on every trade and (b) trade a position size that will not hurt them should the trade go wrong. Ramki

  • R Sathyamurthy

    Tata Tea is now at Rs.560/- (11/12/2008). Will you recommend going short on the scrip (Futures) around Rs.575-Rs.580?

  • R Sathyamurthy

    Thank you Sir. All of a sudden we are seeing some market pundits talking about market recovery towards a stronger bull run (in India). See the message in a newsletter on Indian Stock Markets:

    “India will see the mother of all bull runs in the next four or five years, boosted by double-digit economic growth and increased investment by domestic investors, including pension and insurance funds.” These are the words of Rakesh Jhunjhunwala, whom Forbes termed (in March 2008) as India’s Warren Buffett. He believes that Indian stocks are very attractively valued at the current juncture but there will be a period of great uncertainty before we see the potential re-emerging. “The malaise of the West isn’t a problem India is facing; we don’t have overextended banking systems or overextended credit,” he said.

    Incidentally, Mr. Jhunjhunwala joins a score of experts who have indicated that the worst seems to be over for Indian stocks. As we had mentioned in the 5 Min. of 28th November, Mark Mobius (fund manager, Franklin Templeton) thinks that the Indian economy is still quite vibrant and that stocks are trading at some of the cheapest valuation levels in years vis-à-vis the earnings. “India will rise from this and prosper,” he believes.

  • […] 11 Dec 2008, we suggested that it might be worthwhile to get out of Tata Tea near the 574 level. The actual high was 577, and the stock has since declined to 530, and probably has more to go. […]

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