Sunday, September 28, 2008

Dated 29th September, 2008

It was one of the horrible weeks that we saw for a long time. The market breadth was never so terrible in the recent past. Almost all sectors witnessed selling and many mid-cap stocks broke their respective long term supports and are looking extremely weak. The negative bias existed the entire week with two thirds of the stocks traded in the F&O segment losing between 5%-25%. Sun Pharma and Hero Honda were the only gainers in Nifty. Ranbaxy was the top nifty loser shedding nearly a quarter of its market capitalization. Wipro, Suzlon, Siemens, Unitech, Satyam Computer, Tata Motors, Hindalco, TCS, Infosys and ICICI Bank lost more than 10% week on week.

Markets are in a state of despair amid growing concerns of slow down. Markets always discount the future in advance and we see no exception this time. Markets are giving a clear indication of the times to come. The markets have corrected fair bit in the last week and a bounce back may be possible. Nifty may take support at 3860 and may give a small pull back rally. One must exit all long positions and wait for the opportunity to short the markets. We might see some soothing comments from the FM and statements from big corporates when they come out with second quarter results about the India growth story but that will only add to the pain. It is clear from the charts that the highs of January are history and let traders be not fooled by the ludicrous levels that we saw not very long ago. The downward momentum is here to stay and one must act fast and be not tempted by the valuations. The valuations in many stocks may look cheap but we are almost definitely going to see far more moderation in the valuations. The 61.2% retracement on Nifty comes around 3000, which doesn’t look impossible looking at the negative breakouts in most of the stocks. We see the possibility of the selling escalating as we move forward and we might see a protracted bear run. Utilize every rise to exit long positions and build shorts. There are a very few stocks which are depicting strength which include Tata Communications, Axis Bank, Glaxo, Hero Honda, Syndicate Bank, Lupin, HUL and Zee. Every other stock is looking weak and we recommend medium term traders to stay short and maintain short positions for another 2-4 quarters. SELL.

Sunday, September 21, 2008

Dated 22nd September

Last week saw huge volatility due to turmoil in US financial market but the response in the end was more than heartening. We closed the week in positive after nearly touching the lows of July. Maruti, HDFC, Reliance, NTPC, SAIL and ONGC were the major Nifty gainers all gaining more than 5% week on week. Ranbaxy was the top loser followed by Satyam, Tata Steel, Dr Reddy, DLF, Zee and Hindalco.

All global markets surged on the weekend and the Asian markets opened with strong gains. In all probability we might see a gap up opening and Nifty may try to test the levels of 4400 this week. Irrespective of the global indices and the direction of our markets we might see stock specific movements this week due to the F&O expiry. There is a short build up in many counters and we might see sharp upside rallies in some stocks because of short covering. Trade with caution and utilize sharp rallies to exit long positions. 4560 and 4640 are very strong medium term resistances and hence any move on Nifty towards these levels should be an opportunity to exit and even initiate shorts.
Tata Communication @ 452-456 Tgt 474, 500 SL 444
Akruti City @ 895-900 Tgt 960, 1000 SL 875
Power Grid @ 94-95 Tgt 99, 101, 104 SL 92.50
Bharti Airtel @ 795-800 Tgt 836, 870 SL 785

Sobha Developers @ 221-223 Tgt 211, 202 SL 226
GVK Power @ 32.80-33 Tgt 31, 29.80 SL 33.50
ONGC @ 1110-1120 Tgt 1040, 1000 SL 1140
Punj Lloyd @ 322-324 Tgt 304, 286 SL 333
JSW Steel @ 620-624 Tgt 581 SL 634

Sunday, September 14, 2008

Dated 15th September, 2008

Markets opened the week with a huge gap on back of positive news flow but kept falling unabatedly thereafter. The selling was so severe that the markets lost all the gains of Monday and Sensex went on to close the week with a loss of over 3%. Almost all sectors recorded losses and the market breadth remained extremely negative. The worst performer on Nifty was Sterlite Industries, which lost more than 17% during the week. Reliance Infra, Reliance Industries, HCL Tech, Tata Steel, Siemens and ICICI Bank were among the top Nifty losers. Nalco, Powergrid and Maruti managed to record some gains.

Nifty broke all near term supports decisively and closed below its 50 DMA. The next reliable support for Nifty comes only at 3860. We might, in all probability, see a weak gap down opening and one should exit ones long positions at the slightest opportunity. Fresh shorts may be initiated at rises. We might see buying emerge around 4140 and further at 4000 levels but Nifty might make an attempt to test the lows created in the month of July. On the upside, breaching 4420 looks a colossal task. Medium term traders should wait for the right time to go short. We recommended traders to progressively short Nifty on sharp bounce backs, with a day close stoploss of 4560 for a target objective of 3600 and with a time frame of 2-3 months.

Bajaj Auto @ 600-605 Tgt 640, 680 SL 580
Nagarjuna Const @ 122-123 Tgt 131, 136 SL 118
Mphasis @ 238-240 Tgt 253, 276 SL 234
Sesa Goa @ 132-133 Tgt 141, 144 SL 128

Reliance Industries @ CMP Tgt 1880, 1800 SL 1970
Sterlite Technologies @ 180-182 Tgt 170, 163 SL 185
Praj Industries @ CMP Tgt 161, 148 SL 170
Everonn Systems @ 470-475 Tgt 440, 400 SL 490
IDFC @ CMP Tgt 88, 79 SL 93

Sunday, September 7, 2008

Dated 8th September, 2008

Markets logged good gains on the on Tuesday and gave away the gains in the last 2 trading sessions. The sole reason for the fall was the weak global markets. Our markets were still resilient and trading with poise even on the days when indices were sharply down. Strength was clearly evident in our markets since there was no panic selling after the global sell off. Aviation, Oil and Gas and Banking stocks saw heavy buying interest while technology and sugar stocks were trading weak. Heavy weights Reliance, Bharti, HDFC, SAIL, Infoys and Cairn were the major losers while BPCL, SBI, GAIL, Ranbaxy, HCL Tech, PNB and ONGC were among the major gainers.

The clues, going into the next week, are strong enough to trigger a 5% rally in the indices. The NSG waiver was a clear positive supported by sharp rallies in the other Asian markets and weak crude. The platform couldn’t have been any better. Expect a strong gap up opening and a further rise. Nifty might make an attempt to breach the last week’s peak of 4520. The short term resistance for Nifty exists at 4560 and further at 4640. We might see strong resistance coming above 4600. If Nifty manages to breach and close above 4640 we might see another sharp rise to the levels of 4950. One should trade long as long as Nifty stays above 4280. For the week we expect a broad trading band of 4400-4640 on Nifty.

M&M @ CMP Tgt 604, 640 SL 580
TVS Motor Above 36 Tgt 41, 46 SL 34
Financial Tech @ 1460-1470 Tgt 1540, 1600 SL 1440
Mphasis @ 244-245 Tgt 253, 276 SL 240
Bajaj Auto @ 600-605 Tgt 625, 680 SL 580
Nagarjuna Const Buy @ 128-130 Tgt 136, 142 SL 124 mm=17682920