Sunday, October 26, 2008

Dated 27th October, 2008

Indices are trading at levels not seen in the last 3 years. Another week of selling saw Nifty losing close to 16% and Sensex losing around 13%. The last trading session was particularly severe and almost stocks from all sectors were sold off with out any support. This phase is arguably “the Worst” for our markets so far. Blue chips losing 20-50% in a single day is a rare sight to behold. Technology heavyweights were holding strong in an otherwise weak market and Realty was the worst loser. Uniteh, Suzlon, Nalco, M&M, Tata Motors, DLF, Tata Steel and Hindalco were the top Nifty losers while TCS, Satyam and Infosys were the top gainers.

A bounce back should be the least one could expect after a fall of such magnitude. Markets are defying all laws when it comes to this fall. There is no support at any level and hence one should not be very aggressive buyer at this point of time. The alacrity with which stocks are being sold off, suggests large-scale exodus of funds and not just liquidation. It might take a long time for these wounds to heal and hence one should stay away. We recommend even long term investors to stay away at this moment since the results for the coming quarters are likely to surprise even the most pessimistic estimates. There is a sense of gloom everywhere, which is likely to stay for more time. For the time being avoid the markets and traders make the most of it. Many stocks are likely to see more falls and hence short term short trades may be profitable. The best thing still is to stay away.

Sunday, October 19, 2008

Dated 20th October, 2008

It was the heavy weights’ turn to contribute towards the downtrend. Biggies like Reliance, L&T, ONGC, RPL, Grasim, Ranbaxy, Nalco, Hindalco and Tata Steel fell anywhere between 10-25% week on week. The market breadth was not as terrible as we have seen in the recent past. There were sharp short covering rallies in some of the beaten down F&O stocks. PSU Banking stocks bucked the trend and remained resilient during this entire bear phase. ICICI Bank, PNB, Satyam Computer, GAIL and BPCL were among the top Nifty gainers.

Nifty may test the psychological 3000 mark this week achieving our target (given on 29th Sep) in just 20 days. We feel that the fall is likely to continue but it requires real guts to go short at this level. One must wait for a small pull back for going short. Going long is a strict “NO” since the overall trend is negative and is likely to remain so for atleast another 2 quarters. There is a possibility that we may witness some euphoria being created before Diwali, but still I feel it should be utilized to sell into stocks. Stocks like Bharti, Power Grid, Lupin, NTPC, Kotak Bank have broken their short term supports and are likely to see further downside. One should not be very aggressive while selling but remain short, never the less.

Sunday, October 12, 2008

Dated 13th October, 2008

The selling just doesn’t seem like abating. It was THE WORST week on the exchanges in terms of index fall and erosion in market cap. After all we don’t very often see bluechips losing one fourth of their value in a single week, especially after a deep cut had already happened. It was more or less predicted by us and we were categorical when we said this on September the 29th and I quote - 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 – unquote. Amid the turmoil, PSU stocks were the ones, which were a bit resilient than the rest. Suzlon, Sterlite Inds, RCOM, ICICI Bank, Tata Steel, Unitech and Siemens were the stocks that lost more than 25% week on week.

It sends shivers down my spine when I hazard a guess that another such week is on cards. I have my own reasons for such a wild guess. A small pull back is not ruled out, though. Asian markets are recovering this morning and we might see a flat to gap up opening but markets are not likely to sustain rises. There is an age old saying that “Buy when the markets are panic” but I don’t buy this argument at this moment at least for I recommend buying when I see appreciation and not because stocks have fallen. History is being created everyday and I would surely hate to be caught on the wrong side. We recommend Medium and long term investors to wait for another two quarters before committing any funds. It is a ‘clear sell’ from our side and investors must take their own informed decisions before taking a call on the markets. We must have a stop loss for any trade and a close above 3500 should be the stoploss on Nifty. If one were to buy for a pull back I would rather recommend for a wait for the pull back and sell. If one has not already sold, I suggest cutting positions, if not short. A pull back is certainly possible but it is worth cutting positions than withstanding the pain. For the die-hard bulls, I could only recollect the old Raj Kapoor classic “Jaane kahaan gaye wo din….”.

Bharti Airtel @ 710-720 Tgt 660, 600 SL 740
Lupin @ 640-645 Tgt 565, 490 SL 660
PNB @ 480-484 Tgt 440, 400 SL 495
Titan @ 850-860 Tgt 760, 680 SL 880
Hero Honda @ CMP Tgt 770, 730 SL 840
Tata Communication @ 425-430 Tgt 385, 340 SL 440
NTPC @ 168-170 Tgt 159, 148 SL 174
SAIL @ 110-112 Tgt 98, 82 SL 114