Sunday, November 30, 2008

Dated 1st December, 2008

Markets withstood the big surprise attack on Mumbai and managed to hold. The F&O expiry was smooth and there was no big volatility. Over all the week belonged to stock specific moves where stocks across sectors showed moves on both sides. Hero Honda, TCS, HDFC Bank, Cipla, Sterlite, Bharti, BPCL, Reliance Power, BHEL and NTPC were the top Nifty gainers. Unitech, Siemens, Suzlon, M&M, Ambuja Cement and SBI figured among the top losers.

Though there was resilience to the biggest ever terrorist attack on India, the long term impact would be worse to say the least. The news flow could only worsen going forward. Looking at the veracity of the attack we just tend to feel that we might see some aggression from our side on Pakistan very soon. Though this is just a possibility, markets should certainly discount this chance sooner or later. One should not be caught on the long side though markets might put some gains in the immediate term. 2800 on Nifty provides a good resistance and further resistance comes around 2940. Nifty might try and test 2940 in short term and one should look at building short positions around these levels. For the time being, do not build aggressive short positions and wait for higher levels. Avoid long and trade shorts with caution.


Sterlite Industries @ 250-252 Tgt 222, 208 SL 260
TCS @ 568-570 Tgt 536, 522 SL 580
NTPC @ 163-165 Tgt 156, 151 SL 167
Hindustan Zinc @ 330-333 Tgt 301, 288 SL 340
Sail @ 70-71 Tgt 63, 59 SL 72

Sunday, November 23, 2008

Dated 25th November, 2008

Both the major indices Sensex and Nifty lost close to 5% and 4% respectively during the week. It would have been much worse but for the startling display of short covering on Friday. Markets were weak through out the week and recovered sharply during the last hours of trading on Friday. The market breadth was extremely negative. Almost all sectors took the hit except some pharma and cement counters. Ambuja Cement, BPCL, Zee, Ranbaxy and NTPC were among the Nifty gainers while Unitech, Tata Communication, DLF, HDFC Bank, ICICI Bank, Tata Power and HDFC were the top losers.

The sharp bounce back that we saw on Friday is not likely to last for long. Any sharp rise is an opportunity and one should use these opportunities to exit and build short positions. The fall is not likely to be abated at this juncture and we might not see any big upside in the immediate term. Nifty may at best try to climb to 2800 where it finds resistance before F&O expiry but it is almost certainly comeback to the supports of 2500 and 2360. A short trader must take his chances and maintain short positions. Markets are adjusting the excesses and trying to come back to what is being called fair valuation. Stocks are on their way down and are yet to stop. Buying should be contemplated only when the fall comes to an end and markets consolidate for a reasonable amount of time, which is a long drawn process. In all probability, we are not going to see that happen any time soon. This bear phase may remain for a time longer than expected. Do not ponder over buying but try to exit.
“Trade what you see and not what you think”.

JSW Steel Sell @ 210-212 Tgt 184, 170 SL 217
National Aluminium Sell @ 180-182 Tgt 168, 160 SL 190
Indian Hotel Sell @ 49-49.50 Tgt 45, 43 SL 50
Cairn India Sell @ 141-142 Tgt 132, 125 SL 145
SBI Sell @ 1220-1230 Tgt 1120, 1070 SL 1245
HDFC Sell @ 1450-1460 Tgt 1320, 1200 SL 1500

Sunday, November 16, 2008

Markets tumbled once again after 2 weeks of gains. The fall was again across the board and none of the sectors was spared. There were no places to hide since even defensives like FMCG are not able to hold the their prices. There were no notable gainers from Nifty except Nalco, which added more than 6% during the week. Suzlon, Zee, SAIL, Unitech, Tata Motors, DLF, ACC, M&M, L&T, Maruti and Tata Motors were among the major losers.

As has been our view since past 2-3 months, markets don’t look too promising for the foreseeable future. Things may become worse than what is being talked about and hence we might not see any recovery in the markets. Supports exist for Nifty at 2600 and further at 2520. It may find it difficult to breach 3000. We have been witnessing sharp bounce backs every now and then but we feel that from the current point even bounce backs would not be sharp. So a short trader carries with him lesser amount of risk and more rewards. We recommend medium and long term investors to liquidate their holdings and stay in cash. The fall may not stop here but it cannot go on like this forever. Hence traders should make the most of this situation and try to make bucks as quickly as possible. We may see the pace of the fall subsiding after a while but not the actual fall. Investors are still not willing to accept this fact since we haven’t witnessed it so far, but we see a strong possibility of this phase remaining for a long time.

Siemens @ 300-302 Tgt 278, 264 SL 314
Rolta @ 170-172 Tgt 154, 146 SL 175
IDFC @ 66-67 Tgt 62, 57 SL 71
Cipla @ 191-192 Tgt 181, 174 SL 195
National Aluminium @ 181-183 Tgt 168, 150 SL 185
Praj Industries @ 73-74 Tgt 66, 61 SL 76
ICICI Bank @ 408-410 Tgt 376, 333 SL 420

Sunday, November 9, 2008

Markets witnessed short covering in many F&O counters but indices saw slender gains due to sharp cuts in Reliance and some technology stocks. Banking stocks were the major gainers during the week with a sharp rise of close to 12% on Bank Nifty. Reliance lost as much as 11% and was the one of the major Nifty losers along with Sterlite, Tata Steel, Satyam, Infosys and ABB. Suzlon was the top gainer with a 60% gain after the severe drubbing it got in the last couple of months. Ranbaxy, DLF, Reliance Infra, Reliance Power, PNB, BPCL, Siemens, ITC, SBI and ONGC gained anywhere between 10-30% during the week.

Asian markets saw huge rallies this morning and we may see a gap up opening at the beginning. Multiple resistances exist for Nifty between 3260-3400 and it is not likely that Nifty will breach this zone effortlessly. It is highly unlikely that equities witness across the board buying in the foreseeable future. We believe that the rises that we are seeing every now and then are due to short covering and not genuine long term buying. The valuations in many stocks are looking reasonable at this juncture but the fundamentals are changing as quickly. If the alacrity with which markets sold off during the past couple of months is any indication, we feel we are in for troubled times. Do not commit funds for buying equities and wait for at least another 2 quarters. The markets are here to stay and the stocks, which saw stupendous rallies during the past, are not going to be the same money making machines. Next time it will be a new set of stocks that will make money for investors. We recommend traders to create fresh shorts and hold.

Maruti Sell @ 610-614 Tgt 564, 540 SL 626
Rolta Sell @ 168-170 Tgt 146, 138 SL 174
Siemens Sell @ 307-310 Tgt 278, 250 SL 314
Bharti Airtel Sell @ 670-674 Tgt 618, 600 SL 685
Sun Pharma Sell @ 1230-1240 Tgt 1165, 1120 SL 1260
Zee Limited Sell @ 145-147 Tgt 136, 124 SL 150

Sunday, November 2, 2008

Dated 2nd November, 2008

Indices recovered sharply from the lows they touched on the first trading day of the week. It was a sharp recovery and both Sensex and Nifty recovered nearly 25-30% from the lows. The bounce back was lead by Metals, Technology, Auto, Infrastructure and Realty stocks. Almost all sectors made significant gains due to short covering. The most prominent among gainers is Reliance, which gained nearly 35% during the week. Unitech, Hindalco, Sterlite, Tata Communincation, ICICI Bank and M&M were the other gainers all richer by more than 25%. Sun Pharma, Ranbaxy, Suzlon, Dr Reddy and SBI were among the losers.

A bounce back was necessary for the markets and it happened at the most opportune time ie.. on Diwali. This pull back may take Nifty to 3100 and may be even 3400. On the downside 2760 provides a strong support and Nifty is likely to hold this support for a couple of weeks, at least. The overall sentiment going into the next week is positive and hence one should avoid taking short positions in the immediate future. We may witness stock specific movements this week and hence traders are recommended to cautiously trade long on dips. If Nifty manages to climb to the levels of 3400, it will be a right opportunity for medium term traders to start building short positions and even investors to get out of their holdings. Short term/intraday traders may go long on falls in specific stocks and medium term players should look for building short positions on sharp rallies. 3400 on Nifty is an ideal level for going short and hence we recommend traders to wait for a week of upside and then build medium term short positions.

Reliance Comm @ CMP Tgt 242, 258 SL 205
IVRCL Infra @ 83-85 Tgt 94, 100 SL 80
Tata Communication @ 455-460 Tgt 482, 500 SL 440
Chambal Fertilizer @ 43.50-44 Tgt 47, 50 SL 42.80
GTL Infra @ 37.8-38 Tgt 39.5, 41.20 SL 37

Satyam Computers @ 316-320 286 264 335
Sun Pharma @ 1170-1180 1040 1000 1200
GVK Power @ 12-12.30 10 8.60 13
Sterlite Inds @ 310-320 260 220 340