Sunday, December 28, 2008

Dated 29th December, 2008

Indices started falling after two weeks of rally. Nifty faced resistance above 3100 and retraced. Both the major indices lost more than 7% during the week. Almost all sectors lost ground prominent among them were realty, Auto, Fertilizer, IT and Cement. Aditya Birla Nuvo, Cairn and Ranbaxy managed to end in green while Unitech, HCL Tech, M&M, SAIL, Satyam, Tata Motors, Reliance Infra, ICICI Bank, DLF, Sterlite, Reliance Power and Hindalco were the major Nifty losers all losing more than 10% during the week.

Nifty may find support around 2600-2620 and it may remain a crucial support zone for next couple of weeks. On the upside it may find it difficult to breach 2950. One should exit all long positions at every opportunity and remain short in the immediate to short term. The results season is about to begin and this quarter is all set to disappoint. Stay short.

PFC @ 123-125 Tgt 118, 111 SL 127
BHEL @ 1315-1320 Tgt 1260, 1220 SL 1340
Kesoram Inds @ 144-145 Tgt 136, 129 SL 150
Reliance Power @ 114-115 Tgt 108, 102 SL 119
United Spirits @ 900-905 Tgt 860, 825 SL 925

Sunday, December 21, 2008

Dated 22nd December, 2008

Markets moved up for second consecutive week with good volumes. Weak Oil prices, strong global markets, falling interest rates and fast declining inflation helped markets stage a strong bounce back. Participation was seen across sectors but prominent among them were Realty, Banking, Power, Cement and Technology. Unitech and HCL Tech were at top of the gainers list with 30% rise. Siemens, Ambuja Cement, ICICI Bank, Grasim, HDFC Bank, Powergrid, Suzlon, M&M, DLF, BPCL, PNB, NTPC, HUL and ONGC were other gainers, all richer by anywhere between 10-20%. Satyam Computer, RCOM, HDFC and Reliance Infra were among the top losers.

We are heading into the crucial week as far as the market direction is concerned. We feel that markets and many individual stocks will create short/medium term peaks during this week and start reversal. We might see some short covering rallies before this expiry on Wednesday. Nifty faces resistance at 3160 and further at 3250. We recommend traders to build aggressive short positions for January by the end of the week and maintain positions till January expiry. A sharp correction to the levels of 2600 is not ruled out in January. Get out of all long positions by the end of this week. A trader should have open short positions by the end of the week. The fall that we witness in January will be steep and hence do not book profits on short positions in a hurry.

GT Offshore Sell @ 238-240 Tgt 218, 204 SL 244
Jindal Saw Sell @ 246-248 Tgt 231, 212 SL 253
HDFC Sell @ 1555-1560 Tgt 1460, 1400 SL 1580
Aban Lloyd Sell @ 760-762 Tgt 695, 660 SL 776

Sunday, December 14, 2008

Dated 15th December, 2008

Both the major indices gained about 8% during the week amid very favourable market breadth. Many beaten down mid cap stocks witnessed huge short covering and added substantial open interest during the week. Stocks across all sectors participated in the rally except IT. Technology as a sector didn’t do too well and CNX IT index lost 2.8% week on week. DLF was the biggest Nifty gainer followed by RCOM, Suzlon, Sterlite, Tata Steel, Tata Communication, Unitech, Reliance, RPL, M&M, ACC and ICICI Bank all adding 15-25% during the week. HCL Tech, TCS, Dr Reddy, Power Grid and Cipla were among the losers.

All Asian markets opened with 2-5% gains. Nifty might test 3000 levels at the opening and it is interesting to see if it manages to hold these levels. If it manages to hold the opening gains we might see Nifty test 3160 during the week. A close above 2940 should be a short term stoploss for Nifty short positions. We still hold the view that markets in the medium term may see far lower levels from here and we might see a bearish trend continue for at least 2-4 quarters. Open Interest addition on Nifty indicates a strong close this month and hence we recommend traders to build aggressive short positions near December month expiry. Few stocks like Mphasis, GT Offshore, Power Grid, Financial Technologies, Central Bank, Jindal Saw look weak for the week.

Sunday, December 7, 2008

Markets were trading mixed for the week with favorable market breadth. Both the major indices Sensex and Nifty lost close to one and a half percentage points but the action was outside the index. Many mid-cap stocks moved significantly as is reflected in the Nifty Junior and Midcap indices, which gained 4.86% and 1.38% respectively. IT stocks were the clear losers during the week. Realty and Infrastructure stocks were among the major gainers ahead of the announcement of fiscal package. Unitech, Tata Steel, Tata Motors, Zee, Grasim and ACC were among the major gainers while HCL Tech, M&M, Infosys, Maruti, Cipla, Satyam, ONGC, TCS and Sun Pharma were on the losing side.

The clues going into the next week are heartening. The weekend fiscal initiatives, RBI’s REPO rate cut and the strong global markets may script a positive gap up opening on our markets. Markets may start buoyant but that is unlikely to last for a long time. 2810-2830 is a strong short-term resistance on Nifty and it may find it difficult to breach and close above this band. Multiple resistances above 2900 make it even more difficult for a rally to sustain. On the downside expect supports at 2620 and further at 2500. We expect selling pressure during the later half of the week which makes risk reward favourable to a Short trader. It is a good opportunity for investors to exit their holdings and for traders to initiate short positions. The long-term trend is clearly “Down” and a “U-Turn” looks near to impossible. Do not get tempted to buy. Sell at rises with medium term perspective.

Cairn India @ 136-138 Tgt 128, 119 SL 141
Bank of Baroda @ 254-256 Tgt 241, 227 SL 262
Idea @ 51-52 Tgt 46, 43.50 SL 54
LIC Housing Fin @ 222-224 Tgt 198, 184 SL 227
Jindal Steel @ 850-860 Tgt 780, 720 SL 880
Rolta @ 149-150 Tgt 136, 123 SL 153