Monday, January 26, 2009

Dated 27th January, 2009

It was another week of downfall and almost all major and sectoral indices saw major falls. Reliance came out with better than expected quarterly numbers but still could not climb much. The weakness was visible all across and Banking was particularly weak despite good results from PSU banks. Powergrid was the biggest Nifty gainer with a 13% rise during the week while Zee lost about a fourth of its market cap. Nalco, Jet airways, Cipla and Hero Honda managed to hold into the green while Tata Steel, M&M, DLF, Ranbaxy, ICICI Bank, Hindalco, Siemens, RCom, Grasim, L&T, Maruti, Tata Motors, Maruti, SBI, HDFC, PNB, Wipro and Sail lost between 10-20% during the week.

A decisive close below 2700 on Nifty more or less indicates the things to come. There seems to be unanimity of opinion about the fall now and what we are going to witness is a range bound movement in Nifty for this week. The put call ratio suggests a range of 2600-2700 on Nifty until this expiry. One should indulge in stock specific short trades and pick the right counters to stay short. Cement counters remained quiet without much downside in January. We might see sharp downward rallies in cement in the coming month and hence we recommend traders to stay short in cement. The chances of negative shocks far exceed the possibility of a positive surprise and we may going forward see some more skeletons falling as promoters feel the funds crunch and had to come out in open due to desperation. We don’t want to get struck with another Satyam, or do we? Avoid buying.

Following are some of the positional calls for the month of February. Initiate short positions in counters where the Feb futures are tradina at or nearing initiation prices with appropriate day close stoplosses. Some stocks may not hit Initiation prices but the targets are in tact. Wait for the right opportunity and go short. Avoid trading long.

Sunday, January 18, 2009

Dated 19th January, 2009

Nifty took support around 2680-2700 band and bounced back. The results so far didn’t do too much to give any big boost to the sagging markets. Realty, Infra, Banking and Metal stocks were among the major losers. Reliance Infra, Infosys, Hero Honda and M&M were among the major Nifty gainers while Unitech, Siemens and DLF lost more than 10% during the week.

Asian markets are trading strong and we might see opening gains on Monday. Short term resistances exist at 2860, 2950 and 3150. The action would remain stock specific as the third quarter results keep coming in. There are two reasons to remain short in the markets. The first one is that the overall medium and long term outlook looks extremely bleak and the other one is what happened with Satyam and Rolta can happen with a host of other companies in terms of price erosion. A negative surprise may see a stock crash in a single day and the days of pleasant surprises are more or less over. Risk takers should go ahead and initiate short positions in counters, whose results are due and cover positions after the announcement of results. Out of every 10 stocks we might see returns in 7-8 counters. One should only remain short at rises and do not carry any long positions.

Hero Honda, Indian Bank, Akruti, Chambal Fertilizer, Gail, Noida Toll, Maruti, GTL and GMR Infra are depicting relative strength and we might see some gains in short term. Avoid short positions in these stocks.

We might see fall in some of the PSU banking stocks which erstwhile remained strong throughout. Other counters where one can expect a fall in short term include IVRCL Infra, Financial Tech, DCB, Hindalco, JSW Steel, Punjlloyd, Pantaloon, Unitech, Voltas, Mc Dowell, Polaris and Jindal Saw.

Sunday, January 11, 2009

Dated 12th January, 2009

It was the most unfortunate day for the corporate India when Mr Ramalinga Raju confessed that Satyam was a fraud. It came as a shocker and nothing less than a ban and a disgorgement order against the auditors of the company should compensate the loss of credibility that India has suffered. A fraud of this nature is beyond imagination and the reaction from the markets is not very surprising. Almost all sectors took a hit and stocks with not so sound credentials were beaten to dust. Not surprisingly, Satyam was the biggest Nifty loser with a fall of 86%. DLF, Rcom, Unitech, Reliance Infra, Siemens, Reliance Power, L&T, HCL Tech, Ranbaxy, RPL, Nalco and Reliance were the biggest losers. Grasim, Maruti, TCS, M&M, HDFC, HUL and Infosys were the top gainers.

The next week is going to be crucial as the results season begin with the announcement of results from Infosys. The results this quarter are likely to throw some negative surprises and we should be prepared for some nasty blows on specific stocks. One should remain short in the markets as we are convinced about the long term bearish outlook.

Sunday, January 4, 2009

Dated 5th January, 2009

Indices recovered from the lows and markets gave a tremendous bounce back in terms of market breadth. Almost all sectors participated prominent among them were Media, Realty, Infrastructure, Metals, Banking, Technology, Capital Goods and Power. Unitech was the top gainer Satyam Computer, RCOM, Sail, Reliance Infra, Hindalco, Ranbaxy, Suzlon, Nalco, ABB, ICICI Bank, Tata Motors, Siemens and L&T were among the top gainers gaining anywhere between 10-35% over the week.

It was one of the worst weeks for us in terms of the success ratio of our weekly calls and outlook. Almost everything went wrong as markets staged a big rally. Markets defy everybody at one point or other and we are at the receiving end last week. We still maintain our overall view about the markets and recommend an exit for investors. We see resistance for Nifty coming at 3160 and further at 3250. We feel that markets are in a secular bear spiral and we might see a prolonged bear run on the markets and the rally that we have seen is a corrective rally which will fizzle out sooner or later. We do not recommend going against the trend and hence are vary of recommending a buy at this point. We suggest traders to wait for opportunities and remain sellers on the way down. Those who are holding on to the short positions should continue to hold the positions as we see troubled times ahead. Avoid long positions at any juncture.