Sunday, April 19, 2009

Dated 20th April, 2009

It was another week of gains for the markets but not as vigorous as was seen for the past few weeks. The market breadth was positive and the markets witnessed extreme volatility during the later half of the week. Banking stocks were in thick of the action as Bank Nifty rose more than 10% week on week. Metal stocks, after rallying relentlessly for few weeks, corrected from the highs witnessed early this week. SBI was the top Nifty gainer followed by Axis Bank, Reliance Capital, ICICI Bank, Unitech, ABB, BHEL and PNB. Nalco, Hindalco, Cairn, TCS, Tata Communication, GAIL, SAIL and Reliance power were the top Nifty losers.

The increasing volatility signals the end of this intermediate Bull Run in the markets. One can start looking at selling specific stocks at rises and liquidating all long positions. We might see another sharp rise to the levels of 3500 on Nifty and 11400 on Sensex before they crash down below 3000 and 10000 respectively. The fall is imminent but it is the question of timing the markets. Due to lack of fundamental support for the rise, once the selling starts it will be difficult to contain and the ensuing fall may be sharper than the rise. We see a possibility of stocks and indices eroding all the gains that were recorded during the month at this expiry itself. Hence one should only look at creating Medium term/Long term short positions. Avoid long positions at any level.

Sunday, April 12, 2009

Dated 13th April,2009.

Markets went up for 5th week in a row. It was one of the most spectacular rises we have seen for a long long time. It was a strong breakout technically without any fundamentally solid reason primarily driven by the strong support from global markets. The market breadth remained extremely positive and a third of the stocks traded in F&O segment recorded gains in excess of 10%. The major gainers included L&T, Tata Steel, Unitech, HCL Tech, Reliance Infra and Suzlon while BHEL and ACC were among the losers.

The pace of this rise may raise many eyebrows but it is for real. Though the rally lacks any fundamental backing, it was strong enough to keep the markets afloat and keep them above the October-November lows for some time. The results season is about to begin and looking at the indications we are getting, we are not going to witness any positive news flow from the companies in terms of guidance. The elections go underway this week and we don’t expect much there as well. All in all, this is a baffling move, which may culminate with a sharp rise upside in a couple of days before starting its downward journey again. Avoid carrying long positions.