Sunday, May 24, 2009

Dated 25th May, 2009

Markets opened with circuits up after the unexpected outcome of the elections. Sensex and Nifty moved up 14.08 and 15.44% respectively. Almost everything moved up with the exception of front rung IT stocks. Mid-cap stocks moved up very sharply and half the stocks traded in f&o segment went up by more than 25%. Banking Index gained by one fourth too.

It is becoming increasingly difficult to fathom the reasons for a sustained rally in global financial markets. The momentum is up and hence it is risky to expect the markets to fall immediately. We might see a correction as sharp as the rally when the sentiment turns negative. The fundamentals will hurt the markets more than they hurt them now. Long positions should be contemplated only for intraday and long positions that hurt the most should be liquidated at the end of the day. Avoid carrying long positions. Wait for the change in direction for going short.

Sunday, May 17, 2009

Dated 18th May, 2009

It was 10th consecutive week of gain for Sensex, the longest rally we’ve witnessed in recognizable past. Almost all sectors traded mixed during the week with reasonably good market breadth. Nalco, Zee Tele, Ranbaxy, HDFC and ICICI Bank gained more than 10% during the week while Cairn, ONGC, Sterlite and Tata Communications lost anywhere between 5-10%.

Looking at the outcome of the Elections and the clear mandate given to UPA, our markets should open with a huge gap up as is indicated by the Singapore Nifty. There is a possibility that we may see them losing ground from then. We might see a reversal from here and hence selling is surely recommended at the higher levels of Monday with a strict day close stop losses. SGX Nifty points a level of 4100-4150 at the opening. If this were to be the case, one can have a tight day close stop loss of 4250 and look for selling opportunity in Nifty and specific stocks. Risk averse traders better avoid the markets and wait for clear direction before entering.

Sunday, May 10, 2009

Dated 11th May, 2009

Markets went up for another week. Sensex and Nifty gained more than 4% along with all mid cap indices. The rally was due to the huge rally at the beginning of the week. Our markets under performed almost all the global peers due to nervousness of announcement of election results due this weekend. Metals were among the top gainers and Cement stocks witnessed notable losses. Oil marketing stocks saw weakness due to rising crude oil prices.

The momentum is losing strength, particularly here in Indian markets. Global markets still support gains. Charts in many global markets and commodities suggest another leg of rally before crashing. The election results should be a big trigger and in all probability we will be witnessing a huge crash. By the beginning of the next week, we see even global markets cooling off adding to the pain. One should get out of all long positions by the end of this week. We expect the cement and auto numbers to give negative surprises on their month on month numbers of May and hence recommend traders to create short positions on rises. Trade cautiously with adequate stoplosses.

Tata Power@ 895-900 Tgt 920, 1000 SL 870
Tata Tea @ 708-710 Tgt 760, 800 SL 690
Welspun Gujrath @ 110-111 Tgt 119, 124 SL 107

United Spirits @ 682-685 Tgt 654, 640 SL 694
Tata Communication @ 568-570 Tgt 540, 525 SL 580
Hero Honda @ 1230-1235 Tgt 1160, 1100 SL 1260
NTPC @ 193-194 Tgt 186, 182 SL 198

Sunday, May 3, 2009

Dated 04th May 2009

Though indices managed to move up during the last couple of weeks, distribution could be seen in many second rung stocks. The negative market breadth is a clear indicator to this effect. All the global markets are trading in green and SGX nifty suggests huge gap up opening back home. Nifty should find its peak anywhere between 3700-3800 range. A crack after a gap up opening is another possibility, which cannot be ruled out. We expect very little upside in many stocks and a huge potential downside. It will take a single session to wipe out the gains accrued all these days and hence one should trade the markets cautiously with strict stoplosses. Conserve your money and time for the big fall and initiate short positions before the fall. We shall send you an alert when we sense a big downside opportunity. Following are some calls for this month, which should be initiated at the appropriate levels with strict day close stoplosses.

Tata Power @ 875-880/above 920 Tgt 920, 1000 SL 850
Nalco @ CMP Tgt 238, 260 SL 200
GE Shipping @ 198-200 Tgt 220, 260 SL 190

Hero Honda @ 1220-1230 Tgt 1100, 1000 SL 1260
Bank of India @ 260-262 Tgt 240, 220 SL 270
Divis Lab @ 890-900 Tgt 800, 760 SL 930
NTPC @ 198-200 Tgt 182, 170 SL 206
Ambuja Cement @ 85-87 Tgt 78, 64 SL 94