Dated 13th October, 2008

The selling just doesn’t seem like abating. It was THE WORST week on the exchanges in terms of index fall and erosion in market cap. After all we don’t very often see bluechips losing one fourth of their value in a single week, especially after a deep cut had already happened. It was more or less predicted by us and we were categorical when we said this on September the 29th and I quote - One must exit all long positions and wait for the opportunity to short the markets. We might see some soothing comments from the FM and statements from big corporates when they come out with second quarter results about the India growth story but that will only add to the pain – unquote. Amid the turmoil, PSU stocks were the ones, which were a bit resilient than the rest. Suzlon, Sterlite Inds, RCOM, ICICI Bank, Tata Steel, Unitech and Siemens were the stocks that lost more than 25% week on week.

It sends shivers down my spine when I hazard a guess that another such week is on cards. I have my own reasons for such a wild guess. A small pull back is not ruled out, though. Asian markets are recovering this morning and we might see a flat to gap up opening but markets are not likely to sustain rises. There is an age old saying that “Buy when the markets are panic” but I don’t buy this argument at this moment at least for I recommend buying when I see appreciation and not because stocks have fallen. History is being created everyday and I would surely hate to be caught on the wrong side. We recommend Medium and long term investors to wait for another two quarters before committing any funds. It is a ‘clear sell’ from our side and investors must take their own informed decisions before taking a call on the markets. We must have a stop loss for any trade and a close above 3500 should be the stoploss on Nifty. If one were to buy for a pull back I would rather recommend for a wait for the pull back and sell. If one has not already sold, I suggest cutting positions, if not short. A pull back is certainly possible but it is worth cutting positions than withstanding the pain. For the die-hard bulls, I could only recollect the old Raj Kapoor classic “Jaane kahaan gaye wo din….”.

SELL
Bharti Airtel @ 710-720 Tgt 660, 600 SL 740
Lupin @ 640-645 Tgt 565, 490 SL 660
PNB @ 480-484 Tgt 440, 400 SL 495
Titan @ 850-860 Tgt 760, 680 SL 880
Hero Honda @ CMP Tgt 770, 730 SL 840
Tata Communication @ 425-430 Tgt 385, 340 SL 440
NTPC @ 168-170 Tgt 159, 148 SL 174
SAIL @ 110-112 Tgt 98, 82 SL 114

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