Markets tanked after the announcement of the Budget. There was nothing much that can be done since the FM was struck between the devil and the deep blue sea. When markets build optimism based on illusions and not on reality, such reactions are bound to happen. Both sensex and nifty lost close to 10% week on week as almost every sector gave in to the selling pressure. ITC, Hero Honda, Ambuja Cement were among the top Nifty gainers while Suzlon, Reliance Capital, Reliance Infra, Unitech, DLF, ICICI Bank, R Com, Tata Steel, L&T, Siemens, Axis Bank, R Power and SBI lost anywhere between 15-30% week on week.
The fundamentals of the economy are certainly looking bleak. For me the major problems are unemployment, the security threat from our neighbours and the effect of global recession on India. There are talks of green shoots sprouting up all around but we are no way near to a ‘U’ shaped recovery. The rises that we’ve seen do not support any recovery theory. There are already rumours in the air that a downgrade on India is likely in the immediate future. Every positive news must be sold into and we do not expect the markets to stage a very strong recovery from these levels. The momentum would remain on the downside in the short to medium term. Our markets may open with a gap down going by the global cues but we may see recovery towards 4000. On the upside 4020 is a strong resistance and any move above 4000-4200 should be utilized to create medium term short positions. Sell on rises and maintain short positions. Avoid any long positions. Sell not for today, always sell for tomorrow.
Sunday, July 12, 2009
Sunday, July 5, 2009
Dated 6th June, 2009
Markets were trading cautious throughout the week and ended the week with slender gains. Both Sensex and Nifty gained over a percentage points while Bank Nifty closed up with more than 2% week on week gains. Tata Steel, ONGC, GAIL and BPCL were the prominent gainers in Nifty and Zee, Axis Bank, Sail, HDFC, PNB and M&M were other gainers. Suzlon and Tata Motors were among the worst performers with more than 10% erosion week on week. Rcom, ACC and Hindalco were among the other losers.
Markets took some positives from the Railway budget and moved higher on the last trading day of the week. The big event is due on Monday - The Union Budget. The budget this year is a very crucial event since this is the first budget of the UPA’s second term and would provide us the broad intent on policy and direction. One must be cautious and avoid trading just before the budget. The indications so far point towards a clear long-term vision by looking at the measures taken on educational reforms and the intention to provide national ID cards. The big question still is to see whether the reforms process could continue with out much tinkering with the basic tax structure in the wake of falling revenues due to global economic meltdown and the indications of scanty rainfall for this Kharif season. If one excludes the first couple of days of this week, the overall direction of the equity markets would still be dictated by the global factors. We expect to see some stock/sector specific rallies going forward but the overall direction would remain bearish.
Markets took some positives from the Railway budget and moved higher on the last trading day of the week. The big event is due on Monday - The Union Budget. The budget this year is a very crucial event since this is the first budget of the UPA’s second term and would provide us the broad intent on policy and direction. One must be cautious and avoid trading just before the budget. The indications so far point towards a clear long-term vision by looking at the measures taken on educational reforms and the intention to provide national ID cards. The big question still is to see whether the reforms process could continue with out much tinkering with the basic tax structure in the wake of falling revenues due to global economic meltdown and the indications of scanty rainfall for this Kharif season. If one excludes the first couple of days of this week, the overall direction of the equity markets would still be dictated by the global factors. We expect to see some stock/sector specific rallies going forward but the overall direction would remain bearish.
Sunday, June 21, 2009
Dated 22nd June, 2009
Sensex ended its relentless rally and closed in the red after 14 weeks of WoW gains. Sensex lost 4.7% while Nifty went down by 5.9%. The mid cap indices moved lower in line with the broader markets. Market breadth was negative for almost the entire week. Banking stocks were among the gainers while all other sectors corrected. PNB, Reliance Infra, Cipla and SBI were the top nifty gainers. Reliance was the most prominent loser with a fall of more than 13%. Sterlite, Hindalco, ACC, NTPC, SAIL and ONGC were the other Nifty stocks, which lost more than 10%.
The weakness is visible across all sectors. The global cues suggest a strong opening here in our markets but the rises from here are not likely to sustain. 4400 on Nifty acts as a stiff resistance for immediate term while support exists at 4200. It may try to trade and consolidate in this band for a couple of days before breaking out. Long positions must be avoided at any juncture and stock specific short positions are recommended with strict stop losses. Stocks like Union Bank, Central Bank, Mphasis, LIC Housing Finance and sugar stocks Renuka, Bajaj Hindustan are looking strong. Hence avoid these counters and longs can be contemplated with a strict short term view in these stocks. Cement, Metals and Infra stocks show weakness. One should utilize rises to create short positions in these counters with predefined stoplosses. Sell Lupin, Sterlite, ACC, Rajesh Exports, FSL, Wockhardt and Karnataka Bank for immediate gains.
The weakness is visible across all sectors. The global cues suggest a strong opening here in our markets but the rises from here are not likely to sustain. 4400 on Nifty acts as a stiff resistance for immediate term while support exists at 4200. It may try to trade and consolidate in this band for a couple of days before breaking out. Long positions must be avoided at any juncture and stock specific short positions are recommended with strict stop losses. Stocks like Union Bank, Central Bank, Mphasis, LIC Housing Finance and sugar stocks Renuka, Bajaj Hindustan are looking strong. Hence avoid these counters and longs can be contemplated with a strict short term view in these stocks. Cement, Metals and Infra stocks show weakness. One should utilize rises to create short positions in these counters with predefined stoplosses. Sell Lupin, Sterlite, ACC, Rajesh Exports, FSL, Wockhardt and Karnataka Bank for immediate gains.
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.
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.
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.
BUY
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
SELL
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
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.
BUY
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
SELL
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.
BUY
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
SELL
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
BUY
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
SELL
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
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