Monthly Archives: August 2011

#74 Nifty Update

Market is again a see-saw. Market opened positive to flat on mixed global cues but then we saw upside movement upto around 5110 levels and then a 90 points fall to around 5011 levels with a marginal positive close at 5056. NIFTY is very volatile with many mixed news around the trading terminal. Today COAL INDIA beats RIL market cap to achieve number one position. RIL was beaten first time ever since 2007 in Market Cap race. Inflation and Anna Hazare are the two trending topics in Indian Market. Talking about Inflation , people are seeing a ease but they are still concerned about the margins. All the companies have shown significant growth in Revenues but the margins have declined due to high interest costs and raw material costs. We may see a decrease in raw material costs as inflation ease but what about interest rates?? Will RBI stop the rate hike? People are saying that 2cd quarter will be worst hit due to high rates and low demand of manufacturing products but I feel margins will improve due to low raw material cost. Coming to Anna Hazare it has posted a new difficult to Manmohan and his team. Sudden arrest by Delhi police has made middle class people roar against the government. What will be the outcome?? We have to wait watch.. And talking about its effect on market then it surely has cascading effect as politics and government are directly related to both markets and Anna Hazare. You might think what is the next option for investment?? Seeing the new highs and increased margins in Gold you might not invest there nor in such a bearish stock market… As per my view you must investment in fixed income instruments such as Shriram City union finance issue or upcoming Muthoot Capital NCD issue.. You might think which is better??? Muthoot is better because it is offering secured debentures which will be traded on Stock exchanges and has fixed return of 12.25% for 3-5 yrs investment. Shriram City Union is also good but its unsecured. I have deeply studied the business model of Muthoot and the company has NIM of 11% which is best in industry above 4% by Shriram City Union. I had mention about RCOM FCCB conversion before a day or 2. They have came up with a deadline to sell its tower biz in next 2 months. In my opinion they are trying to cash rich themselves to meet deadline of FCCB conversion which I think is a good way. So RCOM holders bring a smile on your face J. One more burning issue is on pledged shares. If the promoters pledge his own shares to get more loan then you must exit those stocks because if he is not able to repay then you may see a downside in your investment. Technically speaking markets have acquired the bearish part. MACD and stochastics have shown the bearish mood while RSI was already in oversold zone.  I recommend to sell NIFTY on rise with SL of 5390. ISPAT code has changed to JSWISPAT so please make a note of it.

NIFTY levels for 18th August:-
R-5086                  S-5016
R-5125                  S-4990
R-5177                  S-4951
R-5232                  S-4788

#73 Nifty Update

Market salutes 65th Independence day with a positive opening at 5125 but then gradually decrease on domestic concerns. NIFTY closed at 5035 down 37 points. Indian monthly inflation was declared and it was down to 9.22% as per the expectation. Indian inflation is easing out which is a good sign as RBI might end it rate hiking cycle. Experts says that better monsoon will ease food prices and low oil price will ease petroleum prices which are the major constituents of inflation index. State run ONGC is planning to come out with FPO of 412 million shares and they are expected to file RHP early next month. They would like to raise around 12000crores from this disinvestment which is around 5% of government holdings. On the other hand crisil came out  with interesting survey of employment which states that india will need 25.5million more jobs by 2015 to grow with the same pace. Net addition to Employment for the period of 2005-2010 was just 2.2 million because self-employment lost 25.5 million while 27.7 million jobs were added. All job seekers and on going jobbers should be happy high to get better job opportunities in coming years. All the telecom companies are gonna hike GSM call rates which will be gud for revenues and will improve margins of telecom sector but i really doubt will they able to cover their auction cost of 3G license?? US and Europe markets are volatile and indecisive of which way to move on which is making Emerging markets a btter option to invest today. On Political front a new case emerged today…ANNA HAZARE was arrested as he was going to move on fast today. I Dont think Anna Hazare could bring back black money. Do you think all the corporates and government employees will allow him to do so?? All big names are involved and they themselves make laws so i think Anna Hazare wont ever get a upper edge.  Most of the companies are at life time low or 52 week low in oversold territory but i wouldnt advice yet to take long term postions. Intraday traders can trae in scripts like Jublfood and VIPIND for trading where u can earn volatility on both side. They are safe stocks in such conditions. Techincally speaking market is in oversold condition but its getting more and more into a dug. Gap on upper side is expected to remain unfilled until near term. Markets are expected to touch 4800 levels before that. Strategy will remain wait and Watch on NIFTY.

NIFTY levels for 17th August:-
R-5086                  S-4990
R-5125                  S-4951
R-5177                  S-4900
R-5232                  S-4788

#72 Nifty Update

Looooonnnnng Weekend!!!! Investors were cashing out money from market to have enough liquidity to gift their sisters tomorrow…On that occasion we saw some profit booking on long position and market close at 5073 down 65 points. US and Europe markets ended up positively but our markets couldn’t support their rally. US banks and European banks have given a many interview suggesting that they are liquid rich and they won’t get bankrupt so that was positive blow to markets. US employment data were declared and they were positive for markets. On other hand rumors of france societe generale bank to be bankrupt holds fall. Many research house and bank official has given interviews saying that they are on enough liquid position to face this turmoil. PNB Paribas had the same rumor but they are also safe on liquidity side. Europe markets were boosting on such safe news but this happiness is not gonna last for too long. Today IIP data in India were realized which was up to 8.8% against 5.5% last month and beyond expectation of 5.7%. Top gainer was Capital Goods sector which was at 37.7% against 3.7% while mining was top loser at 0.69% against around 6%. Data was positive for the markets but because of the 3 days holiday people didnt wanna keep overnight position and so they squared off many longs. TATA motors results were out yesterday posting a flat result due to market loss at Europe and US of JLR. They expect its sales to hit next quarter due to this turmoil in US and Europe which is 80% market for its JLR. TATA steel posted good number in last trading hours but due to overall bearish mood stock couldn’t pick up today. Indias export jumped to 81% but this won’t last for long as said by official. Technically speaking market is in oversold zone with unfilled gap at 5230. Today we witness a bearish engulfing on Daily chart. NIFTY is expected to be range bound till this expiry. Rather invest in gold on dips.
NIFTY levels for 16th August:-
R-5125                  S-5050
R-5168                  S-4980
R-5232                  S-4930
R-5286                  S-4900

#71 Nifty Update

NIFTY remained range bound today to close at 5138 down by 22%. NIFTY opened positive with bull power but then had shown some weakness. NIFTY played like a Indian Cricket team i.e., initially we had a early fall but then Dhoni and Praveen Kumar came from nowhere to give a respectable total as did Reliance to NIFTY with high of 5185. US was seen in hands of bears yesterday because of rumors of France debt getting downgrade and government could default. But later on Moody and S&P official affirmed AAA rating on France instruments on Bloomberg TV. They even mentioned that France Debt instruments remains the best investment over the world debt market even above Germany’s AAA rating. US has its own worries about economy which didnt allow bulls to have a driving seat last night.  European markets opened positive today which supported bulls in NIFTY. ECB has been buying Italian and Spain debt instruments but thats a temporary relief so you might see some downside in the market. Piramal Healthcare to buy 5.5% stake in Vodafone India with a 2 years of Investment with Availability of PUT option. Piramal aims at 15-20% return. But i really doubt his target. In such a narrow competition in telecom sector will such companies able to give best performance??.. Internal Inflation numbers was out today and Food Inflation was highest at 9.9% in last 4.5 months with High fruits price on WoW. Primary article inflation was at 12.22% against 10.99% last week. Fuel Inflation was marginally up at 12.19%. RBI has biggest challenge these days of Inflation and on other hand instability of financial markets. Will they pause the rate cycle??? In my opinion Inflation would be in control because we will have good monsoon and prices of commodities will ease. Secondly crude is trading a way lower which will have effect on final fuel price and ease them. So i think that inflation will be under control in Second Quarter. China’s monthly export figures were out yesterday and they posted 20% growth which is highest in this year which is a good sign for their economy. Technically speaking Indicators are still hovering around oversold zone. Market seems to be range bound between 5076-5232. Breakout on either side will decide the further trend. Hold your positions if you are short on NIFTY….
NIFTY levels for 12th August:-
R-5168                  S-5125
R-5230                  S-5082
R-5280                  S-5050
R-5334                  S-4985

#70 Nifty Update

BUMPY NIFTY!!! Today NIFTY opened up positive at 5196 and then made a low around 5124 to close at 5161 plus 88 points. Only 70 points volatility but it moved up-down whole day making investors puzzled of its further move. US FED yesterday announces no change in the interest rate until mid 2013 with Range being 0 to 0.25%. Bernake even mentioned that State of Economy and recession are worst then they even expected. Many analyst say that FED are confused what step to take to control US situation so they remain unchanged to their approach towards bailing out its economy. A report says that US banks are more liquid in position then they were before the 2008 turmoil. A official from BoA- Merrill lynch said that erosion in stock prices won’t affect Banks this time around because they have business in hand. Revenues have increase at a slower pace but they are better than 2008 pre-turmoil. Europe Central Bank has been buying Spain and Italy bonds to save the debt crisis but expert says its temporary relief. EU has to think something unusual to save their economy. Analyzing Indias situation, we are at much better place than other countries. Growth story is still on the mind of government as well as many corporate who are expanding their product line. Firstly, Government has decided to participate in bid for Potash resource in Belarush for worth $6-7billion. Government foresees high demand of fertilizers in near future. Government with many private sector companies will participate in this $30 billion bid with many other countries like Russia and china. This will surely help fertilizers companies such as RCF, Chambal Fertilizer and NFL to diversify their product line so you must have these stocks in portfolio. Secondly, SEBI opened limit of QFI to invest directly in Mutual Fund worth of $13 billion which is a large chunk to liquidate MF industry. This will infuse more money in our economy. Thirdly, RIL are about to launch its first Hotel and Luxury house in JV with East India Hotels (EIH). RIL being a cash rich company it is a good idea to move the company towards conglomerate functionality. Fourthly, RCOM yesterday launch  first ever tablet pc by any service provider with a lowest price bid of rs.12999. This move will give a first mover advantage to RCOM but question arises whether this will help RCOM to reduce its 24450 crore debt??..If people are not aware then RCOM has FCCB redemption next January at a rate of Rs.656/share and currently stock is at 94…how will it repay it such cash crunch situation??..Keeping RCOM FCCB aside we could see even in a turmoil condition India is still having confidence in its growth story and We are not sitting back. Technically speaking RSI and Stochastics has shown some fresh buying to move out of Over Sold zone at 30 levels. As i mentioned a gap at 5230 is unfilled which would be felt in next 2-3 days if supported by Global markets. Weekly Chart has witnessed a hammer which may be a reversal sign. Strategy would be selling on Rise for long term while for short term buy with tgt of 5400.
NIFTY levels for 11th August:-
R-5168                  S-5125
R-5230                  S-5082
R-5280                  S-5050
R-5334                  S-4985

#69 Nifty Update

“DISCOUNT… DISCOUNT…Sale upto 15%”…this is what Dalal Street is stating… Since last month high of 5700 market has discounted almost 10% to 5072 (close)and you may see market discounting upto 15% to 4800. But question arises is this the right time to buy??? or you should wait for stock clearance sale by Dalal street?? ….Markets over the globe are extremely volatile.  There is mixed reaction amongst the investor. Yesterday Bank of America got a notice on fraud of $10 billion on mortgage loans (as per Mint top page) which made stock to fall 20%. It seems market has already discounted the downgrading of US but now people is worried about EU debts and further downgrading of Other countries by S&P. S&P 500 for the first time ever saw all its 500 companies closing in red yesterday. Each and every channel is saying it as a blood bath but actually its a good thing for long term investors. We will get the best buy price at current levels or may be little low. Cash markets wont earn you handsome short term profits in such volatile..if at all you do i guarantee that you will lose it in next trade. Then what will work in such volatile market?? DERIVATIVE Strategies… Minimum Risk and Maximum reward..Best strategy for now is “Long Strangle on NIFTY”…Buy a 4700 Put @ 53 and buy 5200 Call @ 105.. Tgt will be the strike price on either side.. It’s risky in the sense that at least one target should be achieved before expiry….Now you might question that why i have taken a little nearer strike price for call….its because now market seems to recover on short positions practically…there is a gap between 5325 levels which might be filled up and on down side if it falls then it will be at a go…On other side the bid for buy for 3 times more then sell on 5200 call so people are bullish for sure… You must square of your position on the either strike price. People are bullish on Indian markets and expect to consolidate at this levels. Long term investors should buy 25% of its desired quantity and wait for more consolidation phase for rest of the purchase. Today Federal Open Market Commission (FOMC) is gonna met up to review QE3 and decide on interest rate. So any change in interest rate will make market go volatile on either side. Technically market is in oversold condition but EWT suggest that market will consolidate around 4800 levels. Market was almost near to that level and so we can say that market has started consolidating. There is no strategy presently on NIFTY except the above mentioned Long strangle but start booking some profits on your shorts.
NIFTY levels for 10th August:-
R-5118                  S-5056
R-5168                  S-5000
R-5230                  S-4987
R-5280                  S-4900

#68 Nifty Update

NIFTY reacted as expected to Downgrade of US rating. NIFTY closed at 5118 down 92 points. NIFTY had opened gap down at 5082 made a low at 5054 and had recovered almost flat to fill up the morning gap. S&P downgrading US has been the most shared topic around the world. All the markets had been volatile throughout the day but we have to wait and watch how does US DOW reacts to the news. European futures were trading in negative zone but markets opened positively beyond expectations which lead our market to almost positive zone. But eventually Europe also lost and couldnt hold up their hand to bulls. Since last 2 days intraday recovery has proved to be false making long term investors greedy to enter long  positions. Market all over the world are very choppy and its difficult to say that any market has bottomed out or stabilize. We should not panic but shouldnt take long positions unless confirmation of stablization or reversal. As nicely said by Sanjoy Bhattacharya in latest forbes issue that retail investors often get into stocks at wrong time i.e. at peak and then the stock slips and they convert their investment period to long term. He has rightly said, the most important thing for your investment is the right time to sell rather than right time to enter. For example he said that all long term investors should have stop loss of maximum 15% and should cut losses at that level. Even if you entered at the peak you must cut your position on downside. He said while reviewing your
portfolio your must first sell of BBBB shares and not shares in profit.. You might be guessing whats BBBB??? its Bent, Broken or  Beyond Belief movement. Now talking of long term we must look at
logistics listed companies. Logistic will be a multibagger sector where you can make tremendous long term profits. why??? Its because government of India in last october has set up a Ware Housing
Regulatory and Development Authority(WRDA) which has been assigned to develop warehouses all over the country for proper storage of commodities including fruits and vegetables. Farmers are not getting
best price because they sell off commodities to middlemen at lower price to get liquidity so government has decided to give proper logistics and warehousing facilities to farmers and WRDA has said they
are gonna set up around 300 certified warehouses in no time. So look out for warehousing and logistics/transport companies on stock exchanges for making long term investment. Coming to NIFTY Technicals market is in oversold condition. MACD has given bearish confirmation. You may expect short term rally upto 5350 but market will be bullish only if it closes above 5390. So be long only above 5400 level. Risk takers can short NIFTY with SL of 5390.
NIFTY levels for 9th August:-
R-5168                  S-5056
R-5230                  S-5000
R-5280                  S-4987
R-5313                  S-4900

#67 Nifty Update

Last week was slide towards 52 week low at most of the global market. NIFTY saw a low of 5116 on Friday on the fear of global weakening with US being the most feared economy. Debt ceiling bill was signed by Obama on 2cd August but he said that he wasn’t happy signing the deal because he thinks it will further worsen economic conditions. To add fuel to his concern, S&P on Friday after market hours downgraded Americas Credit Rating by one Notch to AA+ from AAA. This is was first time since 1941 that US has been discounted from its AAA Rating. S&P official said that they had already warned US government on letter dated April 18 that anything less than $4 Trillion would be insufficient and force them to downgrade rating. And same happened as US Passed on $2.4 Trillion for debt restructuring which resulted in S&P downgrading US credit rating. Now you all might be thinking what will be the effect of downgrading of Credit in US? So here’s what I understood and read…. Downgrading the US credit, consumer credit interest will increase which I think will result in economy slowing down as purchasing power will go down.. Second was that Bond yield will increase which will have two effects 1) people will start parking money in bonds rather than Banks and new business decreasing the supply of money in people hands 2) this will increase the US treasury department’s interest payment costs by $100 billion per year from last fiscal payment of $414 billion which was 2.7% of its GDP. Thirdly as per the reports of IMF, Strength of US Dollars on total currency reserves of each currency by all the country has been reduced to 60% from around 72% in the 2001 which means countries have less decreasing faith on US dollars as a asset. So in short this Degrading of credit rating will have cascading effect on US economy for long time which will affect many other countries especially Asian countries that hold the major part of Treasury bills. Now coming to Indian Economy Moody and Fitch rating agency have estimated India’s growth at 8.2% from previous around 9% so has the Finance department. But RBI has estimated only near to 8% growth. All analyst and firms expect India’s Inflation to be around 9% .As per Moody RBI is expected to Increase rates further to cool inflation. So at this week we can conclude by saying that none of the stock market has anything for investors….Investors as I have been saying should invest in gold at present.
Now technically speaking NIFTY has breached down all the short term levels which completed at 5200. Now Market has created a gap at around 5230-5330 levels which has to be filled up someday soon. But analyzing the market conditions all over the world and taking in longer picture of NIFTY I have tried to plot Elliot wave on NIFTY weekly chart. NIFTY has been in bearish channel since new high last year at 6338 as we can see. If we take initial point as the 2009 bounce back from 2252 then first wave completed at 6338 and we are currently in process of completion of Wave 2. Now as u can notice Wave 2 have 4 possibilities which is 5390 (where the gap is), 4788, 4300 and 3800 and we have respective targets of Wave 3 at 9477, 8861, 8372 and 7896.  Seeing the global condition I feel market will at least bottom out at 4788 levels and might see 4300 levels if the conditions in US and EU see the worst like 2008. 3800 level is too difficult to achieve unless something unusual occurs in the world economy. So I would suggest to stay away from the stock market unless a clear consolidation or reversal is seen in the markets. Risk takers can surely be short in derivative markets with near stop loss on NIFTY at 5390 and long SL of 5586.

#66 Nifty Update

Bull’s Eye!!!! (Though markets were bearish :P) My target on NIFTY 5200 achived…call given around 5600 levels. 🙂 NIFTY closed down 120 points at 5211 on EU Debt crisis fear. US economy is also feared to
have double debt crisis ahead which is making investors fear all over the global. Yesterday Denmark government refused to rescue its bank from debt crisis which is amounted  to $35 billion. All the EU
countries are under threat while US is expecting a recession ahead. All the analysts and politician where saying that Indian markets are strong and dont fear and panic….But what do you think??? is our
equity market really strong?? NOOOO…..what good reason do we have to make our investors smile?? All the sectors as i have been mentioning are having one or the other scam or companies involved in scam. Talking about demand of products then it has seen a way negative change because of increasing interest rates. All the indian companies are under utilizing its production capacity whether it be steel
sector, auto sector or FMCG sector. This bubble is bigger then what we are thinking. May be i feel this is the result of US printing dollars as and when required which has increased the dollar supply to each
countries who has been trading with US. Now on the fear of US crisis all the countries specially china who hold the largest chunk of US and Europe treasury bills, are buying gold instead of US dollars and
Bills. This is why gold has seen rise in-spite of other commodities degrading. Talking about crude it has seen a large fall in demand specially over US and europe which is resultant of its current price. This is what i have got in my mind but people do share if you think I need to correct..Do share some more view and news if you get. Technically speaking market has created a gap today on opening. It has to be filled for sure but before that it may show some down side. All the indicators on daily and weekly chart has been breached and showing bearish movement ahead.
NIFTY levels for 8th August:-
R-5280                  S-5190
R-5331                  S-5145
R-5382                  S-5100
R-5416                  S-4900

#65 Nifty Update

🙂 🙂 :)….you all might be wondering why i am happy even though market was down??? Its just because what i predicted NIFTY’s target has been achieved today.. 5330. Market opened up with some profit booking but that was as a said to fill up the gap which was created yesterday. Market closed at 5331 down 73 points. Global cues are like a gloomy picture and they are not clear which way to go which is affecting the emerging markets such as China and India. Indian markets are very choppy at this movement as nothing good on fundamental side. If you study all sector personally you will find that none of them has anything new or extra-ordinary to say…rather they are degrading in existing business….question arises where is all money going??? Answer is 1)gold/silver and 2) blocked in real estate. People since 2008 has been investing in commodities and real estate because high returns and safe better over equity market. But now real estate market has been cooled down and i feel investors liquidity is blocked and on other hand who has invested in commodities market feel it a better place then equity and why not ??? You will surely get your cost price in commodity if not today then tomorrow but its difficult in equity market. World has to go on and so will each market but intensity of market will change…Next decade is for commodity market. Technically speaking today Market FILLED up my gap at 5330 which i have been mentioning since last one month. Now you might see market bottoming out around 5200-5300 levels. But if its broken then it may take support at 100% fibonacci retrenchment support at 4800. RSI and all indicators are bearish. Strategy is yet sell on rise on NIFTY with SL-5472.
NIFTY levels for 4th August:-
R-5382                  S-5280
R-5416                  S-5253
R-5442                  S-5190

R-5472                  S-5156