Weekly outlook on Indian Stocks Market

Nifty likely to maintain range, BHEL seems attractive

2011-09-18T17:50:00.000-07:00

As another eventful week got ended where RBI has again increased the interest rates, Indian Equity Markets are likely to take a day or two of breather. Nifty (benchmark index) is now stuck in a narrow range of 5060-5200 and would like to break it after a pause.

Fundamentally, the concerns remain valid. High Interest Rates are likely to impact the earnings from now on. Growth will also likely to come down. Globally uncertainty looms larger over Europe and USA. Commodity Prices are going up. Amidst such scenario, the expectations should be tapered down.

Nifty move from 4800 to current levels is likely to resume for a while. It is likely to touch 5200-5270 from where we might see another retracement to 4900-5000. If Nifty is able to breach 5270, then the next level comes at 5400.

On the downside, 5030-5040 is a very crucial level. If this gets breached, we might see Nifty going to 4960 and then, 4870 levels. Thus, as a trader it is wise to work under strict stop-losses. Shorts can be opened at 5020 with target prices of 4960 and stop-loss of 5060.

On both fundamental and technical side, BHEL looks attractive. Technically it is close to its medium level support of 1640. Also it has underperformed Nifty by around 10-15% in last three months which it might try to recover in the coming days. For technical traders, one may go long in 1660-1680 range with target prices of 1730-1780 and Stop-loss of 1630.

Comparison with Nifty index

Fundamentally too, one may buy this stock at around current levels. As it is a part of benchmark index, it was trading at PE of 17X in March with EPS of 122 (Ref: Results). Even if we discount the slow down and put down EPS to 110 for this financial year and reduce PE to 16X, then even, its fair price comes at 1750. At fair valuations of 120 EPS and PE of 17X, the price arrives at 2050.

Thus, long term investors can buy the stock at 1660, 1530 levels with probable targets of 1750, 1900, 2050 levels in next 6 months.

Wishing you a great week...

Buying opportunities in mid cap space. Bharat Forge, Indian Bank Buy - 08th August 2011

2011-08-07T08:59:00.000-07:00

The Global Equity Markets had a horrendous time last week. US and European Indices fell by ~ 10%. The ripple effect of USA Debt Downgrade, European default, imminent slowdown in the economies and this list may go on and on and on....

Indian Equity Markets too melt down by 5%. Though the pain on Dalal Street was much more than this. Mid-cap stocks fell down much more than that. Interest Sensitive sectors like Real Estate, Infrastructure fell down too. DLF, Unitech, BHEL, L&T - all big and small names fell down. Reliance too down below 800 Rs mark. One can't count the dead on this battle field.

Amid such scenario, our recommendations did a bit better. Cummins India hit its Buy target of 640. Wow! Rare Buy target achieved in this market. The recommendation is still open @ 605 with target price of 640 and Stop loss of 578.

India Cements fell down but managed to stay above its SL of 64. It closed @ 65. The hope still alive... :) Geodesic Systems too managed to float above its stop loss of 53. It closed @ 55.25. The buy recommendations still intact.

For this week, one may Buy Indian Bank @ 215 with Stop-loss of 208 and target price of 228. The stock has fallen down steeply till Thursday. But on Friday, it shows resilience in the support range of 210-220. Open Interest too was positive too which is a good indication.

Bharat Forge too can be bought at around current levels of 270-275. The stock has fallen steeply from 340 Rs and looks into over sold range. One may buy this stock with Stop-loss of 264 and target price of 292.

Wishing you best of luck for the challenging week!!!

Tremendous buying opportunity in mid-cap stocks amid macro issues - 03rd August 2011

2011-08-03T09:46:00.000-07:00

Indian Equity Markets are having nightmare sessions now a days. At macro levels, things have become scary - US Debt Downgrade which can have cascading effect on the world economy, Europe slowdown, Inflation issue in India, Corruption in Government, High Commodity Prices... The list is endless.

But the bigger question is on how to change this Threat into Opportunity?? For this, we just need to go to the basics and find out stocks which have no or minimal impact from these issues, yet they have fallen with the market. The time is ripe to find out stocks which are going down with the flow, yet their fundamentals intact. And surely, you will lot many such stocks in mid and small cap like GTL Infra, GMR Infra, KS Oils, JP Associates, HCC, IFCI, Geodesic, India Cements...

1) Cummins India - Cummins India has fallen steeply in the last few days from 680 odd levels to 610 levels (~10%). The company is due to announce results tomorrow. Its sales have risen consistently. The business model is intact and has very less interest expenses. Technically too, RSI is around 20 odd levels. One may buy this share in 610-615 Rs range with approximate targets of 640, 660 levels. Stop Loss can be placed at 590 and 570.

2) Geodesic Systems - Geodesic Systems is an IT company that develop software into telecom, financial services and power. The company's revenues have been increasing steadily and has been making efforts to reduce the debt expenses. The company is in run to acquire a company in US and likely to make final announcement in August. It has a good range of applications which has been getting good demand from the clients. Technically too, the stock is trading at 2 year low. RSI is also close to 20 which indicates over-sold range. One may buy this stock in 60-61 range with targets of 65, 75. One may place Stop-loss at 53.

3) India Cements - India Cements has been under consistent pressure for last few quarters and no doubt, has some fundamental issues. But the current stock price suggests more digestion than what is required. The valuations have become really attractive at the current levels. Though the current monsoon season will have a negative impact on the sales, but that will be counted in the next quarter. One may buy the stock in 68-69 Rs with target price of 75, 80, 90, 105 and Stop-loss of 64, 59 and 55.Hope you have a great year of investing!!

Volatile Nifty in coming days, Buy Tata Global and Sell KPIT Cummins - 24th July 2011

2011-07-24T08:33:00.001-07:00

Indian Stock Markets have become volatile on the backdrop of decent quarterly results, FII inflows but deteriorating US debt dispute and high inflation and poor monsoons are putting a check on the further rise. This week of expiry though can become exception and we might see some movement on the reverse side.

This week, Nifty, is expected to become volatile and direction seems not clear. The Options Trader can buy both Nifty 5600 Call and 5600 Put if Nifty hovers around 5600-5610 during initial trade on Monday. In case it makes a gap up opening on the up side, Nifty is likely to face resistance at around 5710-5720 and becomes a sell candidate. On the downside, Nifty can go below 5500 if it breaches 5540 on the downside.Last week, Nifty made the anticipated move and rebounded from 5550 to 5625. Both stocks recommendations though, hit their Stop-losses :(

During the current week, one may sell KPIT Cummins at around 196 for stop-loss of 203 and target price of 187. The stock had a good run up during last few quarters but disappointing results on 21st July pushed it down. Though it had again rebounded on friday but likely to face stiff resistance around 197 mark. Also psychological level of 200 will also play on traders' mind. Another technical factor that will play is the major gap between short term trend line and long term trend line, which is likely to narrow down in the coming days.

On the buy side, one may accumulate Tata Global Beverages at around 102 with target price of 113 and Stop Loss of 96. The stock has been trading in a range of 90-105 for last six months and has rebounded strongly from 90 levels twice. Also the stock is making a bullish pattern now and likely to break the current levels to 113-115.Wishing you a great trading week ahead...

Nifty close to short term support zone. Pidilite overbought PGHH Buy -17th July 2011

2011-07-17T10:18:00.000-07:00

After a negative last week for the bourses, the benchmark indices are likely to show some support in the current range. Quarterly results so far have shown consistent growth coming in the top line, though the bottom line seems hit by rising Interest and Employment costs.

Technically, Nifty is trading close to the support zone of 5530-5560, where it is likely to show some strength. Front line real estate stocks like DLF, Unitech, Sobha Developers, Parsavnath are showing strength and are likely to boost the index up. FMCG stocks too are showing strength which are good indications for the market.

The short-term traders may go long on Nifty in 5530-5540 range. Nifty is likely to move up to 5610-5630 range where it is likely to face some resistance. One may close the position, if Nifty goes below 5510-5515.

Among the stocks, Pidilite Industries is showing resistance for last few weeks at around the current levels, primarily due to technical reasons. RSI is currently close to over-bought zone for this stock. Also the gap between the short-term support and long-term support is quite wide which indicates that the current run up in short-term is difficult to sustain and hence, it might correct a bit. Traders can open their short positions in this scrip at around 170-172 Rs with Stop-loss of 176 and target price of 166.

Another stock that is currently looking good at the moment is Proctor and Gamble (PGHH). It has broken down its current resistance levels of 2000 and hence, is likely to create a short-term rally in the near future. FMCG sector overall is doing well which provides further fillip to this stock. One may enter into this stock at 2010 with stop-loss at 1980 and target price of 2045.

Wishing you a great investing week!!! We will soon come out with more trading and investment ideas.

Parsvnath Developers - Headwinds present but valuations provide better Risk vs Reward ratio

2011-03-20T17:42:00.000-07:00

Parsvnath Developers is Delhi NCR based real-estate firm which caters to the needs in both residential and commercial segments. The company primarily started from Delhi NCR region and gradually expanded to other cities of India.

During the last recession, the company suffered major losses due to tremendous amount of leverage on its books. In March '09 results, the sales revenues were reduced to half on Y-o-Y basis whilst the interest expenses increased to double. Its Interest / Net Profit ratio had increased to 36% in FY'09 results.

Subsequently, the company restructured its business, which has started to give some results now. The company's Net Profit has been increasing steadily and is expected to see it grow by around 35% this year (Click here for results).

Though few concerns remain. With Central Bank constantly increasing the benchmark rates, the loans will surely get expensive which would result in slowdown in demand (sales can decline) and also increase the interest expenses (higher borrowing cost). Also, the last quarter result shown decline in revenues and increase in other expenses which again put some doubts on the financial health of the company,

Technically though, the share price has declined sharply in the last two months. In Apr '10, the share price was trading @ PE of 8X (57 Rs price, EPS - 7 Rs). With expected EPS of 9.5 Rs and current price of 37 Rs, it is trading at PE of just 4X, which seems cheap.

Even in the current context, we may reduce PE valuations to 6X. Even in that case, the fair price comes @ around 60 Rs which provides an upside of not less than 50%.

Hence, it becomes a buy with first target of 47 Rs (@ PE of 5X) and second target of 57 (@ PE of 6X).

Eicher Motors - fundamentally good stock and valuations attractive

2011-03-05T18:22:00.000-08:00

Eicher Motors is India's leading tractor manufacturer company. Royal Enfield brand too belongs to this firm. The company has shown tremendous growth since last recession when interest costs and less demand on the agriculture front had put steep pressure on the bottom line.

With new economic horizon, the working environment for this company has changed. Both Central and State Governments are now focussing on the agriculture sector which would help the company in increasing its sales. Also it has exclusive tie-up with International HCV manufacturer -Volvo - for trucks manufacturing. Thus the company foray into Rural India space would help it continue to grow in the near future.

In terms of financials, the company was into tremendous interest costs pressure in 2008 where Sales/ Interest Expenses ratio was around 14% which now has been reduced to mere 2%. The reduce in interest expenses along with improved sales has helped the firm notch 100% increase in Net Profit on Y-o-Y basis.

Valuation-wise the stock used to trade in PEX of 18-20 times during recession period. In the current bull market, it traded at PEX of 45-50 times. Currently, it is trading at PEX of 35. With better financial prospects in the future and its working in "Agriculture" domain, it should demand PE of at least 35 times. With estimated EPS of 35 Rs (30% gains Y-o-Y) and PE of 35X, its fair price comes at 1250 Rs for next one year which provides returns of 20% from current market price.

Technically, it has good support at 1020-1050 levels. If this level is broken, the stock can be accumulated at around 850-860 levels, which is extremely attractive. After this level, one may buy around 600-650 levels where exists Stop-loss as well for this stock (Ref: graph).

My advise is to buy around 50% at current levels and 50% at 850 levels for optimal gains. In case of last resort, put 100% more at 650 levels with strict stop-loss of 580.

Jain Irrigation seems a good buy though at lower levels

2011-02-23T04:20:00.000-08:00

Jain Irrigation is World's second largest organization in Micro-irrigation sector and has given exceptionally good results in the last few quarters.

Though after the split occurred in Oct, the stock is trading in a range with some negative bias probably due to more equity now floated into the market. The negative sentiments of the overall market is also putting pressure on the stock.

The stock traded @ PE of 30 times last year at EPS of 7 Rs (adjusted) citing the robust business model of the company. The company has managed to live upto investor sentiments but its rising interest costs would surely bring the bottom line into pressure in the comg days.

With potential EPS of around 8.5 Rs this year and PE of 25X (lower due to current market sentiments), the probable target price comes at 215 Rs.

Fundamentals of the company remains intact and can be bought @ 170-180 Rs with target price of 215-225 levels.

Macro Economic factors look to spoil the bull party- 03rd January 2010

2011-01-03T08:55:00.000-08:00

Indian Equity Markets have made a good rebound from intermediate lows made in the early part of December 2010.

But if we look at the charts carefully, even though it is giving bullish signals, the correction gaps have widen up than before. In other words, the time to recovery is increasing as we move up. It indicates that confidence level is now as good as it was in the lower levels.

Then the only reason we have been goin up is the liquidity factor. The long term investors must utilize this opportunity to book profits and wait for a good correction to come. With high current account deficit, rising interest rate regime and high inflation, there has been some serious fine tuning required in the Indian economy before it can resume its meaningful upward journey.

Short term traders must go into the market with strict stop-losses. The logic is not to afraid to book losses quickly.

Technically, we are into bullish zone till the time market crosses 6170-6200. Also RSI which is in mid-50 range can go upto 70-80 levels where we would see an over bought region. In this range, we anticipate another fall to come into the markets.

Options traders can sell Nifty 6300-6400 Calls for January at every rise. In the downward trend, one may sell Nifty 5800-5900 Puts.

Wishing you a great trading time ahead!!!

Short term correction can give medium term buying opportunity - 20th October 2010

2010-10-19T10:05:00.001-07:00

There is an old saying that "People have Short Memories". After all the gung-ho on Indian economy in 2007, the next two years just saw the opposite before another reversal happened and markets climbed to their all time high. But has the time to book profits have actually come???

Honestly, the answer is "No". No doubt markets have corrected in the last two weeks and why not?? After tremendous rally in the market in September, its time to book some profits and take money out of the table. But that doesn't mean that rally has ended... It is just an intermediary phase. So bulls hang on a bit before you can throw your towel in the ring...

Anyways coming back to the today's market. The markets today opened flat in the morning and then escalated sharply in the afternoon after Tax collection figures appeared. But then in the last hour of the day, the markets again corrected and closed down around 1% down. The volatility has not increased much which indicates that correction may likely to continue for a while.

The provisional figures released by exchanges indicated buying by Foreign Institutional Investors (FII) by around 120 Crores and Domestic Institutions by around 200 Crores. Though Dow Jones has opened in red trading around 1% down on account of China curbs.

China curbs will likely to affect Indian equities in a positive way as Chinese market will now become less attractive for equity investments and hence, will now divert more money into the Indian markets allocated for Asia by Foreign funds.

Tomorrow markets are likely to open in Red. The support zone for Nifty Spot is around 5980-5990 where one may buy Nifty futures with Stop-loss @ 5960 and target price range of 6070. In case Nifty Spot breaches 5960, then we may sell Nifty with Stop-loss @ 6000 and target price range of 5890.

One may also buy Bank Nifty if is trades in 12080-12100 range tomorrow morning with Stop-loss @ 12030 and target price range of 12380.

Wishing you a great trading day tomorrow!!!

Liquidity defying fundamental issues in Indian stocks Market, trend dangerous - 13th August 2010

2010-08-12T17:55:00.001-07:00

Indian Equity Markets had a volatile session on Thursday as markets try to balance it out between adverse global cues and renewed optimism in Indian companies after Tata Motors and SBI results lately. The markets opened weak on account of overnight weak closing in US markets, but consolidated at the lower levels and gradually recovered to close flat. The Industrial Production data for June came lower @ 7% against 14% on m-o-m basis, but ably covered by steller results by SBI which posted growth of 25% on y--y basis.

Among the sectors, Banking sector did pretty well on account of good SBI results. Stocks like PNB, Axis Bank too rallied alongside SBI which helped the benchmark indices recovered as weightage of banking stocks in the indices is quite high.

Fundamentally, stocks markets have few concerns which they need to overcome. The most important one is weak global cues. US and European economies are again facing the headwinds. The unemployment numbers, trade deficit data are indicating that growth has still not picked up in these ecoomies.These will surely impact the profitability of Indian companies as well, especially in Information Technology, Textiles, Oil & Gas sectors.

Another cause of concern is Inflation. Earlier the blame game was put on Food items which were called expensive due to weak monsoon last year. But the data in the last few months have indicated that it has now spread to non-food items as well. The steep slash in benchmark rates last year, though has propped up growth but also increase the inflation as well. Now central bank is hking the benchmark rates and that will surely going to hit the profitability of India companies as interest rates increase.

Technically, markets are already trading at almost all time high PE valuations of 20-21 times. The global and domestic level concerns do not justify such high valuations. The only suporting factor is the high amount of liquidity in the equities world due to almost zero benchmark rates overseas. It is causing immense speculation in the markets due to which we are seeing markets scaling new highs despite the fundamental concerns.

Henceforth, we advise clients to stay put from the markets for a while and keep themselves in cash by atleast 30%. Also one must trade with strict stop-losses and target levels to keep its books running.

Technically Nifty is trading in a narrow range throughout this month. Traders are advised to maintain "Sell on Rise" strategy till the time Nifty breaches 5470. Hence, one may sell Nifty @ 5425-5435 range with stop loss @ 5470 and target price of 5350. In case, Nifty breaches 5470, one may go long on Nifty with target price of 5525 and Stop-loss @ 5435.

Wishing you a great trading day today!!

Rich valuations of Indian equities likely to bring more pain than global equities, caution advised - 12th August 2010

2010-08-11T09:56:00.001-07:00

Indian Equity Markets had a weak opening on Wednesday, following the weak outlook by Federal Reserve. The rich valuations of Indian stocks are making it further more attractive to sell. The stocks remained in pressure throughout the day and finally closing the day down around 1%.

Among the sectors, almost every consumption and investment related stocks fell. Commodity stocks like Sterlite, Tata Steel fell. Construction and Infrastructure and related stocks like IDFC, Unitech, HDFC too fell putting more pressure on Indices.

US markets have too opened weak on account of negative Fed Outlook, slowdown in Chinese economy and weak economic data today. Dow Jones is currently trading 200 points low and we will most likely to have weak opening on Indian bourses tomorrow as well.

Technically, Nifty may go down till 5335-5350 where it might try to find some support. If Nifty slips below 5335, then we might see some more correction coming in which might take Nifty to 5280. Hence, traders can initially buy Nifty in 5345-5350 range with Stop-loss @ 5335 and target @ 5370. In case, Nifty breaches below 5335, then traders can go short with Stop-loss @ 5360 and target price of 5290.

Among the stocks, one may buy Cipla @ 306-309 range with Stop-loss @ 301 and target price of 321. The stock has corrected by good 15% and likely to find some good support in 305-310 range.

Wishing you a great trading day tomorrow!!!

Federal Reserve meeting likely to provide short term direction to Indian markets - 11th August 2010

2010-08-10T09:04:00.001-07:00

After a hiatus, it feels good to come on Writing board on blogger. Thanks to blogger for providing me a personal space.

Anyways coming back to Indian Equity Markets. After breaking the crucial technical levels last week, Indian markets remained in backfoot during the first two days of the week. This seems anticipated as Indian markets look richly valued at the current levels. The earnings season has been a bit disappointing, though monsoon and other macro economic indicators are giving a positive signal. Another factor which is driving the markets has been liquidity. FIIs have been pumping continouous inflows into the Indian equities and help the markets sustain at the current levels.

Today is the critical day for the markets as US Federal Reserve will be sitting tonight to gauge the current economic scenario. It is highly probable that US Federal Reserve will announce more stimulus measure for the economy to help it tide over the current recession.

The downside tonight in US markets could trigger short term blip in Indian equities which might take benchmark index Nifty to 5350-5370 levels. If this level too gets breached, then next support only come at 5280. On the contrary if US markets overcome the initial weakness and opened flat / in green tonight, we might see Nifty heading to 5525-5540 levels in the short term. I am quite optimistic that liquidity situation should help its reach these levels.

Fundamentally, two stocks which are looking attractive at the current levels are GMR Infra and Suzlon Energy. Both the stocks have been languishing in 55-60 Rs range. Both the companies have been saddled with debt burden but are doing their bit to tide the difficult situation and can be accumulated with a long term perspective.

Wishing you a great trading day tomorrow!!!

RBI tightening and lack of extra-ordinary results keeping markets in check - 29th July 2010

2010-07-28T08:12:00.001-07:00

Indian Equity Markets had a weak trading session on the backdrop of correction in big heavyweights like Reliance, HUL, DLF and L&T. Also the unwinding of long derivatives positions also put further pressure on the bourses. Another factor which is causing worry for the markets have been lack of any positive trigger from the results. The growth expectations have already been factored in. Also, it is feared that RBI tightening of policy rates will put pressure on lending rates and hence, can squeeze the profit margins of the companies.

Provisional data released by FIIs indicate some encouraging picture. In the Capital Market segment, FIIs have bought equities worth 500 Crores while in the derivatives segment, they have sold futures positions worth 700 Crores.

Technically, the target given for Nifty has been achieved for today. Nifty after reaching its recommended sell price of 5440 later hit the target price of 5410 givin returns of Rs. 1500 per lot.

Dow Jones has opened negative on backdrop of some weak orders data. The correction in the US markets is expected after steep run fro 9800 levels to 10550 levels. If the trend persists and Dow Jones closed in red, we may see negative opening in the bourses tomorrow morning.

In case of flattish opening, one may buy Nifty in 5385-5390 range with Stop-loss @ 5375 and target levels of 5420. In case of gap down opening, the support levels can be seen @ 5350-5355. One may buy Nifty in these levels with stop-loss @ 5335 and target price of 5375. In case of positive opening, one may sell Nifty @ 5430 with stop-loss @ 5445 and target price of 5410.

Wishing you a great trading day tomorrow!!

Indian Stock Markets facing heavy head winds at upper levels, correction likely - 28th July 2010

2010-07-27T08:39:00.000-07:00

Well RBI Quarterly Review Policy has finally come and thankfully brought no major surprises!!! Well, there has been so much of discussion happening in the economic circles regarding RBI stance in its quarterly review policy and whether it will take any major step to combat the inflation which is going steadily above 10%. Much to the relief of the markets, it has not brought any major surprises - Reverse Repo Rate up by 50 bps, repo by 25 bps, CRR remains unchanged.

Two major heavyweights - Reliance Industries and L&T have announced their results today. L&L results have been disappointing, but Reliance Industries Results have come in line with the expectations. As Reliance results have come after the market closes, we may see some positive action coming in the stock during early trade tomorrow.

Real-estate sector stocks have rallied after RBI didn't brought any major surprises in its review. DLF rallied by more than 2% and so do other real-estate stocks. The stock markets did rallied a bit after RBI announcement but closed a tad lower. Sensex though is able to give a closing above 18000 which is an encouraging indication.

Technically, the markets have been in a bit of over-bought zone. As results of the heavyweights have not been exceptionally great and RBI tightening its interest rate regime, these will surely put pressure on the equities in the coming few months. Any further rise can only be due to tremendous FII inflows and can be taken as good way to book some profits.

Dow Jones has opened flat and is likely to show some resistance around 10500-10550 mark. In such backdrop, we might see some flattish to negative opening in the market tomorrow. Also, we might see the unwinding of long positions for July series which might bring some more pressure on the indices.

Tomorrow one may adopt "Sell on Rise" strategy with major resistance levels now seen at 5450, 5470 in case of positive opening. One may put a stop-loss of 5487 and target price of 5420. In case of flattish opening, one may keep a resistance levels of 5435-5440 with stop-loss of 5455 and target price of 5410. For deep down opening, one may keep resistance levels of 5400, 5410 with stop-los @ 5430 and target price of 5360.

Wishing you a great trading day tomorrow!!

RBI Quarterly Review, RIL and L&T results likely to dominate Markets on Tuesday - 27th July 2010

2010-07-26T09:26:00.001-07:00

Indian Equity Markets had a volatile trading session on Monday, one back of event-filled Tuesday. Tuesday will see three major events happening - RBI Quarterly Review, L&T and Reliance Industries Quarterly Results that are expected post-market.

Among the sectors, Pharma sector saw some buying coming in while Automobile Sector tripped on the back of poor results from Maruti and increase in loyalty payment to the parent company by 81% on y-o-y basis. Hero Honda too falled by 8% expecting the similar movement of funds to the parent company.

Provisional Data released by exchanges indicate subdued picture. Domestic Institutional Investors sold heavily during the day. They sold equities worth 700 Crores while Foreign Institutional Investors bought equities worth 120 Crores. Tomorrow's RBI policy is likely to be hawkish which is putting pressure on the markets.

Technically Nifty is likely to face some resistance @ 5450 level and then @ 5470 level tomorrow. If RBI doesn't act more hawkish than expected, then we may see some upward movement in the market. In such case, one may sell Nifty in 5460-5470 range with stop-loss @ 5487 and stop-loss @ 5420.

On the contrary if RBI policy comes more hawkish than expected, then we may see Nifty heading to 5350. In such case, one may buy Nifty @ 5340-5350 range with stop-loss @ 5325 and target price of 5380.

Among the stocks, one may continue to accumulate NMDC in 258-260 range with stop-loss @ 245 and target price @ 290.

Wishing you a great trading day tomorrow!!

Indian equity markets in a range, caution advised - 22nd July 2010

2010-07-21T11:37:00.000-07:00

Indian Equity Markets had a good session on Wednesday, following the positive global sentiments. The markets had a gap up opening and remained in green consistently throughout the day. Almost every sector remained positive, more noticably Real-estate and IT. Mid-cap space too did pretty well. Nifty Volatility Index (VIX) declined by more than 1% on the back of consistency shown by the markets.

Provisional data released by exchanges gave somewhat mixed picture. In the Capital Market segment, Foreign Institutional Investors were net buyers by around 300 Crores while in the Derivatives segment, some major buying was seen in Options segment by around 4000 Crores. US markets have opened in red on the back of Bernanke speech on US economy. Also, the results season has not started on the optimistic note hence putting more pressure on the indices.

On the basis of these events, we might see a gap-down opening tomorrow morning in Asian bourses. Nifty has an intermediate support @ 5350 and resistance at 5430-5440. In case the Nifty trades in 5350-5360 range tomorrow, one may buy Nifty with target price of 5375 and Stop-loss of 5335. On the other side, if Nifty reaches its resistance range of 5425-5435, one may sell Nifty with stop-loss of 5455 and target price of 5410.

Wishing you a great trading day tomorrow!!

Indian markets looking weak at the higher levels, correction likely before expiry - 21 July 2010

2010-07-20T17:34:00.001-07:00

Indian Equity Markets had a lousy session on Tuesday as markets traded within a small range throughout the day. In fact, it has been more than a week since markets have been trading within a narrow range. After trading in a positive territory in the early part of the day, the markets gave up its gains and finally ending the day down by quarter of a percent.

Almost all the sectors were in red, albeit not more than 1%. Financial Services sector declined the maximum. The correction was due after surging continously for last two weeks in the banking stocks. Construction stocks had a good run - DLF, Unitech, Sobha Developers, HCC etc have gained somewhere between 2-4%.

Provisional data released by exchanges indicates somewhat subdued picture. Foreign Institutional Investors have bought shares worth 250 Crores but in the derivatives segment, they have been net sellers in the index segment.

US markets have gained by 0.5% last night, more on the back of technical rally. It opened weak after IBM and Goldman Sachs reported disappointing results, but gradually recovered and finally closing in the green. As the rally is purely technical in nature, we might see Asian Indices having a flattish-to-negative opening in the early part of the trade.

For Nifty, we might see some support coming @ 5345-5350 levels. If these levels are breached, we might see Nifty heading to 5300 levels where it is widely speculated to find a strong support level. Though my personal view is that in case Nifty now reaches 5300 level, it is likely to breach it as there has been massive shorting of Nifty 5300 and 5200 Strikes by the traders and we might see covering of some of these short positions which could pull down the index further. On the upside, Nifty has mild resistance @ 5390-5400. The major resistance stands @ 5435-5450 levels. If this is too breached, then Nifty may head to 5535 levels. Traders are advised to go long on Nifty today in 5340-5345 range with stop-loss @ 5325 and target price of 5360.

Wishing you a great trading day today!!!

Indian stock markets managed to hold, but outperformance may not last long - 20th July 2010

2010-07-19T08:28:00.000-07:00

Indian Equity Markets had a good trading session on Monday. Despite the meltdown in US markets on Friday, Asian indices including India managed to hold back their levels steadily and finally closing the day flat. Among the sectors, Consumer Goods and Industrial Manufacturing sectors declined the maximum while Financial Services and Construction sectors gained during the day.

Provisional data released by exchanges gave a mixed look. In the Capital Market segment, FIIs were among the net buyers by around 150 Crores while in the derivatives segment, they were net sellers in both futures and Options segment.

Technically Nifty is able to hold on to 5300 levels pretty comfortably and looked like a strong support. But with global markets looking weak, we may see a strong retest of these levels. If Nifty breaches these levels, then we may see markets heading towards 5150 and then 5070 levels. On the upside, 5440-5460 levels and then, 5530-5540 levels are likely to provide the major resistance.

So far, we have been able to outperform the global indices, but from now on we advise some caution to the investors. One should use short term rallies to book profits and keep themselves in cash by atleast 30%. One may also hedge the positions by buying Nifty Puts for Strike Prices 5200 / 5300 of August series.

Wishing you a great trading day tomorrow!!

Indian equities in midst of growth story and global slowdown, caution recommended - 19th July 2010

2010-07-18T09:30:00.001-07:00

Indian Equity Markets on Friday had a volatile session on the back of flat US markets on Thursday and no major cues from the domestic markets as well. TCS announced its results on Friday morning, which have exceeded analysts' expectations. The stock in turn, went up by more than 7% and pushed almost every stock in Information Technology space.

The financial results have been so far satisfactory. Some decline is expected on sequential basis, and hence any positive suprise is taken with charm on the Dalal Street. Though companies in commodities space likely to feel more heat, as withdrawal of stimulus phase-wise will keep pressure on demand and hence, on the growth of these companies.

Provisional data released by exchanges on Friday have been good. Foreign Institutional Investors were net buyers by around 650 Crores while Domestic Institutions have been net sellers by around 300 Crores. In the derivatives segment, FIIs have been buying continiously in the futures segment but also writing Lower Strike Price Puts and Higher Strike Prices Calls. This indicates that FIIs see limited movement on the downside as well as on the upside from the current levels.

Technically, Nifty is likely to find some support in 5280-5320 range. The next strong support stands @ 5200-5230 range for the markets. If this level is broken, the next support is seen @ 5060-5080 range. On the upside, the major resistance is seen @ 5430-5460 range. If this resistance is broken on closing basis, then Nifty will find next resistance @ 5530-5550 range.

Stock-specific, Tata Motors-M&M pair trade has finally reached its target. Tata Motors hit its target price of 815 and closed @ 830. This pair trade strategy gave the profits of 52000 Rs. Tata Power too hit its target price of 1340, giving the profits of 6200 Rs per lot.

For the coming week, Cement stocks story can be retained. One may buy India Cements and Ultratech Cements around the current levels. For India Cements, one may keep Stop loss @ 99 and for Ultratech cements, one may keep Stop-loss @ 810. Tomorrow, one may sell Nifty if it rebounds from 5310-5330 levels @ 5340 with target price of 5280 and stop-loss of 5390.

Wishing you very best of luck for the coming week!!

Volatility increases as Indian equity markets near to resistance zone - 15th July 2010

2010-07-14T09:13:00.000-07:00

Indian Equity Markets had a voltile session on Wednesday. On the back of positive US markets, Nifty opened higher but found 18000 / 5450 levels in Sensex / Nifty as tough resistance to break. Finally, markets lost the strength and corrected by about quarter of a percent. Among the sectors, Banking stocks did well while IT continues to lose its strength. Technically IT looks in an over-sold range and we might see some short covering coming in this sector.

Provisional data released by exchanges gave some positive indications. Depite the correction, Foreign Institutional Investors (FIIs) remained net buyers by around 500 Crores. In the derivatives segment, FIIs opened some short positions on the upper levels which indicates that resistance levels mentioned above is likely to be a tough nut to crack.

US markets have opened flattish on the back of disappointing retail sales figures. US markets likely to stay flat or trade with a negative bias. Technially, Nifty is also likely to find some support in 5280-5320 range while it may find some tough resistance in 5430-5450 range. The traders may wait before any clear signal emerges.

All the stocks recommendations remained intact. Technically, NMDC looks pretty strong in 255-265 range and can go up to 290-300 in the short term. Similarly, Max India has also given a positive breakthrough and can go upto 175 in the near term.

Wishing you a great trading day tomorrow!!

Liquidity and Positive Global sentiments pushing Indian Equity markets up - 14th July 2010

2010-07-13T10:02:00.001-07:00

As discussed, Indian equity Markets had a good trading session. After trading in a negative range during the earlier part of the day, the markets bounced back after Europe opened strong. Finally, benchmark indices able to breakthrough key resistance levels and closed the day up around 0.5%.

Among the sectors, Metals and Constructions have gained during the day, while Information Technology and Telecom sectors traded in red during the day. Infosys Results have been disappointing which put pressure on IT stocks.

Provisional data released by exchanges have been good. Foreign Institutional Investors (FIIs) made net purchases of about 800 Crores while Domestic Institutions were net sellers by around 600 Crores. In the derivatives segment too, no major cues have been derived.

US markets have opened in a positive zone which should help Indian markets open in a positive zone tomorrow morning. The markets can find strong resistance in 5440-5450 range. One may sell Nifty in this range with stop-loss @5465 and target price @ 5415. Technically as suggested, Tata Power remained in strong trading zone of 1310-1320. Those who have taken this position can place target price @ 1340 and stop-loss at 1297.

Max India which was suggested 23 June @ 163 today made strong gains and now trading @ 167. The target price can be maintained @ 175 for this position.

Wishing you a great trading day tomorrow!!

Infosys going to blow Q1 earnings season tomorrow - 13th July 2010

2010-07-12T09:46:00.001-07:00

Indian Stock Markets had a decent trading session on Monday, on the back of global positive cues and after-effects of IMF upgrade of India's GDP figures. Among the sectors, Banks and IT did well, while Oil & Gas and Telecom sectors looked weak.

From tomorrow, Q1 season is going to start with Infosys results, but IT stocks have already seen appreciation in last 2 weeks and hence tomorrow we might see some profit booking coming in these stocks. Similarly, Banking stocks have also seen decent uptick in last one week and hence, chances of some profit booking coming in these stocks.

Provisional data released by exchanges indicates net buying from Foreign Institutional Investors (FIIs) while DIIs made net sell of about 300 Crores. In the derivatives segment too, FIIs made net purchases of about 1000 Crores.

Technically, Nifty reached its target levels of 5380 comfortably during early trading session. The next resistance level is seen @ 5430-5445. One may sell Nifty 5430-5440 range with target levels of 5380 and stop-loss of 5465. In Stock-specific recommedation, one may buy Tata Power in 1310-1315 range with stop-loss @ 1297 and target price of 1340.

Wishing you a great trading day ahead!!!

Indian Equity markets entering into Q1 results season, stock specific action likely- 12th July2010

2010-07-11T10:43:00.000-07:00

As discussed, Indian Stock Markets finally made a positive breakthrough on Thursday session, taking markets above psycological levels of 5325, though closing the day below 5300 @ 5296. It was a good trading session overall for the markets.

Commodities stocks like Sterlite, Tata Steel along with Construction stocks like DLF, Unitech did well while Cements stocks continue to lag behind. Though technically, Cements stocks should make an intermediate base around the current levels and hence, can be a good pick.

Provisional data released by exchanges have been encouraging. Foreign Institutional Investors (FII) made a net purchase of 900 Crores while Domestic Institutions were net sellers by around 300 Crores. In the derivatives segment, FIIs have again been net buyers in the futures side, though Options didn't give a clear trend. Though the kind of put writing we have seen, it seems 5200 seems a strong support for this expiry.

Another positive factor which has been playing over the markets has been monsoon. Monsoon season, this time has been pretty good and should help inflation to cool down a bit. Though, most of the inflation seems on the demand side, as manufacturing index is also on an uptick. Hence, the rate hike seems imminent in July 29 policy meet.

Technically, Nifty crossed its upper breakthrough level of 5325 and hence, is likely to go up to 5390 in the near term. The stop-loss is pegged at 5270. Amongst the stocks, cement stocks can be accumulated for short term uptick. One may buy Ultratech Cements and Indian Cements according to the levels given in yesterday's post.

Wishing you a great trading day ahead!!!

Indian equity markets making a breakthrough, likely to go up atleast 2% - 09th July 2010

2010-07-08T17:07:00.001-07:00

Cement stocks likely to make rebound, Indian stock markets may trade in a range - 08th July 2010

2010-07-07T09:23:00.000-07:00

Indian Equity Markets had a weak trading session on Wednesday, on account of negative global cues. All sectors, except Telecom were decline, more notably Energy. Heavyweight Stocks like ONGC, Reliance Industries, and Hindalco declined.

Provisional data released by exchanges indicate net selling by 50 Crores in the Capital Market segment, while Domestic Institutional Investors have been net buyers by around 350 Crores. In the derivatives segment, futures have shown some net selling but there has been some buying coming in Options segment. This buying may be on account of covering of short positions on Put side or buying of Call, which is yet not clear. The trend in next 2 days will give clear picture about the same.

Dow Jones has opened strong today on account of better Q2 prospects for financial companies. As discussed, Dow Jones can go upto 10080 in the near term which should aid the Indian stock markets as well. Technically too, Nifty is still trading within a range and no clear trend is yet seen. As discussed earlier as well, the breakout will be decided if Nifty crosses 5320 on the upside or 5155 on the downside. Two stocks that looked strong are Ultratech Cements and India Cements. Cement stocks have been on decline for last few months and seems like making a base around the current levels.

One may buy Ultratech Cements in 855-865 range with 810 as stop-loss and 920 as target price. For India Cements, one may buy the stock @ current levels of 107-109 with stop-loss of 98 and target price of 120.

Wishing you a great trading day tomorrow!!!

Indian stock markets approaching Q1 results season, look positive bias with caution - 07th July2010

2010-07-06T08:24:00.001-07:00

Indian Equity Markets finally had a traders' session on Tuesday. After a lacklustre session on Monday, the markets gained by more than 1% today. The markets initially opened flat and gradually gained momentum taking cues from European markets and Dow Jones futures trading in Europe.

Among the sectors, Metals and Information Technology sectors did well. Stocks like Hindalco, Jindal Steel, TCS and Infosys have gained by more than 1.5%. Cement stocks though remained in negative territory. The supply glut is pulling the cement prices down and hence, putting pressure on Net Profit Margins of cement companies.

Provisional data released by exchanges gave encouraging cues. Foreign Institutional Investors (FII) have been net buyers by around 300 Crores. In the derivatives segment too, FIIs have covered some of the short positions created earlier.

Nifty @ 5200 seems a decent support in the near short term. Technically, Dow Jones too look in short-covering mode and likely to go up till 10070 at-least in the short term where it has a key resistance. The next resistance level stands at 10300, breaking which will confirm intermediate bullish trend. Here in India, the traders need to be cautious as markets have already been over-valued. One may only go long if Nifty stays above 5320 on hourly basis tomorrow, with stop-loss of 5270 and target price of 5400.

Options traders can sell Nifty 5500 Call above 35 with stop-loss of 50 and target price of "0". Alternatively, one may go int bear spread buying 5500 Put and selling 5400 Put once Nifty approaches 5450, though it's still a bit far.

All stock strategies suggested earlier have been intact. Wishing you a great trading day tomorrow!!!

After a dull day, action likely to resume in Indian equity markets - 06th July2010

2010-07-05T17:50:00.001-07:00

Yesterday was among those days, when a trader just simply can go for a nice outing or long drive in monsoon rains and come back with no change in the indices. The markets remained stagnant within 0.5% range throughout the day closing the day almost flat. The volumes were absymally low due to 'Bharat Band" effect. All the sectoral indices remain flat, except Industrial and Capital Goods sector that saw some decline in stocks like BHEL, L&T and Siemens.

Provisional data released by exchanges indicate net selling by Foreign Institutional Investors (FII) by around 250 Crores while Domestic Institutions too made selling by around 50 Crores. In the derivatives segment too, FIIs activity were largely muted with no major change.

US was closed yesterday on account of Independence Day. Europe closed flat, but Asian markets opened weak today morning due to strengthening of Yen against Euro and uncertainity on European economy persists.

On account of it, we may see a negative opening in Indian Equity markets today. The direction for the markets are still unclear and hence, we recommend no triggers beyond 5155 on the downside and 5320 on the upside. If Nifty able to breach 5155 on the downside, then we may sell Nifty with a stop-loss of 5215 and target of 5080, whilst if Nifty able to break 5320 on the upside, then we may see the upside levels of 5400 and stop-loss of 5270. The stock recommendations made earlier remained intact as markets failed to move in either of the directions.

Wishing you a great trading day!! Let's hope markets display its usual volatile characteristic today.

Indian equity Markets hanging equally balanced between Bulls and Bears - 04th Juy2010

2010-07-04T09:21:00.000-07:00

Indian Equity markets had a flattish session on Friday. After remaining in a positive zone in the first half, markets lost the momentum and dragged down to its lows of the day, finally closing around 0.25%. The sector that looked really weak was cement where all major stocks like ACC, Jaipakash and Ambuja Cements fell down.

RBI Rate Hike, albeit happened post market timings will have an impact on the markets tomorrow morning. The banking and automobile stocks are likely to face some resistance tomorrow morning while IT and Pharma stocks might regain some buying.

The outlook for this month looks quite challenging. The markets are likely to face strong headwinds at the upper levels while it may find some support coming in lower levels due to strong funds inflow coming from overseas. Hence, we are likely to see a range bound market during the current month.

For coming few days, the outlook seems unclear as markets are equally balanced between bulls and bears. Hence one is advised to sell Nifty only if it breaches 5155 on the lower side with stop-loss of 5215 and target levels of 5080. On the upside, one may buy Nifty above 5320 with stop-loss of 5270 and target price of 5400.

Just as a statistical note, for all the stratgies recommended in June, our Booked P/L comes at 35000 Rs which has been good. For open positions, P/L has been around 20000 Rs.

Wishing you a great trading day tomorrow!!

Global Cues to drive Indian Equity markets, closer to support zone - 02nd July 2010

2010-07-01T10:19:00.000-07:00

Following the global peers, Indian Stock Markets had a weak trading session on Thursday with benchmark indices Nifty and Sensex fell by around 1% each. All the sectors have closed in the red, with metals, automobiles and construction sectors taking the maximum brunt.

Provisional data released by exchanges indicate a dismal picture. Foreign Institutional Investors have been net sellers by around 200 Crores during today's trading. In the derivatives segment, there has been massive selling seen in the Index and Stocks Futures segment, while some Put writing is also seen happening in 5200 and 5100 Nifty Puts.

Now the big question arises where are our markets head to now?? Technically, a lot depends upon Dow Jones. Dow Jones has found some support at 9650 from where it has rebounded strongly till now. If 9650 gets broken decisively, then we might see next support coming at 9200 only. In this scenario, Nifty @ 4800 looks imminent.

Alternatively, if Dow Jones able to regain strength from here, we might see it heading towards 10100. In this case, Nifty can head towards 5400 again, albeit it is doutbful that it will sustain at those levels because the kind of Call writing is seen at those levels indicate that those levels will give tough resistance.

Traders may take a Bull spread strategy by buying Nifty 5200 Call and Selling 5300 Call when Nifty comes in the range of 5200-5215. TCS Sell strategy has hit its target price today and gave a profit of 16000 Rs per lot.

The other strattegies remain intact, including pair trade strategy of M&M-Tata Motors... Its been 18 days. Wow!!!

Wishing you a great trading day tomorrow!!

Indian Equity Markets osciallating in a range, breakout unlikely - 01st July 2010

2010-06-30T10:41:00.001-07:00

Warren Buffet has once rightly said "The equity markets have the power to remain irrational till the time you remain solvent.". Fundamentally, things have not been good - high inflation (causing negative real growth rate), increasing NPAs, weak global factors, stimulus inhlated growth and yet the equity doctors say "All Izzz Well".

There has been too much talk about Indian economy being resiliant to uncertain global factors due to domestic demand but one must forget that it gives a hedge not the license to grow. But the way markets have been moving indicate that Indian economy, alng with few other Asian economies are ready to supercede the global situation. This growth related bubble is dangerous to ride and one might stuck in a situation like what happened in 2008.

Anyways coming back to today';s market, Indian equity markets had a miraclaous run after a gap down opening, due to weak Dow Jones closing below 10000 mark. Finally markets got some support from European markets and finally closing the day 1% up.

Metal and IT Stocks declined but Oil and FMCG stocks gained during the day. Provisional data released by exchanges gave positive bias for markets as Foreign Institutional Investors emerged out as net buyers by around 500 Crores while Domestic Institutions came out as net sellers by around 115 Crores. In the derivatives segment, we have seen no major change happening in futures segment, but in options we have seen some major put writing happening for Nifty 5000 and 5100 Puts.

Technically too, Nifty has made a strong support of 5180-5210 range which will be a difficult level to break in the coming days for bears. The strong resistance for the markets is seen in 5380-5410 range. Thus traders are advised to remain on sidelines till we get close to any of these levels. If markets rise on Thursday, then traders can sell Nifty above 5370 with stop-loss of 5410 and target of 5270. On the downside, one is advised to go long only if Nifty drifts down to 5230 levels with target levels of 5300 and stop-loss of 5170.

Among the stocks, Gujarat Flourchemicals and NMDC remained flat while TCS further declined. One is advised to book profits in TCS if it comes down to 735-740 levels. M&M-Tata Motors recommendation still remains intact... Wow 17 days now... Too much frustuating...

Wishing you a great trading day tomorrow!!!

Global cues may trigger a sell-off in Indian Equities, caution required - 30th June 2010

2010-06-29T08:23:00.001-07:00

Indian Equity markets had a tough session on Tuesday as it failed to capitalize on the gains made during Monday. Almost every sector fell, the maximum hit is taken by Metal stocks that have fallen between 3-4%. Similarly Infrastructure and Financial stocks fell in the range of 2-3%.

Provisional data released by exchanges indicate bearishness as both Foreign Institutional Investors and Domestic Institutions have been net sellers by 200 and 150 crores respectively. In the derivatives segment too, FIIs have been net sellers by around 2000 Crores in the Index and Stocks futures. In the Options segment as well, FIIs have been net buyers. The call writing of 5300 and 5400 Nifty Strike Prices was also seen which indicate bearish trend.

US markets have opened deep in the red due to Chinese growth and bad data on consumer confidence. It has again gone down below 10000 mark which indicates that it is likely to correct further too. 9840 level should provide key support. If Dow Jones breaks this level, we might see the index heading towards 9200 level.

Technically, Nifty has broken down its key support level of 5280 and closed at 5250. The next strong support level is seen around 5125-5145 levels. Once it breaks then the next support level comes at 5040-5060. On the upside, one may continue to face some resistance in 5360-5390 range.

For tomorrow, Nifty might have a gap down opening around 5160-5180 if Dow Jones closes below 10000. One may sell Nifty futures around 5200-5210 range with stop-loss at 5230 and target levels of 5160. If Dow Jones recovers and close above 10000 then we might see Nifty taking support @ 5200 levels. In such circumstances, one may buy Nifty in 5200-5205 range with stop-loss of 5180 and target levels of 5235.

Among the stocks, TCS sell strategy seems to do well. It is trading below the recommended price of 767. Gujarat Flourochemicals and Max India have declined though still trading above the recommended price. Tata Motors-M&M strategy is still intact... Wow 16 days now...

Wishing you a great trading day tomorrow!!!

Indian Stock Markets likely to make yet another attempt to breach key resistance levels - 29th June 2010

2010-06-28T09:25:00.000-07:00

Indian Stock Markets had a good run on Monday as stocks rallied to wipe out all the losses incurred on Friday. Though on the way up, it has hit the stop-loss levels on "Short Sell" strategy recommended for the day.

Among the sectors, Oil and Gas and Auto sectors did well. Reliance, ONGC were up by more than 1.5% while Tata Motors also made decent gains of more than 2% on the bourses. Though Maruti and Hero Honda ended the day in the negative territory.

Provisional data by FIIs indicate strong buying from Foreign Institutional Investors as they notched up stocks worth 800 Crores during the day. In the derivatives segment, FIIs didn't give major indication as they didn't notched up major buying / selling in the futures segment.

Among the stocks, buy recommendations on both Gujarat Flourochemicals and Max India did well. Tata Motors-M&M pair trade strategy is still active. It has more than 15 days since i have made this recommendation, strangely it is still active. TCS sell strategy seems OK as we are still making profits as of now.

US has made into positive territory in the initial trades and seems likely that it will remain in green during the day. If that happens, we might again see decent gains coming into Indian equities tomorrow. No recommendation for Nifty for tomorrow as markets are currently trading in a no-trend territory.

Wishing you a great trading day tomorrow!!!

Global Cues tough, Indian Euphoria High - 27th June 2010

2010-06-27T07:30:00.000-07:00

As predicted, Indian Stock Markets slid on Friday on the backdrop of negative global cues. Technically too, Indian equity markets are in strong resistance zone and it will take a while before we may see another attempt to break the final wall of resistance.

The global cues during the weekend aren't too good. Three US based banks have been closed / taken over. There have been concerns on the possible impact of Yuan appreciation on Chinese economy. Stocks in Gulf have closed lower on renewed apprehension on global recovery.

Provisional data released by exchanges on Friday gave a subdued picture. Foreign Institutional Investors have been net sellers by around 250 Crores in the Capital Market segment. In Derivatives segment too, FIIs have been net sellers by more than 1000 Crores in the Index and stock futures segments.

All these factors indicate that the coming week might be volatile. We may see a negative to flattish opening on Indian bourses on Monday morning. The traders may adopt "Sell on Rise" strategy on Monday and sell in the range of 5280-5290 with stop-loss @ 5320 and target price of 5225.

Stock-specific one may buy Tulip Telecom in 845-850 range for target price of 920 and stop-loss price of 810. Technically the stock has entered into its support range of 840-860 and with corporate action for Split coming on 6th July, we might see a spurt in the stock anytime soon.

Another stock that traders may fancy is Hero Honda. The stock has a strong resistance zone of 2060-2090. One may sell the stock in this range with target price of 1920 and stop-loss price of 2125.

The pair-trade strategy for M&M and Tata Motors is still open. TCS Sell strategy is now in profit after languishing in losses for initial few days. Overall things working fine for us :)

Wishing you a great trading day tomorrow!!!

Indian Stock Markets likely to correct amidst tough global cues and strong resistance zone - 24th June 2010

2010-06-23T09:14:00.001-07:00

As predicted, Indian Stock Markets had a volatile session throughout the day. The markets opened weak marginally on the backdrop of weak closing in US bourses and then, remained in negative territory throughout the day. The last one hour saw some buying coming into the Indian markets and markets finally closed the day 0.5% up.

Provisional data released by exchanges indicate consistent buying from Foreign Institutional Investors (FIIs) who have bought stocks worth 250 Crores. Whilst on the other side, Domestic Institutional Investors were net sellers by 800 Crores. In the derivatives segment, FIIs remained cautious with no major buying / selling seen in Futures segment.

US has opened in Red on the backdrop of bad Housing sales numbers. If US closed in red, then we might see some pressure coming into Indian markets tomorrow morning. Since tomorrow is an expiry day, hence we might not see major impact of global cues on Indian markets.

The traders can adopt "Sell on Rise" strategy tomorrow. In a scenario, Nifty has a gap down opening then we might see some support coming in 5290-5300 range. One may sell in 5305-5310 range with stop-loss at 5325 and target of 5280. On the other side if Nifty has a flattish opening, one may sell Nifty in 5340-5350 range with target levels of 5315-5320 levels and stop-loss of 5365.

Today was not a good day for our strategy. Nifty hit its stop-loss and so do Maruti, but this is a part of traders' life and hence failures and success are nothing but two sides of the same coin. Two stocks that look good technically at the moment are Max India and NMDC.

Max India can be bought in 160-163 range with stop-loss of 147 and target price of 175. NMDC can be bought in 255-260 range with stop-loss at 245 and target price of 290. NMDC has corrected quite a bit in last few months and seems a good stock to buy at the moment.

Wishing you a great trading day tomorrow!!!

Indian markets likely to trade within a range, volatility may increase near to expiry -23rd June 2010

2010-06-22T17:10:00.000-07:00

Indian Equity Markets gave up some of its early week gains as renewed concerns on European financial system surfaced and downgrading by Fitch of Spanish banks also put further pressure on Asian markets. European markets also opened in red in the afternoon which put further pressure on the Indian stock markets. Finally, Indian benchmark indices closed in red by around 0.8%.

Provisional data though, gave somewhat different picture. Foreign Institutional Investors came out as net buyers by around 800 Crores while Domestic Institutional Investors were net sellers by around 200 Crores. In the derivatives market, the volumes generated by FIIs were tremendous (around double of usual day's trading) and were net sellers in index and stock futures segment by around 800 Crores. Thus it seems that FIIs have been hedging their stocks portfolio by taking a reverse position in the derivatives market.

Dow Jones closed down 1.5% overnight on renewed concerns about housing sales dropped by 2% m-o-m which was more than expected. Also S&P downgrading of BNP Paribas bank also put pressure on US stock markets. The weak closing in US will ensure weak opening for Asian markets when they open today morning.

Nifty is likely to open below 5300 today. One may adopt "Sell on Rise" strategy for today's trading and sell Nifty around 5300 mark (5290-5300) with strict stop-loss of 5320 and target levels of 5255. As it's an expiry week, hence one is advised to follow target levels and stop-loss levels strictly. The traders who have taken sell positions yesterday, may book profits in the gap down opening.

Amongst the stocks, Maruti and TCS have already been recommended for Sell. The short to medium term investors may buy Gujarat Flourochemicals. It's an INOX group company with interests in flouro chemicals and renewable source of energy. The company also trades in Carbon credits. One may enter into this stock in 150-155 range with stop-loss maintained at 140 and target price of 170-175.

Wishing you a great trading day today!!!

Chinese intruded into bear territory, retailiation likely - 22nd June 2010

2010-06-21T10:12:00.000-07:00

Chinese have the bad habit to play the spoilsport. Indian benchmark indices were sitting amidst the strong resistance zone and set to go correct a bit, but just a statement regarding their currency and vhroommmm... Markets broke all the resistance zones at one go.

Though it didn't hurt us much. Nifty hit the stop-loss right on the opening tick giving us the loss of 3300 Rs per lot. But Kotak Bank-SBI pair trade strategy proved to be a jackpot for us where it gave us profit of 23000 Rs per pair. Tata Motors-M&M strategy is not giving us much profit at the moment.

Anyways, lets come back to Indian Equity markets. Chinese assurance of Yuan appreciation against dollar was welcomed by the equity markets worldwide. Hang Seng closed 3% up, Indian equity markets went up by 1.72%, Europe is up 1% and Dow Jones has also opened 1% up.

Provisional data released by exchanges also gives a positive impression. Foreign Institutional Investors have emerged as net buyers by 1500 Crores. In the derivatives segment too, FIIs have been net buyers in Index and Stocks Futures.

Technically too, Indian stock markets have crossed a major hurdle and now 5280-5300 act as a strong support level for Nifty. Further down, 5190 acts as a major support level. On the upside, Nifty now is likely to face strong resistance in 5380-5440 range. It is likely probability that Indian markets may ovecome this hurdle slowly and steadily and hence, traders may fancy chances to sell Nifty around 5400 levels with stop-loss of 5440 and target price of 5310.

Among stocks, one may sell Maruti futures in 1375-1380 range with a stop-loss of 1410 and target price of 1330.

Wishing you a great trading day tomorrow!!!

Indian economy in jinx - IIP gives optimism but inflation brings concern - 21st June 2010

2010-06-20T07:48:00.000-07:00

After continouos rise for seven consecutive trading sessions, Indian equity markets took breather on Friday, closing down around 0.20%. After a lacklustre May where FIIs pumped out around 12000 Crores, it has been good month so far. FIIs have put in back around 3000 Crores back into the Indian markets. With European zone showing some stability we might expect some more inflows coming into the Indian Equity markets.

Though the current levels might not encourage the foreign institutions to put new money into the markets. Hence we might see some range bound markets for a while now. There are few more concerns that might discourage buying at the current levels. Another one is RBI Monetary policy review due for 27th June. With Inflation figures above 10% for three consecutive months, we might see some tightening done by the central bank before / on the policy review meet. Slow down in Europe is likely to impact Information Technology stocks which have major weightage in both Sensex and Nifty Indices. Any tightening by RBI will also increase the funding costs for the companies and hence might lower down the profit margins for various companies.

Technically too, Nifty is standing at strong resistance levels. Existing short traders can continue to hold the position till Nifty breaches 5310 levels with target level of 5190.

TCS sell strategy is giving losses of around 2%. M&M-Tata Motors pair trade strategy has done well on Friday as M&M went down by 3% while Tata Motors remain flat. Currently it is giving a profit of 8000 Rs per pair. Kotak Bank and SBI pair trade strategy is in profit overall by around 20000 Rs per pair, albeit there is not much change on Friday.

I am not adding more recommendations as we already have three open positions lying. Nifty is likely to show volatility due to expiry week and hence, we must follow the stop-loss and target levels strictly.

Wishing you a great expiry week!!!!

Buying from FII driving markets up, time to remain cautious - 18th June 2010

2010-06-17T09:45:00.000-07:00

Indian Equity Markets had a good session on Thursday. The trading was laregly muted and flattish, till the late afternoon brought a suprise upward rally. The markets finally closed the day up around 1% each.

Provisional data released by exchanges have been encouraging. Foreign Institutional Investors (FII) have been net buyers by around 500 Crores while Domestic Institutional Investors have been net sellers by around 350 Crores. In the derivatives segment, FIIs have been net buyers by around 300 Crores in futures segment. In the Options segment, we have seen some kind of Call writing happening in the 5300 and 5400 Calls by FIIs.

US markets have opened weak and trading in the negative territory. Gold is trading higher at the moment which indicates that institutions have been hedging their equity and currency related risk by buying Gold in the international markets.

Technically, Nifty is in strong resistance zone of 5280-5310. If Nifty breaches this level successfully then we might see Nifty heading to 5370. On the other side, Nifty has strong support at 5170-5190. Hence, traders are advised to carry foward their short positions in Nifty with target levels of 5190 and Stop loss of 5310.

Recommendation to Sell TCS is giving loss by around 1%. Kotak Bank-SBI pair trade strategy has performed well today as Kotak Bank registered the gains of 1% while SBI fell by 0.5%. Tata Motors-M&M pair trade strategy has done well today, but is in overall losses.

No new recommendation for now as we have already 3 open strategies lying open. Wishing you a great trading day tomorrow!!!

Indian Equity Markets seem sitting on June Expiry High, likely to go down - 16th June 2010

2010-06-16T09:45:00.001-07:00

As on expected lines, Indian stock markets had a volatile session on Wednesday. The markets moved within a range of 1% throughout the day. After a gap up opening of about 0.5% on the back of bullish cues from US markets, the markets immediately retreated to flattish levels and remained hovered within a range. Finally, it closed with gains of 0.2%.

Provisional data though gives bullish undertone. Foreign Institutional Investors have been net buyers by around 800 Crores while Domestic Institutional Investors have been net sellers by around 170 Crores. In the derivatives segment too, FIIs have been net buyers by around 1300 Crores in Futures segment, some kind of Call writing and Put buying was also seen in Nifty Options. Overall it seems that FIIs have been hedging their positions perfectly at the moment and waiting for a particular trend to emerge.

Technically as suggested yesterday, Nifty 5250-5260 range gave an opportunity to adopt "Sell on Rise" strategy. It is likely that Nifty may go down till 5170-5190 range. Stop-loss for the same can be maintained at 5310.

Stock-specific our recommendation to sell TCS is giving us losses at the moment, though stop-loss is still far away. SBI and Kotak Bank pair trade strategy is still intact. M&M and Tata Motors pair trade strategy is giving losses at the moment.

Wishing you a great trading day tomorrow!!

Indian Stock Markets in strong resistance zone, likely to see some correction - 16th June 2010

2010-06-15T09:26:00.000-07:00

Indian Equity Markets went through a consolidation phase on Tuesday as markets moved in a narrow range of 1% throughout the day. The markets remained in a negative zone in first half of the day, but as Europe opens and showed some strength, Indian equity markets too picked up and finally closing the day, up around 0.5% up.

Provisional data released by exchange is encouraging. Foreign Institutional Investors (FIIs) have been net buyers by around 500 Crores while Domestic Investors have been net sellers by around 350 Crores. Derivatives data on the other side indicates some kind of profit booking happening around the current levels.

Technically, Nifty 200 Day moving average and 90 Day Moving average is at 5090 and 5135 levels and chances do exist that we may retrace to 5170-5190 levels in the coming days. Hence, traders are advised to adopt "Sell on Rise" strategy. One may sell Nifty in 5250-5260 range with target price of 5180-5190 and stop-loss of 5310.

Stock-specific TCS has come down. our pair-trade strategy of Kotak Bank-SBI and M&M-Tata Motors remain intact and doing well.

Dow Jones has opened in green which may help Indian markets have a gap up opening and hence, give us chance of "sell futures" as suggested above.

Wishing you a great trading day tomorrow!!

Indian Equity Markets in bullish mood, but in the middle of resistance zone - 15th June 2010

2010-06-14T09:00:00.001-07:00

Indian Equity Markets had a faboulous start of the week. The benchmark indices Nifty and Sensex had a gap up opening in the morning and capitalized on the gains throughout the day. It finally closed the day up by 1.50%. Target levels suggested by us on Nifty last week has reached its target level of 5200.

Provisional data by exchanges data is encouraging for the day. Foreign Institutional Investors (FIIs) were net buyers by around 400 Crores in Capital Market segment, while in derivatives segment, FIIs were net buyers by around 500 Crores in the futures segment.

Dow Jones has also opened in a positive territory on encouraging data from Europe. Asian markets are likely to take Europe data encouraging and we may see another gap up opening tomorrow. Though Nifty is now in a resistance zone and tomorrow's gap up opening can be seen as a perfect opportunity to take "Sell on Rise" strategy. The traders can sell Nifty at 5240-5260 levels with target price of 5175 and stop-loss can be maintained at 5310.

Our pair trade strategies for Kotak Bank and SBI is giving good gains at the moment, though, it has not reached its concluded levels. The other pair trade strategy for Tata Motors and M&M has not performed, but I am quite hopeful that M&M can see correction coming in soon.

Wishing you a great trading day tomorrow!!!

Nifty may consolidate at current levels, short term outlook bullish - 13th June 2010

2010-06-13T09:19:00.000-07:00

The last week has been good for Indian Stock Markets where markets have gained almost 1%. It has been third consecutive weekly gains for the markets which will give confidence to the bulls. BSE Sensex has closed above the psycological levels of 17000 which will provide good technical support to the Indian markets.

Provisional data for Friday indicate net buying from Foreign Institutional Investors (FIIs) in tune of Rs. 800 crores. In Derivatives segment too, FIIs have been net buyers in Index and Stock Futures by around 1500 Crores which will further give heart to bulls and sleepless night to bears.

Technically, Nifty is able to breach 5100 levels comfortably on Friday and hence now, 5070-5100 now acts as a strong support zone. Its the fourth time in last 3 months that Nifty has breached this level. Last three times, it breached this zone and then again went down. On Friday as well, we have seen some selling coming in 5150 levels but Nifty is still able to hold 5100 levels.

Traders who are planning to take fresh positions in Nifty may buy Nifty futures in 5100-5110 levels with stop-loss @ 5140 and Stop-loss at 5180. Though the opportunity has equal risk and reward but the risk seems less in trading perspective as Nifty has breached 5060 levels on strong volumes and hence coming back down to these levels seem unlikely during the short term.

We have yet another pair-trade strategy for you. Mahindra & Mahindra has been doing pretty well and has gained more than 15% since stock-split two months back and now likely to face strong resistance. On the other side, Tata Motors has declined by around 5% in last 3 months. Hence, one may can now sell 2 lots of M&M and buy 1 lot of Tata Motors with an anticipation that gap between them now likely to reduce. One may take this position at the current levels and come out of the position in the following cases:

Tata Motors reaches 815 on the upside / goes below 715 on the downside.
M&M reaches 650 on the upside / goes below 565 on the downside.

Wishing you a great trading week ahead!!!

Indian Stock Markets sailing towards 1 month high, likely to face resistance - 11th June 2010

2010-06-10T10:32:00.000-07:00

Indian equity markets had a good run on Thursday supported by good economic data from various Asian economies and technical support coming in Euro currency against other currencies. The day started flat for the Asian markets due to weak US markets on Wednesday. As day progressed, equity markets worldwide picked up after announcements of strong economic data from Japan and China. Indian benchmark indices - Sensex and Nifty finally closed the day with the gains of 1.5%.
Provisional data released by exchanges indicate net buying from Foreign Institutional Investors (FIIs) by around 200 Crores while Domestic Institutional Investors made net sell of 100 Crores. Derivatives data indicate buying coming into Index Calls and futures which forms a base of 5000 for the markets, atleast for this expiry.
Technically Nifty is able to give a breakout from resistance zone of 5060-5080, though it is quite close to that zone. If Nifty manages to stay above this level tomorrow then we could see markets heading to 5180 levels for sure.
Dow Jones is currently trading 1.5% up and chances are bright that we might see a gap up opening tomorrow. Traders who are willing to take fresh positions are advised to wait and resort to "Sell on rise" strategy at around 5180-5190 levels with target price of 5100 and stop-loss of 5250. On the contrary if Nifty goes below 5060, one may buy Nifty with target price of 5180 and stop-loss can be placed at 4985. Traders who already hold a long position can place the stop-loss at 5020.
Stock-specific Cipla and Maruti have touched their target prices of 330 and 1330 respectively. Information Technology stocks are looking weak and hence, one is advised to sell TCS on tomorrow's rise. One may sell TCS at 765 with a target price of 720 and stop-loss of 805.
Wishing you a great trading day tomorrow!!

Nifty in narrow range - support 4960 resistance 5060 - 10th June 2010

2010-06-09T17:22:00.001-07:00

Indian Stock Markets had a lacklustre session on Wednesday as markets failed to retain the gains made in the first half of the trading session and finally closing the day almost flat. Nifty which made the high of 5050 during mid session closed the day at 5000, virtualy giving up all the gains.

Provisional data indicate net selling by Foreign Institutional Investors (FIIs) by around 250 Crores while Domestic Institutional Investors made net purchases of Rs. 150 Crores. In the derivatives segment, FIIs seem to cover up few short positions as they made net purchases by around 500 Crores in the Index and Stock Futures segment.

Overnight Dow Jones has closed in negative territory, as probe in BP Oil Spill starts. It seems Dow Jones weak closing might not impact the Indian equity markets much, but technically, markets are looking to trade in a narrow range between 4950-5080 range. 200 day moving average stands at 5000 which brings support while 30 day moving average stands at 5050 which brings resistance. Awesome Oscillator too is giving a breakout only above 5060.

Thus, traders who plan to take fresh positions may wait for a while. In case Nifty breaks 5080 on the upside, one may take buy position in the markets with a target of 5200 and stop-loss of 5020. Similarly, if Nifty breaks 4940 on the downside, one may take sell position in Nifty with target price of 4750-4800 and Stop-loss of 5005.

Our pair trade strategy of Kotak-SBI is still giving us gains. One may retain this position and only come out on the levels as discussed earlier. Cipla is still hovering close to its target price of 330.

Wishing you a great trading day today!!

Nifty hold support levels but concerns remain strong - 09th June 2010

2010-06-08T09:20:00.000-07:00

As discussed in the yesterday's post, Indian Stock Markets had a tough trading session today, finally closing the day down by around 1%. Nifty found good support in the range discussed yesterday (between 4960-4980) and closed the day @ 4987. This particular suppot range is quite critical for the Indian markets as it will confirm the higher-highs and higher-lows trend built after the last correction to 4800.

Provisional data released by exchanges indicate selling by Foreign Institutional Investors by around 200 Crores. In the derivatives segment too, FIIs have been net sellers of Index and Stock Futures. In the Options segment, FIIs have been net buyers. The Put prices for Nifty indicate some buying coming in there, hence indicating further downside.

US has finally come in green after Bernake's positive comments on US economy, currently trading up around half-a-percent. It is critical that Dow Jones finds some support at around current levels, else we might see another round of steep correction in the markets which may take Dow Jones down to 9200-9300 levels.

Technically, Nifty is also trading in a support zone of 4940-4980. If Nifty breaches 4940 on the downside then we might see some some sharp selling coming into Indian markets which may take it to 4750-4800 levels. Whilst if it finds some support around the current levels, then we might see some resistance coming in 5060-5100 range.

The traders who have taken long position today can continue to hold it till Nifty breaches 4935 on the downside. The target on the upside can be placed at 5100 where it might face some strong resistance.

Kotak Bank- SBI pair trade strategy has given up some of its gains today, but still in positive zone. One may continue to hold the position till the levels breached. These levels have been discussed in Friday's post.

Wishing you a great trading day tomorrow!!!

Nifty back to support zone - 08th June 2010

2010-06-07T17:28:00.000-07:00

As everyone expected, equities worldwide tumbled on Monday, fearing that Europe crisis could lead to double-dip in the equities market. The equities in Asia fell in the range of 2-4%, the commodities and financial stocks bearing the maximum brunt, LME is at eight months low.

The timings of European crisis were worse for Europe and US. Just when things were slowly building up and various economic indicators started giving positive signals, the European crisis occurred which has taken back up all the gains that US / European markets have made in this year.

Indian stocks, though has been doing pretty good, is likely to face another test of FII outflow. Though I have a feeling that we might not repeat the crash in 2008 as we have been able to show resilliance and tremendous comeback during the previous crash. Hence, any major correction can be taken as good opportunity to buy stocks.

Provisional data released by exchanges yesterday have been dismal by all means. Both Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have been net sellers in Capital Market by around 400 and 200 Crores respectively. In Derivatives segment, FIIs have been net sellers of more than 1500 Crores in Index futures which agains gives negative cues to the markets.

US markets overnight have closed 1% down, now close to 9800 levels and hence, we may once again see a gap-down opening today morning in Indian markets. Technically, Nifty is likely to face good support at 4960-4980 range, where one may buy the Index futures. The stop-loss can be maintained if Nifty goes below 4920 while target price can be maintained at 5100. Dow Jones is also now in its support zone of 9600-9800 and if it makes any intermediate recovery from these levels would surely help Indian stock markets in recovering some of their losses.

The pair-trade recommended yesterday (Kotak Buy and SBI Sell) has given some wonderful results. In the midst of negative bias, Kotak Bank has closed positive yesterday while SBI has fallen by 2.5%. One may retain the strategy and come out on the levels mentioned in the yesterday's post.

Wishing you a great trading day today!!!

Equities set for another roller-coaster ride - 06th June 2010

2010-06-06T08:43:00.001-07:00

Friday has brought mixed news for Indian Stock Markets. Whilst on one side, Indian benchmark indices were able to close above strong psycological levels while on the other side US markets crash (Dow Jones below 10000 is really scary) on the back of employment data and Hungary crisis has brought worries of another meltdown.
Technically, Nifty has been making higher lows and higher highs after May crash to 4800 and this trend is breached only if Nifty closes below 4960. Another support level for Nifty stands at 5050-5070 range. If Nifty is able to close tomorrow around these levels, then there will be a strong chance that Nifty can again revive its upward journey which may take Nifty to 5200.
Hence the traders are advised to buy Nifty futures if it trades around 4995-5005 range on a gap down opening with stop-loss of 4950 and target price of 5170. On the other side, if Nifty goes below 4930, one may sell Nifty futures with stop-loss of 5010 and target price of 4830.
After Maruti-Hero Honda successul pair strategy, another one for you. One may buy Kotak Bank futures and sell SBI futures tomorrow morning. One may book profit / loss in this strategy in the following circumstances:

SBI goes above 2420 or goes below 2220.
Kotak Bank goes above 800 or goes below 695.

Wishing you a great trading day tomorrow!!!

Outlook still cautious on equities amidst short term reversal - 04th June 2010

2010-06-03T17:21:00.001-07:00

Indian Stock Markets had a good day on Thursday, clocking the gains of 2%. Thursday were one of the days when markets didn't show any signs of weakness and right from the opening bell till closing, traded strongly.

In yesterday's post, we discussed that there is high probability that Nifty can break its crucial resistance zone of 5060-5090. Nifty broke this zone and closed the day at 5110. Meanwhile, it has also breached the target level of 5115 discussed yesterday.

Provisional data provided by exchange gives a positive sign. Foreign Institutional Investors have been net buyers by around 500 Crores Rs while DIIs too joined the party by making net purchases of around 100 Crores. In Derivatives segment too, FIIs have made net purchases of approx 2000 Crores in Index futures, which indicates some kind of support formation @ 5000-5050 levels.

US markets closed flat overnight and we might see flattish kind of opening on Indian bourses. On the upside, Nifty is likely to face some resistance in 5030-5050 range, albeit any correction coming in these levels can be used to take buy position in Nifty. One may take buy position in Nifty June Futures @ 5060-5080 levels with target price of 5180 and stop-loss can be maintained at 5005. Stock-specific, one may book profits in Maruti in 1320-1330 range.

Wishing you a great trading day today!!

Renewed attempt to break crucial resistance zone, but fundamental concerns remain strong - 02nd June 2010

2010-06-02T08:55:00.000-07:00

Indian Stock Markets had a volatile trading session today as it gyrated violently within a range. Throughout the day, Nifty traded in a range of 4950-4995. Only during the last half-an-hour, the market broken loose the range on the upside and closed the day at 5019, up by 1%.

Among the sectors, Telecom sector had a good day, with various experts talked about consolidation happening in the sector soon. Also, RCOM renegotiation with MTN flared the stock and it closed the day up 11%. Auto sector also did well after monthly sales report indicate decent growth trend in sales - best ever for Hero Honda and Maruti Suzuki.

Technically, the stock is managed to float above 200 day moving average but it is still trading below 30 days and 90 days simple moving average, which indicates bearish trend for the short term. Awesome Osciallator indicator is also giving a bearish signal. Provisional data released by exchanges give subdued picture as FIIs remain net sellers by 165 crores while DIIs have been net buyers by the same amount.

Though the encouraging sign is that Nifty is again closing in to the crucial resistance zone of 5060-5090. With US markets opened up on decent note (up 1%), chances of re-testing of 5060-5090 resistance zone is high. If it happens, then this will be its third attempt in last 2 weeks and probability of breaking this zone is higher this time. Thus, one may buy Nifty futures if it manages to break 5055 on the upside with stop loss of 4990 and target price of 5115. On the flip side, one may sell Nifty if it falls back to 4950 levels, with target of 4860 and stop-loss of 5015.

Stock specific, one may sell Hero Honda in 2005-2020 range with target price of 1850 and stop-loss of 2060. Technical indicators are giving strong buy signals but psycological levels of 2000 and strong correction from those levels 2 months back can give some heart to the traders. Cipla recommendation still remains intact.

Wishing you a great trading day tomorrow!!!

Will next move bring surprise or panic in Indian Stock Markets - Wait and Watch - 2nd June 2010

2010-06-01T10:10:00.001-07:00

Indian Stock Markets did just what was feared. After having a gap down opening, Nifty tried to consolidate in 5030-5050 range, but weak opening in European markets triggered the alarm button and markets slid down steeply. Finally, it closed the day @ 4970 - a fall of 116 points.

The provisional data released by exchanges also give a dismal picture. Foreign Institutional Investors have been net sellers by around 550 crores while Domestic Institutions have been net buyers by around 200 Crores. In derivatives segment too, FIIs have been net sellers in futures contracts by around 1400 Crores. This data indicates growing concern among global investors on valuation front and whether the given growth trajectory is likely to be maintained in future or not.

Technically too, as we discussed yesterday, were giving negative signals. Now the markets have fallen steeply, one need to be cautious around the current levels as markets may pick any direction. Traders are advised to sell Nifty, if it breaches 4915 on the downside with stop-loss @ 4980 and target price of 4830. On the other side, one may buy Nifty if it breaches 5040 on the upside with stop-loss of 4990 and target price of 5115. Traders are advised not to take any fresh position in 4920-5040 range as markets may consolidate in this range and pick any direction.

Our pair trade of buying Maruti Suzuki and selling Hero Honda futures have given handsome returns today itself. At one point of time, Maruti was trading at 1290 (Buy Price - 1240) while Hero Honda trading at 1935 (Selling Price - 1940) thus giving consolidated returns of 11000 Rs per lot. One may continue to hold this pair trade with trigger prices mentioned in the previous post.

Cipla still seems a good buy at the current levels as it is able to create a base in 312-316 range. It is likely to touch 330 in the near term. One may enter into stock at around current levels with Stop-loss of 314 and target price of 330.

Wishing you a great trading day tomorrow!!!

Indian equity markets in strong resistance zone, fall likely - 01st June 2010

2010-05-31T09:32:00.000-07:00

As we discussed yesterday, Indian Stock Markets remained in a range-bound session throughout the day, albeit it closed the day with a positive bias. Provisional data released by exchanges also gave a positive cue as FIIs have been net buyers by around 600 Crores during the day, while DIIs remained almost unbiased with net sell of around 70 Crores.

But traders need to be cautious at the current levels. If we closely analyze the charts for this year, Nifty has has been hovering around 200 days moving average, but trading below 30 days moving average. RSI has also moved above 50 (closing on over-bought zone) and Awesome Oscillator indicator is also giving negative signals.

Cumulatively, traders can adopt "Sell on Rise" for next few trading sessions. One may sell Nifty June Futures in 5060-5080 range with stop-loss maintained at 5115 and target price of 4980.

Stock specific, one may adopt pair trade by buying Maruti Suzuki futures and selling Hero Honda Futures. Maruti Suzuki share, after sliding in last few months, is trying to build base in 1170-1200 range and has bounced back twice from those levels. Hero Honda on the other side has reached strong resistance zone of 1950-2000 range. One may book the profit / loss in the pair trade under the following cases:

1) Maruti touches 1325 on the upside or 1150 on the downside. (Current Market Price - 1240, lot size - 200)

2) Hero Honda touches 1830 on the downside or 2030 on the upside ( Current Market Price - 1940, lot size - 200).

Wishing you a great trading day tomorrow!!!

Indian Stock Markets lack direction as mixture of positive and negative cues emerge - 31st May 2010

2010-05-30T11:18:00.000-07:00

Indian Stock Markets had a good trading session on Friday. After taking positive cues from US markets overnight, benchmark indices had a gap up opening. The market consolidate throughout the day then and finally closed the day at the crucial levels. Nifty is sitting right at the top of its crucial resistance level of 5066 where it is likely to face a stiff resistance, especially in the backdrop of weak US markets and downgrading of Spain sovereign debt ratings.

Provisional data though for FIIs have given a positive cue. FIIs after being net sellers for last few days have finally become net buyers on Friday. As per provisional data released by exchanges, FIIs were net buyers by around 400 crores while Domestic Institutional Investors (DII) have been net buyers by around 350 Crores.

Stock specific, commodities space has done really well. Sterlite Industries recommended on 24th May has closed above its target price of 680. Maruti is also looking good and now making a nice support level in 1150-1200 price range.

One thing which is worth mentioning is the discount in Nifty Futures (-30 pts) which is quite significant. Albeit, the provisional data for FIIs indicate a different picture all around as it indicates a net buying of about 900 Crores in Index Futures. Thus, it seems that domestic institutions and traders are bearish about the markets in the near term while FIIs are anticipating rebound in Indian equity markets.

Technically, Nifty is now standing at the crucial resistance range of 5070-5105. We need to have a closer look at the trading range in next 3-4 days. For Nifty June, 4970- 5000 range is a strong support level. Tomorrow markets are likely to open weak and Nifty may have a gap down opening by 1-1.5% which will directly take Nifty to this support zone. In such a scenario, one may buy Nifty June futures with Stop-loss of 4940 and target price of 5040. Similarly on the upside, one may sell Nifty June Futures in the range of 5060-5080 with Stop-loss of 5115 and target price of 4980. Traders are advised not to take any position in the range between 5000-5050 as markets can take either direction in such case.

Options traders may opt for Bull spread by buying 5000 Nifty Call and Selling 5100 Call and 5300 Call. The strategy can give you gains if markets stay above 5000 or will lead to limited / no loss if Nifty stays below 5000. Though in this case one may ensure to square-off the position if Nifty goes above 5360 levels.

Wishing you a great trading day tomorrow!!!

From Support zone, Indian stock markets head to Resistance Zone - 28th May 2010

2010-05-27T17:36:00.000-07:00

As cricketing experts say that "T20-T20 match is the game of momentum. The team that picks up the momentum is likely to win the match.". The analogy can be seen in stock markets as well. Two days back when markets were correcting, every expert on TV talked about further downtrend in the market. Various broking houses had suggested further fall of 10-15% in the markets. Now when markets have made a strong comeback, these voices have been toned down and few have now changed their stances, citing robust Indian economy as evergreen excuse :)

Though fundamentally, nothing much has changed for the equity markets. Indian economy will surely feel the heat of a slowdown in European economy. We also need to take care of infation levels which are too high, thus, probaibility of an Interest rate hike is high. The stocks are trading at high valuations which limit the further upside in the markets.

Technically too we are entering into strong resistance zone that starts from 5070 to 5300. In this resistance zone, there are several levels that will be difficult to break and hence, major upside from the current levels will surely be a slow and tedious task for the markets.

US financial markets have closed with 3% upside overnight and this will surely have a hangover effect on the Asian bourses. In India, we might see a gap-up opening after which we might see some consolidation happening in 5030-5070 levels (for Nifty). The first level of resistance can come in 5070-5105 levels. Once this is breached, the next level to watch out for is 5170-5200 which seems a big resistance zone.

Thus traders can adopt "Sell on Rise" strategy till Nifty breaches 5200 levels on the upside. On the downside, Nifty may find a support at 4930-4950. If this level is breached, then we might see markets heading to 4800 levels again.

June series are expected to be volatile as markets may try to find some direction for itself. Those who want to take a bit of risk may sell both Nifty 5100 Call and Nifty 4900 Put. This will give you premium of around 200 Rs. One may keep stop-loss for the strategy at 5325 on the upside and 4690 on the downside. One may book profits in it when combined premium for the strategy reduces to 80 Rs.

Wishing you a great trading day!!!

Is correction over???? - 27th May 2010

2010-05-26T07:57:00.000-07:00

The most fascinating thing about financial markets have been the uncertainity. I completed my yesterday's post at around 12:00 A.M IST and Dow Jones at that time was trading 200 points down. By the time Dow closed after two hours (at 2:00 A.M IST), it was almost flat. It has spoilt my strategy built for the day :(

Anyways, bounce back in US markets from below 10000 gave instant shot of bullishness to the world financial markets today. Indian equity markets had a gap up opening today and gained strength during afternoon once Europe too had a gap up opening by around 2-3%. Finally, Indian bourses closed the day up by around 2.5%.

Commodities specific stocks regained some of the lost ground today. SAIL, Hindalco, Sterlite Industries were up 5-7% each while financial stocks like IDFC, and ICICI Bank too had a good day today, gaining around 2-4%.

Today's gain seems more of a short-covering on the backdrop of immense selling seen in the last few days. Provisional data also indicate lack of fresh buying by Foreign Institutional Investors (FII). According to provisional data, FII have been net-sellers by around 200 crores while Domestic Institutional Investors have bought equities worth 70 crores. This data is not encouraging, especially on the day when bourses were up by 2.5%.

Hence, the traders can adopt "Sell-on-rise" strategy, but close to 5000 levels for Nifty. The traders can sell Nifty June futures in 4970-4980 levels with stop-loss of 5070-5080 and target of 4750. Since tomorrow is expiry day, we might see fresh short positions being created, especially during afternoon session. Hence day traders can sell Nifty May around 1:00 P.M (when European markets open) with stop-loss of 1% from those levels.

Among the stocks, one may buy NIIT Technologies @ 182-185 levels with target price of 207 and stop-loss of 168. The stock fundamentally has been quite a performer in last few quarters, clocking Net Profit Margin of 23-25% which is quite good.

I would like to share one note of experience. If there arises a problem that put every country's economy into danger, then we can sit back and relax, because chances are bright that some way out will be found to tackle the same. In 2008 when global economy came into recession, every major country swung into action and took collaborative action to prevent the same and restore the confidence. Now if Europe issue balloons into a global problem, then one may take risk and invest into Indian stocks because chances are bright that some solution will be found... But.. Only if it derails every economy including USA.

As of now, European issue seemed not putting US economy into danger as various data including Employment, Retail Sales, Housing has shown an encouraging trend. Let's see how coming days / months pan out for Europe and rest of the world... Keep an eye on it...

Wishing you a great day tomorrow as It's TIME TO SAY GOOD BYE TO MAY SERIES!!!!

Panic spooked the Indian bourses, though support zone acts as a cushion - 26th May 2010

2010-05-25T11:37:00.000-07:00

If Monday was full of enthusiasm on account of Reliance patch up, then Tuesday was just the opposite. Overnight weak closing in US markets triggered a gap down openings for Indian bourses. The weakness persisted throughout the day and accentuated during afternoon when Europe opened about 2-3% down. Finally, the benchmark Indices - Nifty and Sensex closed the day, down by around 3%.

The opening on US markets is not good either. Dow Jones has already breached 10000 mark and is trading around 9900 levels. If this weakeness persisted till closing, then we are likely to see a major gap down opening in the Indian and other Asian markets tomorrow, as 10000 levels for Dow Jones was crucial to maintain.

In our yesterday's discussion, we talked about major fall in Nifty to 4770 if it breaches 4870. We had just seen the exact happening today with Nifty June contract making a day's low of 4765 before briefly rebounding to 4790. Technically though, we are sitting on the broader support band for Nifty between 4600-4800. Tomorrow possible gap down opening may push Nifty down to 4700 levels during early trades, but one must maintain caution and do not attempt to buy / sell Nifty at those levels. One must take 4700 levels on Nifty to evaluate the strength of the market. If Nifty manages to stay afloat 4680-4710 levels with consistent rebounds, then we may Nifty rebounding to 4850 levels. On the contrary if Nifty breaches 4680 and sustains there for half-an-hour or more, then fresh sell positions on Nifty can be taken with stop-loss of 4725 and target price of 4620.

Options traders can sell both Nifty 4700 Call and 4700 Put and buy 4500 Put to hedge the position. This strategy will come into losses if Nifty crosses 5050 levels. This level can be taken as stop-loss for the strategy. On the downside, the maximum profit if Nifty retains between 4700 and 4500.

There are two stocks that really look interesting at the moment are DCHL and NDTV. Both the stocks have corrected quite a bit in last few days and it is likely to give a small rebound in the coming days. DCHL has already entered its strong support zone of 105-120. One may buy this stock with stop-loss of 102 and target price of 140.

NDTV too looked strong at the current levels. The stock has corrected quite a bit in last few days and now likely to see some rebound in the coming days. One may buy this stock in 93-98 Rs range with stop-loss of 86 and target price of 115.

Wishing you a great trading day tomorrow!!! Shaba Kher...

Short covering RIL-ADAG patchup not able to take Indian stock markets up - 25th May 2010

2010-05-24T09:52:00.000-07:00

Sunday brought a much suprised good news for Indian economy in a form of patch up stitched between two warring brothers and owners of two major business houses of the country- Reliance Industries and Anil Dhirubhai Ambani Group (ADAG).

Indian stock markets too reacted positively to the development and had a gap-up opening of about 1.5% each. The markets further made their way up and at one time Nifty was trading above 5000 mark which gave hope to the participants of a consolidation around those levels. But with soft opening in European bourses, markets started loosing its ground and finally closing the day at 4943.

The provisional data released by exchanges indicate selling of around 1000 crores by FIIs, though, it is ably supported by a buy of around 1100 crores by Domestic Institutional Investors (DIIs). It should be noted that FIIs have already sold equities worth 11000 crores in the month of May, which should be a concern for the Indian stock markets.

Another positive factor that might have drived the markets up was "Short-covering". The markets have lost almost 7-8% in this month and it was widely expected that some of the short positions in May series will be covered which can help Nifty move beyong 5000 levels. The initial part of the day saw some of the shorts being covered, but Europe soft opening triggered the fresh round of short positions created in the markets. Though, there are certain indications of short covering happening around 4930-4950 range, which should act as mild support for the markets.

US markets have opened up soft and European markets too have been trading in a narrow range. If the trend persists, we might see a flattish kind of opening for the markets. 4870-4890 should act as a good support level for the Nifty. On the upper side, 5030-5050 acts as a strong resistance. For tomorrow, traders should maintain caution and wait on the sidelines till markets take a definite trend.

If Nifty able to breach 4870 levels on the downside, then traders can open short positions with stop-loss of 4925 and target of 4770. Whilst if Nifty goes up and breaches 5030 on the upside, one may sell Nifty with Stop-loss at 5080 and target price of 4925.

No stock-specific recommendations for now. The previous recommendations for Maruti, Sterlite and Cipla remain intact.

Before we close the article, a note of caution. Many a times we try to do bottom fishing especially during times when markets seem weak and suddenly we see markets rebounding and we end up with nothing in our hands. By now we all know that markets are weak. Almost every analyst is giving bolder levels on the downside. JM Financial has even talked about Nifty @ 4100 in the medium term. But the fact remains is "nobody knows it". Hence, it is advised to pick good quality stocks at every correction.

Another piece of statistics before I close the article. In last one year Dow Jones has actually outperformed Sensex by around 10%. Seems strange!!!! Yes... But its true....

Wishing you a great trading day tomorrow!!! Good night...

Short covering likely to drive Indian equity markets up, but caution advised at higher levels - 24th May 2010

2010-05-23T01:26:00.000-07:00

As we have been discussing for last two days, Indian Stock Markets have rebounded strongly from their support levels (Nifty: 4850) on Friday. From its lows of 4840, Nifty rebounded strongly to reach the target of 4925 comfortably and closing the day @4931.

Overnight closing on Dow Jones has been good and we may expect Indian Stock Markets to open at decent note on Monday morning. As it is expiry week, hence it is likely that we might see some degree of short covering coming into the markets which may take Nifty close to 5000 levels, where we may see some fresh short positions built in again. The important resistance levels come at 503-5070 range. If this range if breached on closing basis, we may see Nifty going till 5200. But the probability of this happening is unlikely as global factors are still competitive.

Fundamentally also the recession in Europe will likely to affect almost every major weight in Nifty, thus, valuations may not justify too much upside from the current levels.

Thus, it is advised that traders may go long on Nifty within the range 4920-4950 with a target level of 5040-5060 and stop-loss can be placed at 4870. Once Nifty breaches 5040, one may switch to "sell on rise" strategy where one may sell Nifty in 5040-5060 range with stop-loss at 5160 and target price of 4750. Hence, the risk-reward ratio becomes really lucrative in "Sell-on-rise" strategy.

We had advised traders to buy Maruti in 1190-1210 range on Wednesday with target of 1350 and stop-loss at 1140. The stock has rebounded strongly from 1170 to close on friday at 1240. Fundamentally also, the stock is currently trading at attractive levels and can be bought from long-term perspective.

Technically, Sterlite Industries has entered the strong support zone from where it is expected to take a short term bounce. One may buy Sterlite Industries in 620-640 range with target price of 680 and stop loss of 605. Similarly, one may buy Cipla in 316-318 range with target price of 330 and stop-loss of 305.

Options traders can sell Nifty 4400 Put and Nifty 5300 Call for June series with stop-loss at 5350 on the upside and 4350 on the downside.

Before I adieu, I would like to remind everyone that atleast Indian Stock Markets is still in structured bull phase. We are not as leverage as we were in 2007 that further accentuate the fall. We have come out better than the others from the grip of recession. Though the support drivers for the markets to go up are still not intact but downside too is limited. Henceforth, one may try to adopt stock specific approach and buy good quality stock during corrections.

Wishing you a great investing day and the coming week!!! Hopefully, we again meet with big smile on our faces.. He ha ha :)

Indian Stock Markets looked weak but entering the strong support zone - 20th May 2010

2010-05-20T08:45:00.000-07:00

It seems yesterday's discussion seems more relevant for today's post. The support level of 4850-4800 on Nifty didn't tested today, but chances are omnious that it will surely be tested tomorrow when markets open. Dow Jones is currently trading more than 2% down (250 pts). If this weakness persists overnight, then we might see ateast 100 points gap down opening and put market in our set support-zone of 4850.

FIIs data doesn't give encouraging picture either. Foreign Institutional Investors have been net sellers of more than 600 Crores while Domestic Institutions were net buyers of Rs. 700 Crores. Amidst the Nifty, Public Oil Production companies like Oil India, ONGC were up by around 8-9% while IGL was down by 5%.

Over a longer term, investors have some good reasons to be cautious. The recession has gripped the European markets and hence, strategies of some Indian companies to move to Eurozone at the time of US recession seem backfired and hence, profitabilties are likely to hit for several front line companies in Nifty and Sensex. Similarly Asian economies have now been suffering from Inflationary problems which are the offshoots of loose monetary policies adopted by governments during the midst of global recession.

Hence, long term investors need to adopt a stock specific approach and try to concentrate on companies that work on domestic theme and away from inflatonary pressures. One such company is FDC. FDC is a pharmaceutical company that works in the field of Opthalmics and Oral rehydration salts. Electral that we all might have consumed at the time of dehydration is company's flagship product. Besides the company has expanded itself into other areas and pushing its growth plans steadily. The company's exposure to overseas markets is insignificant. The stock is currently trading for Rs. 90 and can be accumulated at around 83-85 Rs (25%), 78-80 Rs (25%) and 70-72 Rs. (50%).

Derivative traders may go long on Nifty around 4825 levels with stop-loss of 4780 and target of 4925. If it breaches 4775 on the downside, one may create fresh short positions with target of 4700 and Stop-loss of 4825.

One may also adopt Pair strategy wherein one may buy Nifty @ 4850 and sell Bank Nifty @ 8980 in te ratio 2:1 i.e., one may buy two lots of Nifty around 4850 and sell one lot of Bank Nifty @ 8980. The target levels for Bank Nifty is 8680 and for Nifty is 4925. If any of these breach, one may close both the positions and book their P/L. On the reverse side, one may close the position if Nifty breaches 4775 on the downside or Bank Nifty reaches 9400 on the upside.

Its a testing time for everyone related to stock market, but one should not drive its money on emotions and rather try to derive their decisions on price and valuations.

Wishing you a great trading day tomorrow!!!!

Amidst the panic, stock markets enter strong support zone - 19th May 2010

2010-05-19T08:45:00.001-07:00

ndian Stock Markets, after a stable gap down opening, slide steeply in the latter half of the day and end the day with losses of more than 3%. Provisional data for today indicates strong selling from FIIs @ 1300 Crores. Among the losers, high beta stocks in Nifty like ICICI bank, Sterlite Industries and Tata Motors have slid more than 7%. JP Associates hit its 52-week low of 120 Rs.

The current level augment that markets are now entering the panic phase now. Till the time, Nifty remained above 5000 levels, there seemed a hope that markets will gradually recover and some buying was seen around 5000-5100 levels. But once these levels have been breached, the only way markets finding themselves going is "DOWN".

Amidst such scenario, whats should a trader do now? If we think rationally, Nifty should find some strong support @ 4800-4850 levels. Till the time, markets remain above 4775, there are strong chances that markets can recover till 4950. Hence, traders can now go long on Nifty tomorrow (if markets have gap-down opening) at around 4850 with Stop-loss of 4775 and target of 4950.

Options traders can play on reverse-straddle tomorrow selling both 4800 Call and Put. This should fetch around Rs. 200. One may keep a stop-loss @ 4600 on downside and 5000 on the upper side.

Amongst the stocks, Maruti @ 1200-1210 levels. The stock is currently at its absolute base of last 9 months and should act as a strong support level. One may keep a stop-loss of 1140 and target price of 1350 on the stock. Fundamentally also, the stock has come to the decent levels.

Anyways, time is surely test the nerves of several traders and chances are ominous that short-sellers may find themselves stuck in no-win situation. So temptation to go short should be resisted as market enters its strong support zone of 4800-4850.

Nifty likely to consolidate around current levels till budget - Indian Stock Markets Bulletein for 2nd Feb to 5th Feb 2010

2010-02-01T16:44:00.000-08:00

Indian Stock Markets have shown some strength in last few days, allying fears of double-dip recession and tightening monetary policies. Technically speaking, such correction was quite evident in the first half of this year, as we had seen a massive rally in 2009. Institutions who have been buying throughout the 2009 will surely like to book profits. The investors who were on the sidelines were waiting for such correction to invest their money into Indian equities.

Another thing that have helped markets worldwide is the clarity on the Obama's plan. Yesterday's announcement on 3 trillion $ spending in this fiscal will give markets a confidence that US economy will further improve this year. The GDP data that came on Friday was also good, albeit on lower base. But it has indicated that lower base is now almost created and things should only improve in the near future.

In such scenario, we might see some consistent rally, pre budget. My sense is that Budget will also be industry friendly this year. I feel that if FM can roll back some of fiscal incentive this year on one hand, then it will surely provide some other incentives that will help industries move forward.

Also government is under pressure on inflation front now and we have seen some major steps being taken in last few weeks to curb the inflation. Only Sharad Pawar needs to just "Shut up" its mouth to prevent further fuel the inflation.

Coming back to the markets, I feel that investors can buy "Domestic" theme at this juncture. Consumption based companies should be in demand. The government has also realized that in order to achieve 8-10% GDP, they must support consumption theme. Exports are more suspectible to shocks as global economy is still lagging behind and hence, might not able to contribute significantly in country's growth.

Few sectors that are worth mentioning is "Infrastructure", "Power", "Logistics", "FMCG', "Packaging" and "Auto". Banks can be avoided as tightening of monetary policies will only make things difficult to maintain their Net Profit Margins.

Technically, markets are likely to face some resistance at 4960-4980 levels. It is likely to drop from those levels at-least two times before it can further march to break these levels. On the downside, 4880-4900 becomes a strong base. Hence, for today, one may buy Nifty with target of 4960-4980 before one may go short on it. Please note that this level is likely to get breached and one may see markets again climbing 5100 levels.

Option traders can buy 4900 Nifty Call and Sell one 5100 Call and two 5200 Calls and one 5300 Call. This strategy will give profit till Nifty breaches 5300, which is a significant jump for this expiry.

Wishing you a great week of trading...

Correction to continue, but provides good buying opportunity - Indian Stock Markets bulletein for 27th Jan to 29th Jan 2010

2010-01-26T06:46:00.000-08:00

The last week has been a pretty tough one for the Indian Stock Markets. First Barack Obama suprise announcement regarding curb on properitory trading and then, China's tightening norms hit the equities market badly. Indian benchmark indices fell by more than 5% after these announcements. Mid cap and Low cap stocks fell much deeper which indicates that correction is likely to continue.

The much needed correction is now on the cards and will give long term investors enough scope to invest into the Indian markets. The fundamentals remain strengthen, but one needs to remain cautious on the sector / company where one is putting its money. The domestic sectors like paper, media, FMCG, are fundamentally good one and less affected by global factors. Whilst the sectors like Information Technology, Oil, Pharma, should be avoided as these are more closely aligned with international events.

Technically also, NIFTY has break the major support levels. It is below 34 days exponential average which indicates that medium term outlook is not good. The next strong support is seen at 4700-4725 from where the markets can make annother attempt towards 5100.

Option traders can safely take bear spread strategy, buying 5000 Put and sell 4800 Put. One may also safely sell 5300 Nifty Calls Feb and keep 5250 as stop loss to move out of the strategy.

An interesting stock that is worth mentioning is "Valson Industries" It is a textile company with consistent profit records. Also, the company is giving 2.5 Rs dividend every year on Face value of Rs. 10. The stock is currently trading at 25 Rs which indicates dividend of 10% which is always more than bank rates. The stock is only traded in BSE.

Weekly Outlook for Indian Stock Markets - 20th July to 24th July 2009

2009-07-19T17:37:00.000-07:00

Friday's Review
Indian stock markets had a great run on Friday with benchmark indices going up by yet another 3-4%. Among the sectors, Bank Nifty was up by 4.5%. Leading the pack was ICICI Bank which has again roared back to 750 Rs levels. Overall, the entire week has been a memorable one for the markets as it covered up all the losses that it had made during the last week. Further upside from hereon would largely dependent upon monsoon and the global factors.

Apple and Yahoo are due to announce their results on Tuesday which would impact our markets on Wednesday. Crude Inventories data is also due on Wednesday. Crude has again picked up on Friday and trading at around 63 USD per barrel. In domestic markets, no major cap will be announcing their results on Monday / Tuesday, so no major cues other than monsoon.
FII View
FIIs on Friday were net buyers, albeit not the drivers of the rally. In the cash segment, FIIs were net buyers by around 150 crores. The buying, though a positive one, but not so great in the current rally. It seems valuations are the ones that stopping them to participate.

In the Index Futures segment, FIIs made net purchases of 700 crores, adding about 25000 new contracts. In the Index Options segment, FIIs were net sellers by about 330 crores, adding 30000 new contracts. The Open Interest for 4300 Put has increased the maximum by 45% on day-to-day basis. Similarly, the Open Interest for 4300 Call has decreased by 20%, primarily on account of profit-booking.

The above cues indicate range bound markets for the first few days of the markets. Traders can go short on Nifty around 4425 with stop-losses @ 4460 and target levels of 4350.

Stocks Ideas
Satyam Computers and Jp Hydro hit their target prices on Friday, giving gains of around 15% from recommendation levels. The current level do not justify the new recommendations, except for one which is given below:

Scrip Name - Buy/Sell - Recommended Price - Target Price - Stop Loss Price
Infosys Tech - Buy - 1825 - 1930 - 1770

Wishing you a great trading day ahead!!

Weekly Outlook on Indian Stock Markets - 29th June to 3rd July 2009

2009-06-28T10:59:00.000-07:00

Last Week Highlights
The last week marked the expiry of June series. The June series was a lukewarm with indices remained range-bound and closing around May levels itself. During early June, indices once looked to break major psycological levels, but then later sucumbed to profit booking.

Now budget is just right at the corner, and markets are again gaining strength on hopes that new government would take positive measures towards reviving the growth. On Friday, we have seen strong buying by domestic and foreign institutions and this is likely to continue during the next week as well.

The sectors that really look promising is the Banking and Power. Banking stocks have been seeing good accumulation over the last few days, especially mid-sized PSUs like Andhra Bank, Central Bank, UCO Bank, etc. Similarly, Power stocks, except NTPC (as it is fighting legal battle with Reliance), are also seeing some good appreciation in last few days, including PTC, PFC, Power Grid and Reliance Power.

FII View
FII on Friday have been strong buyers in the derivatives segment. In the cash segment, Foreign Institutions purchased stocks worth 550 crores. Domestic Institutions, too, were net buyers by around 330 crores.

In the Index futures segment, FIIs were net buyers of about 1100 crores. Nifty and Bank Nifty have seen some long positions being created. In the Index Options segment, FIIs were again net buyers by 370 crores. Several out-of-money calls seen some good Open Interest build-up and premiums for those have also increased, indicating positive sentiments from the institutions.

In the stocks futures segment though, FIIs were net sellers by 285 crores. It might be done to hedge their index long positions.

The cues indicate further upside in the markets from the current levels, which can be considered as pre-budget rally. It is advised to the traders to keep booking profits at the higher levels and simultaneusly, buy out-of-money call options to hedge their positions on the long side. We might see profit booking coming in the markets after the budget.

Stock Views
On Friday, buy recommendations for Network18 and IVRCL Infra saw their target prices being hit. Those who have not booked profits in IVRCL can remain keep their positions open, by taking target price (364) as stop-loss. We expect this stock to remain bullish till budget.

Few new stock ideas for the week are:

Scrip Name - Buy/Sell - Recommended Price - Target Price - Stop Loss Price
M&M - Buy - 695 - 740 - 684
ABAN - Buy - 895 - 945 - 854
Moserbear - Buy - 93 - 102 - 86

Options Strategy
Buy Nifty 4200Put, 4700 Call and Sell two 3800Puts, 3600 Put - the combined strategy would give losses if Nifty remains range-bound between 4200 and 4600 levels. It will give unlimited profits, if Nifty goes above 4800. On the downside, it comes into losses, if Nifty goes below 3600.

The strategy can be viewed by clicking here...

Wishing you a great trading week ahead!!

Weekly Outlook for Indian Stock Markets - 15th - 19th June 2009

2009-06-14T11:40:00.000-07:00

Past Week Summary
The past week has again been a good one for the stock markets with benchmark indices gaining for the 14th consecutive week. It has been a total turnaround for the equities worldwide and Indian markets have been an out performer.

Among the stocks, IT and Pharmaceuticals sectors have outperformed, while, Banking sector has been a laggard one for the indices. At the current levels, valuations have become a major concern for various companies and hence, we have been seeing selling supply coming in various stocks at the upper levels.

Outlook for next week
The next week can again be a range-bound for the Indian stock markets due to roll-overs. We might see some marginal build up on short side, in the anticipation on budget in July, though, the traders it should not be a major one, after seeing the fate of shorters post elections outcome.

The next week might see some rally or consolidation happening in less volatile stocks / defensive like NTPC, Cipla, Sun Pharma, and Power Grid. These stocks have not seen a meteoritic rise in the bull run and it might be their time now to show some upsurge. Also, these stocks look reasonable in terms of valuations than the other stocks.

FII View
FIIs View have been a positive one for last few months while Domestic Institutions have been booking profits at the current levels. On Friday as well, FIIs were net buyers of around 470 crores in the cash segment.

In the derivatives space, FIIs were net sellers of around 230 crores in the Index Futures segment, reducing their positions by around 1700 contracts. In the July futures, we have seen some Open Interest build-up, which indicates that roll-over has started happening in July futures contract.

In the Index Options, FIIs were net sellers of mere 9 crores, adding around 17000 new contracts. If we break this figure in terms of amount, there has been a decline of around 42 crores, which indicates some positions build-up happened in higher strike price options. (The value calculated for Option contracts is equal to strike price * Lot Size).

In the stock futures segment, Foreign Institutional Investors have been net buyers of 340 crores, reducing their positions by around 5600 contracts. This figure again indicates some short-covering / roll over happening in this segment.

The overall trend indicates volatile sessions for the markets in the days ahead. Bulls might attempt to break psychological levels of 16000 on Sensex and 5000 on Nifty, but it might not be an easy task to do after seeing a strong supply coming in the markets at higher levels.

Hence, traders are advised to go short on Nifty around 4660 levels with a stop-loss at 4750 and cover their position around 4475. Similarly, traders can go long on Nifty around 4475 with stop-loss at 4400 and target of around 4600.

Stocks Ideas
Stocks Ideas discussed in last few days have remained intact. Two new stock ideas that look interesting are as follows:

Scrip Name - Buy/Sell - Recommended Price - Target Price - Stop Loss Price
GVKPIL - Buy - 40.15 - 44 - 36
HCC - Sell -108 - 96 - 115

Options Strategies
1) Buy IFCI 55 Call and Sell 2 IFCI 60 Calls - this strategy would give profit, if IFCI remains below 60. It is currently trading at 51 Rs. One may sell one 60 call immediately, if IFCI moves above 60 Rs. The maximum profit at Friday's closing price is around 90000 Rs. while maximum loss should not be more than 40000 Rs.

2) Buy Nifty 4700 Call and Sell 2 Nifty 4900 Calls and 2 Nifty 5000 Calls - this strategy will lead to maximum profit of around 10000 Rs according to Friday's closing prices. On the other side, it will start giving losses once Nifty crosses 5100 mark. One may move out of this strategy after booking losses, if Nifty crosses 5050 mark.

Wishing you a great week ahead!!

Weekly Outlook for Indian stock markets - 4th to 8th May 2009

2009-05-03T06:46:00.001-07:00

April Highlights
The April series has been exceptionally well for the Indian stock markets. The benchmark indices - Nifty and Sensex have risen up by more than 10% each during last month. Another encouraging indicator for the markets have been continuous buying by FIIs since last month. They have now become "Net Buyers" for 2009, which should be bring positive sentiments into Indian equities as of now.

The last week has been a truncated one for the Indian stock markets. We remained closed on Thursday and Friday and hence, have missed the rally that other Asian markets went through on Thursday. This might help the Indian stock markets in better opening on Monday than its Asian peers.

The next week outlook
Despite some encouraging cues, there are few worrying signs as well. DLF results, announced on Friday, have come as a shocker with its net profit declining by 93% year-on-year basis. This migh put pressure on other real-estate stocks as well.

Another worrying factor was the exports-imports data released on Friday. The exports shrank by 33%, while imports fell down by 32%. Though both exports and imports fall is syncronized, but it indicates the slow down in global trade. This might put pressure on IT and other export-oriented stocks.

Technically speaking, we may see a range-bound market in the coming days. Markets are likely to open gap-up on Monday, but may face its first resistance at around 3580. The next resistance level comes moderate at 3615-3630. Nifty then, face strong resistance at 3670, which could act as a show-stopper.

On the support side, the first support level comes at around 3360-3380. If this level is breached, the next support level comes at 3280-3300 which could provide strong support to the falling bourses.

FII View
Foreign Institutional Investors (FII) are trading heavily in derivatives markets since last few days, but are hedging their poitions quite well. If they are buying in Index futures, they are hedging their positions by selling Calls or buying Puts (to cover for the downside).

Hence, my view is the range-bound market till outcome of elections. One can build long positions when Nifty comes down in 3300 range, with a stop-loss at around 3250. Similarly on the upside, one can build short-positions around 3570-3600 on Nifty, with a stop loss around 3670.

Stock Ideas
On friday, Renuka Sugars and Austral Coke have hit its stop-loss targets, while ABG Shipyard, Tata Elxsi and M&M hitting its target prices. Few more stock ideas are given below:

Scrip Name - Buy/Sell - Recommended Price - Target Price - Stop Loss Price
Dish TV - Buy - 32.5 - 35 - 29.65
Balaji Telefilms - Buy - 43.75 - 54 - 39.65
Adlabs Films - Sell - 225 - 212 - 238
Sterlite Industries - Buy - 415 - 450 - 375
Aban Offshore - Sell - 417 - 365 - 438
Allahabad Bank - Sell - 53 - 50.65 - 55.45
Aurobindo Pharma - Sell - 223 - 209 - 235
Ballarpur Industries - Sell - 16.2 - 15.25 - 16.75
Bank of India - Sell - 241 - 231 - 251

Wishing you a great trading week ahead!!

Weekly Outlook for Indian Stock Markets - 27th to 29th April 2009

2009-04-26T01:44:00.001-07:00

Strong Last Week
The last week has been a decent one for Indian equity markets with benchmark indices went up by around 3%. Psycologically, the indices are able to break through the key resistance levels, which provide encouragement to the bulls for further upside.

The results announced during last week were not so encouraging. While Wipro had pretty good set of numbers, Reliance disappointed. ICICI Bank also came up with poor set of numbers on Saturday. It's net profit down by more than 35% during the year. NPAs have also increased to 2.09% from 1.49% last year. These negative factors may put pressure on the markets during next week.

Expiry and Results might bring volatility during next week
Traders are advised to remain cautious during the next week, as April series is going to expire as well. On the technical side, Nifty may again attempt to test 3500-3515 levels on Monday / Tuesday. If Nifty actually able to breach this level on closing basis for atleast two trading days, then we might see further upside to 3670-3700 levels. Hence, one is advised to speculate on the up side, only if this level is breached on Nifty.

On the downside, markets are expected to test 3380 levels. If this level is breached, then the next strong support level comes at 3300.

Scored 3 Sixes but lost 1 wicket
Out of the stocks discussed, Adlabs Films, Kingfisher Airlines and Binani Cements are able to hit their target prices, while, Century Textiles hit its stop-loss level. Few more stocks ideas are given below:

Scrip Name - Buy / Sell - Recommended Price - Target Price - Stop Loss Price
IDBI - Buy - 68 - 60.5 - 76
Century Textiles - Sell - 247 - 218 - 264
Zee Limited - Sell - 115 - 106 - 123
Austral - Sell - 303 - 280 - 325
Karnataka Bank - Buy - 87 - 95 - 81
Rama Newsprint - Buy - 17 - 20.3 - 14.65
Aditya Birla Nuvo (Long Term)- Buy - 570 - 745 - 425
Dishman Pharma - Buy - 107.5 - 215 - 84

On the Options side, one can take the following strategy for this month's expiry:

Sell Nifty 3200 Call and 3600 Put - this is a strategy in which we are selling deep in-the-money call and put options. This strategy will give maximum profit of 750 Rs per pair if Nifty expires in 3200-3615 range. This strategy will start giving losses, if it breaches this range on either side. Ths strategy is for those who are willing to take risks.

Wishing you a great trading week ahead!!

Weekly Outlook for Indian Stock Markets - 20th April to 24th April 2009

2009-04-19T09:52:00.000-07:00

Last Week Roundup
The last week had been a pretty range-bound for the markets, with benchmark indices gaining just 1% each. The markets have been facing tough resistance around the current levels and hence, one needs to tread cautiously from now on. The traders need to follow strict target prices / stop-loss prices on the open positions.

Key events for next week
There would be flurry of results that are expected to be announced during next week. TCS and Axis Bank will be announcing their annual results on Monday. Tuesday will see HCL Tech, Hero Honda, Rolta and Ultratech coming up with their annual results. These results could bring about the next trigger for the stock markets, either on the upside or on the downside.

Globally, the next week will bring some key events from US. On 22^nd April, we will see Crude Inventories data coming from US. On 23^rd, we will see release of initial claims data and home sales data from US government.

Battle of Bs’ – Bulls and Bears
The next week could see a break-out, either on the upside or the downside. The momentum that markets had built over last few weeks is finally losing its steam. It can be seen from the trading behavior on Thursday and Friday when markets have seen some serious profit booking coming at higher levels. Also, elections are just around the corner and everyone might like to sit on some cash before the elections outcome, which means we may see the up-side remaining cap at around the current levels.

Though, the encouraging factor remains the strong institutional buying coming from foreign players, which indicates that they are hopeful about a possible turnaround in the Indian economy in next 6-12 months. Most of this buying is coming from Asia specific hedge funds, which pulled out the cash from the emerging economies, in the aftermath of Lehman collapse. These funds are now using the huge cash surplus to invest in the Asian economies and broken-down stocks and hence, chances do exist that these funds may actually able to bring about next wave of buying coming into the Indian stocks.

Stock Views
The banking sector has seen some good buying coming throughout the last week. The Bank Nifty index has given the returns of more than 5% during the last week, while the benchmark Nifty index has given the returns of mere 1%. This trend is likely to continue during the next week as well.

Some stocks from mid-cap IT space have also seen some good open-interest build-up, especially in HCL Infosys that has seen the rise in Open Interest of more than 450%. One can buy some mid-cap IT stocks with a trading perspective.

On the other side, we might see some profit booking coming in those stocks that have risen tremendously in last few weeks and hence, advise to stay out of such stocks for a while.

Some stock views that I would like to share are given below:

Scrip Name – Buy / Sell – Recommended Price – Target Price – Stop Loss Price
Core Projects – Sell – 101 – 90.5 – 108.65
Skumarsynf – Sell – 29.15 – 26.5 – 30.5
Patni – Buy – 163 – 175 – 152
Nav Bharat Ventures- Sell – 187 – 173 – 197.65
ABG Shipyard – Buy – 116.5 – 125 – 107.75
BEML – Sell – 480 – 455 – 506
Cummins India – Sell – 212 – 195 – 222
Dish TV – Buy – 29 – 31- 27
Federal Bank – Buy – 173 – 182 – 166
GDL – Buy – 73.5 – 79 – 68
HCL Infosys – Buy – 85 – 97 – 78.35
Hindustan Zinc – Sell – 505 – 477 – 527
Indian Bank – Buy – 115 – 123 – 106
SREINTFIN – Buy – 38.05 – 42 – 34

Wishing you a great week ahead!!

Weekly Outlook for Indian Stock Markets - 13th April to 17th April 2009

2009-04-12T08:05:00.000-07:00

Just few encouraging statements from US financial space and stock markets rallied as if nothing happened... The global markets, including Dalal Street have rallied almost 30% in last two months.

But the real test is just about to begin when the renewed optimism will be tested against the actual financial results due to be announced this month. US companies will see their first quarter results of this financial year, whilst, Indian companies will announce their annual results for 2007-08. These results will determine the financial health of the companies.

The changes in accounting standards in USA might also help companies in displaying healthier balance sheet than what it is actually at the moment. It is widely speculated that comanies may be allowed to defer the notional losses on the open liabilities / assets that they are carrying on the balance sheet for next few months.

Hence, on the backdrop of these events, we might see increase in volatility in the global week in the coming week(s). The coming week will see 1st quarter results announcements by GE (17th), Citi Group (17th), Intel (14th), Johnson and Johnson (14th) in US. The good and bad of these results will have an impact on the markets.

Similarly, in India, Infosys is due to announce the results on Wednesday (15th). The results will give an indication on how badly IT sector has been hit by the problems in US. Also, its guidance for the coming quarter / year will determine the prospects of IT sector in the coming quarters.

Hero Honda will announce its annual result on Friday and it is expected to announce the healthy results for this year. This company has been exception in Auto sector, due to its presence in robust rural sector.

The just concluded week has been a good one for us as well. Most of our stocks views have gone well. On Friday, SCI, Dish TV, have hit their target levels. The long term target for Jain Irrigation System has also hit its target price. Few new stock views are given below:

Scrip Name - Buy / Sell - Recommended Price - Target Price - Stop Loss Price
JP Hydro - Sell - 41.45 - 37 - 44.65
Yes Bank - Buy - 62 - 71 - 53
Meghmani Organics - Buy - 8.75 - 9.85 - 7.6
Jet Airways - Sell - 224 - 203 - 241.5
ABB - Sell - 463 - 438 - 480
Amtek Auto - Buy - 93 - 103 - 83
CESC - Buy - 248 - 264 - 229
GTL Infra - Sell - 31.3 - 29.55 - 32.55
IRB - Buy - 103.5 - 113.5 - 97

Few Options strategies for the coming week are as follows:
1. Sell Ashok Leyland 20 Call and Buy 22.5 Call - this is a bear spread strategy which is taken with a view that Ashok Leyland may trip on profit-booking this week.

2. Sell GVKPIL 27.5 Call and Buy 30 Call - this is again a bear spread strategy which is taken with a view that this stock may come down on account of profit booking.

3. Sell ICICI Bank 380 Put and 430 Call - this strategy is taken with a view that stock may move within a range in the coming days. This will be short term strategy in which one can move out, once you get 4-5 Rs. per pair. One can move out with loss if scrip able to cross 450 mark on downside / 350 Rs. on downside.

Wishing you a great trading week ahead!!!

Weekly Outlook for Indian Stock Markets - 06th April to 10th April, 2009

2009-04-05T17:28:00.000-07:00

The Indian Stock Markets along with global markets have performed reasonably well over the last few days. And if recent events to go by, the "feel-good" factor is expected to continue.

G-20 meeting held last week was a positive one. The countries have pledged $1 trillion into the global financial system which has further assayued the fear of global recession. Also, most of the pain is now out in the street, including possible GM bankruptcy. Hence, the downside in the market looks limited.

But what about the upside? Will we see Dow able to conquer the 10,000 feet again or would we see Nifty pulling back to 4000 levels in the coming weeks? The answer is "doubtful". The journey ahead should not be easy. The way markets have discounted the bad news, it has also digested the good news coming in last few days. The markets will now require continuous flow of better economic data and some positive steps taken by the governments and central banks worldwide.

In India, the coming week is also a truncated one with exchanged closed on Tuesday and Friday. Hence, we are left with only three working days this week. We may see markets correcting a bit this week. It has almost been a up-side journey since last few weeks and hence, institutions may take some time to book profits during the coming week, especially before the scheduled general elections.

On the technical front, we may see Nifty facing stiff resistance at 3250-3275 on the upside. If Nifty manages to breach this level on closing basis, then next resistance comes at 3340-3350 levels. On the downside, we may see Nifty finding support at 3115-3125. The next support level would be in the range of 3060-3080.

The last day of previous week was full of triggers. Bajaj-Auto, Bank of India, Axis Bank, Aptech, Amtek Auto, Jain Irrigations Systems, ABG Shipyard have hit their target levels, while Bajaj Hindustan, Ashok Leyland, Alok Textiles and Balaji Telefilms have hit their stop losses.Two new stock views that I would like to share are:

Scrip Name - Buy / Sell - Recommended Rate - Target Price - Stop Loss Price
ABB - Sell - 452 - 415 - 467
Aditya Birla Nuvo - Sell - 470 - 440 - 481.

On the options side, one can take a collar strategy in Nifty. The strategy is as follows:

1. Buy Nifty 3100 Call and 3200 Put. Sell 3300 Call and 3000 Put - this strategy should be taken in such manner that Buy Premium should be greater than Sell Premium by 170 points. This strategy gives you a loss of Rs. 3750 if Nifty ends up between 3050-3250. Anything above 3250 or below 3050 would yield you profit of Rs. 1250. Here, the risk is greater than reward but the range of risk is only 200 points which should not be much seeing the volatility in the markets for last few days.

2. Sell Nifty 3100 Call and Buy Nifty 3200 Put - this strategy would give you a maximum profit of Rs. 5700 Rs. if Nifty ends up below 3100 on expiry. On the reverse side, it will give you maximum loss of Rs. 4200 if Nifty manages to close above 3300.

Wishing you a great trading week ahead!!

Weekly Outlook for Indian Stock Markets - 30th March to 3rd April 2009

2009-03-29T09:18:00.002-07:00

The Indian stock markets have shown tremendous surge during the last week. The benchmark indices have gained by more than 10%, taking cues from the global markets. Economic indicators, too played a crucial part. Inflation has come down to almost 0%. IIP data for the month of February is also encouraging which may boost the equity markets in the coming week.

Another positive indicator is FII data. FIIs have been net buyers throughout the last week, which indicates the increase in risk appetite among the FII fraternity. The next week could be range-bound with markets trying to consolidate during the current levels. Nifty may oscillate between 3000-3150 levels. Nifty has strong support at 2960 levels, which if breached, could take it down to 2850. On the upper side, Nifty may attempt to touch 3200 levels, but may find strong resistance at 3170.

Few stock views for next week is as follows:

Scrip Name - Buy / Sell - Recommendation Price - Target Price - Stop Loss Price
3iInfotech - Buy - 32 - 34 - 30.5
ABB - Sell - 420 - 390 - 437
ABG Shipyard - Buy - 80 - 86 - 77
Aptech - Buy - 82 - 87 - 77
Bajaj Hind - Sell - 48 - 43 - 50.25
Bata India - Sell - 103.5 - 95 - 108
Canara Bank - Sell - 168 - 161 - 172
Crompton Greaves - Sell - 118 - 111 -121
Escorts - Sell - 38 - 35 - 40
Indus Ind Bank - Sell - 34.5 - 32.5 - 35.5

Few Options trading strategies are given below:

1. Sell Bank Nifty for 4500 Call and 4000 Put for total premium at 11250 Rs. Maximum Profit of Rs. 11250 and maximum Loss will be unlimited. Both are out of the money options and ideal for those who expect markets to remain range-bound between 3800 to 4700 (Curr Value- 4406). The idea is to earn the time value of the contracts which will decrease in the coming days.

2. Sell Bharti Airtel 660 Call for premium of Rs. 7750. Maximum Profit of Rs. 7750 and maximum loss will be unlimited. It is an out-of-money call option, expecting Bharti to fall in the coming days. Stop Loss can be taken at 25 Rs. per lot, which could lead to maximum loss of s. 4500.

3. Buy Cairns India 180 Put for premium of Rs. 11250. Maximum Profit unlimited while maximum loss will be Rs. 11250. It is an out-of-money Put option, anticipating Cairns India to fall down in the coming week.

4. Buy ICICI Bank 380 Put and Sell 360 Put for total premium of Rs. 5600. Maximum profit will be Rs. 8560 while maximum loss will be Rs. 5500. It is a Bear Spread strategy by trading in both are out-of-money Put options, anticipating ICICI bank to come down in the coming week.

5. Buy IFCI 17.5 Put and 25 Call for total premium of Rs. 19700. Maximum Profit will be unlimited and maximum loss will be Rs. 19700. Both are deep out-of-money options, anticipating the stock to remain volatile in the coming days.

6. Sell Nifty 3400 Call and Buy Nifty 3500 Call - Maximum Profit will be Rs. 800 and maximum loss will be Rs. 5800. Again a bear spread by trading in both out-of-money call options. Doesn't expect Nifty to cross beyond 3400 levels in this expiry.

Wishing you a great week ahead!!

Weekly Outlook for Indian Equity markets - 23rd to 27th March 2009

2009-03-22T08:58:00.000-07:00

General Elections hold the key
The last week has been a good one for Indian equity markets. The benchmark indices have gained by more than 3% each, led primarily by Banking and Auto space. Mid-cap index too showed great deal of activity with many stocks gained by more than 50% within this week.

But the given rally is not due to any fundamental shift in the economy. It is primarily due to positive global cues in last fortnight and short-covering seen in the markets after re-testing the October lows.

The next fortnight could be critical for the equities worldwide. Whether the current rally consolidates around the current levels and then moves forward or it again fizzles out like what happen in the typical bear market, is to be seen.

Fundamentally, Indian stock markets are in disarray. General Elections are due in April and May, which might keep the markets within a range, even if global markets show some strength. On the contrary though, weakness in the global markets may actually accentuate the pain in the stock markets. Hence, investors may remain in sidelines till the time elections get over. The clean majority for either Congress or BJP would give strength to the markets, whilst third-front majority could be a troubling sign for the markets.

The coming week could be range-bound
The coming week may see Indian equity markets consolidating around the current levels. For Nifty, support again lies at 2680-2700, whilst it may show very strong resistance at 2950-3000 levels. Typically for Sensex, the support lies at 8500 levels whilst it may show resistance around 10000 levels. Also the expiry is due this week, which may further put markets under pressure.

Sector-wise, Finance and auto sectors may see some profit-booking coming during the week. One can pick some quality stocks in this space at lower-levels. HDFC Bank is always a pick at Rs. 800 levels. Maruti is also a good stock to buy around Rs. 680 with a long-term perspective.

Stocks Pick
Last week, Mcleod Russell, Akruti and Aptech Technologies have given us the maximum profit, whilst Aditya Birla Nuvo and PFC have given us the maximum loss.

Let’s look at some picks for the current week:

Scrip Name – Buy / Sell – Recommended Price – Target Price – Stop Loss Price
Canara Bank – Buy – 146 – 153 – 141
SREI Infrastructure Finance – Buy – 32 – 41 – 27
Jet Airways – Sell – 161 – 140 – 168

The coming week marks the expiry for the current month. Hence, it would be better to wait till Wednesday before discussing the Options segment.

Wishing you a great week ahead!!

Weekly Outlook for Indian Stock Markets - 16th to 20th March 2009

2009-03-15T07:45:00.001-07:00

The power of the powerful can be judged from one of the events occured last week. Just one statement by Citibank CEO Vikram Pandit stating that Citibank is profitable for last two months brought a rally in the stock markets worldwide.

Does it indicate the end of the problem that US or the entire world is facing? No, it only indicates that future might not be as bad as the present. The main culprit behind the current situation are the financial institutions based in USA. When one of these institutions have shown profits, it brings along the hope in the world fraternity that things may be coming into normal. But we must not forget that these are only hopes. Whether these contain some substance is yet to be seen.

Skeptical experts still see pain in the economy. The optimism in the economy is at all-time low throughout the world. The jobs have been lost, companies have been reeling under the pressure of over-leverage, consumers in any part of the world have been cutting their spendings and concentrating more on savings which has further stranded the global trade and hence health of the economies.

Another cause of concern is the worsening situation in Eastern Europe countries. Recent IMF report suggested that these countries are facing serious debt and have asked for immediate help from International Monetary Fund (IMF).

Anyways, lets come back to the coming week. The coming week may carry the momentum in the first part of the week, which can push the Indian bourses to previous support levels. Nifty may again attempt to breach 2800 which can provide tough resistance. This level would indicate whether the given rally has some substance or not.

One can buy 2700 Nifty Put along with 2750 Nifty Call. This would cost the premium of 95 Rs, which could be maximum loss of around 5000 Rs per pair. If Nifty actually breaches 2800 levels, then it would go up to 2900 and this would bring the profits of atleast 5000 Rs. On the contrary, if Nifty fails to cross 2800, then we may see Nifty again attempt to go below 2600 and it may bring the profit of around 4000 Rs.

Few stock specific strategies for the coming week are given below:

Scrip - Buy / Sell - Target Price - Stop Loss Price
Indotech Transformers - Buy - 310 - 279
Kalindee Rail Nirmaan - Buy - 100 - 80
South Indian Bank - Buy - 50 - 42
Cummins India - Buy - 165 - 146
Hind Dorr Oliver - Buy - 38 - 31
Akruti City - Sell - 1025 - 1255 (One can also attempt to buy Akruti Options Put for 1100 for Rs. 10.)
LITL - Sell - 125 - 115
Jindal Irrigation Systems - Buy - 375 - 330

Wishing you a great week ahead!!!

Weekly Outlook for Indian Stock Markets - 24th Feb to 27th Feb, 2009

2009-02-22T19:06:00.000-08:00

Introspection
The past week has not been good for the Indian equity markets. First, the lukewarm interim budget and then the renewed concerns of recession in US pulled down the Indian bourses. Both Nifty and Sensex ended the week, down approximately 7%.

Now, how's the road ahead looking like… With elections coming by, the government may not take any major policy decisions, and hence we might not see any support coming from the diplomatic front. There are certain reports in the media regarding yet another fuel price cut, but it might not help the companies much as the prices have already reduced substantially from higher levels.

At the financial front, Reserve Bank of India (RBI) is expected to cut the benchmark rates by another 50 bps to 100 bps, as inflation is already down to less than 4%. RBI may also force the banks to reduce the lending rates which will further ease the pressure from the companies and may stimulate the consumption cycle.

Globally, things are bad, which we all have understood and know by now. It took us more than an year to accept this fact. Now, further negative news may only trigger immediate downside, but it seems limited now. Dow is already sitting at six year low. It may go another 500 points, but fear of further downside is a more of a pessimistic view.

The ailing financial institutions have already go bankrupt and the government in US will not allow further destruction at the economic front. It is now actively putting in the money in the companies, buying stakes in troubled companies and ensuring that conditions do not deteriorate much.

Hence, this is my personal view that we are now in second phase of bear market where we may see "consolidation" happening for sometime. After about 13 months of destruction, we may see another 6 months of consolidation where we may see some negative news flowing in form of recession / bankruptcies or some positive announcements coming from the governments and central banks to stimulate the economy. The stock markets too may follow these events and can remain range-bound.

Amidst such scenario, an investor must learn to be patient and remain invested for at least one year. The traders should trade with strict stop-losses and must book profits at regular intervals.

Sectors to look out for in long term…
In this year of stimulation, the focus will be on Infrastructure and related sectors. The government would be spending money to prop up the infrastructure and invite the global players to invest in Indian economy. In the just concluded Bull cycle, the foreign players often complained of poor infrastructure in the country. The government will surely have a look at this weakness and improve the same as well. Hence, one may see some buying coming in Infrastructure stocks like GMR Infra, Reliance Infrastructure, JP Associates, etc.

Also the related sectors like Infrastructure Finance, Cement, Steel, etc may also benefit from the same. Hence, one can also invest in stocks like IDFC, IFCI, Ambuja Cements, ACC, Tata Steel, etc.

Another sector which is to look out for is Energy and Power sectors, which has now become a priority for every government. Stocks like NTPC, Power Grid, and Reliance Power can also be bought with long term perspective.

The week ahead…
The coming week could again be a white-wash for the Indian stock markets, if provisional data is to go by. Derivative figures on Friday indicate a huge build up on sell-side by FIIs. There have been increase of Open Positions of more than 80000 in Index Futures side and net sell of more than 900 crores, which indicate that FIIs are anticipating further downside in the Indian stock markets.

The level of 2700 is crucial for Nifty. If Nifty closes below this level and remain there for 2-3 days, then we may see bear cycle coming in Indian markets with maximum upside of 2800 and downside of at least October lows of 2300. The chances of market bouncing back from these levels are also high.

Hence, one can safely adopt a strategy for buying 2600 Put and 2800 Call for March. The maximum risk according to Friday's closing will be around 8000 Rs. per lot-pair, whilst maximum gains are unlimited.

On the stocks side, stocks from Infra, Pharmaceuticals, and Cement looks strong. One can buy these sectors in the coming week.

Wishing you a great week ahead!!!!

Weekly Outlook for Indian stock Markets - 16th to 20th Feb, 2009

2009-02-15T17:17:00.000-08:00

Union Budget holds the key for next three months

After weeks of anticipation and speculation, the B-day has come. With elections coming by and economy facing global head winds, this budget holds the key. Almost every sector wants some favor from the government to help itself sustain in the current turbulent conditions, especially the real estate & infrastructure and export-oriented sectors. Another crucial aspect is that this will be the last chance for the government to encourage the economy. Once elections are announced in a weeks’ time, then the government might not be able to take any major policy decision / provide a stimulus package. All the other measures will be through RBI only till elections get over.

Amidst such scenario, this year’s Union Budget holds significance and may decide the movement of the markets for next 3-4 months. Hence, investors should attempt to resist the temptation that may come in near future and it is prudent to wait till the outcome of elections to invest. Traders should move with strict stop-losses and target prices to ensure they are able to book profits / losses at regular intervals.

Promising sectors for future
Some of the sectors that look promising are the infrastructure, cement, engineering and IT sector. These sectors have seen the worst and now available at attractive valuations. Also, these sectors could be the pillar of Indian economy on its revival course. Also, the successive governments will be emphasizing on spending the revenues in improving the Infrastructure, which would help Infrastructure, Engineering and Cement sector. Information Technology has been the sunshine sector of the Indian economy and expected to receive government’s continuous support. Hence, few stocks that can be picked from long term perspective are IDFC, Aditya Birla Nuvo, BHEL, Punj Lloyd, Infosys, Mphasis.

Short-term Views
Out of last few recommendations, Gujarat NRE Coke has hits its Stop Loss, whilst, Amtek Auto and Welspun Industries have hit their target levels. Few stock specific recommendations for the coming week is as follows.

Scrip Name – Buy / Sell – Target Price / Stop Loss
Kamat Hotel – Sell – 30 / 37
Hotel Leela – Buy – 23 / 17.5
Reliance Capital – Sell – 410/468
Sintex – Buy – 125 / 108
Sterlite – Buy – 205 / 265
Radico Khaitan – Buy – 74 / 68
Akruti – Sell – 1010 / 1085

Some Option based strategies are as follows. All are Buy specific strategies:

Sterlite 280 Call with Bharti Airtel 620 Put Or,
ICICI Bank 460 Call with Bharti Airtel 620 Put
Unitech 32.5 Call with Unitech 30 Put

Wishing you a great week ahead!

Weekly Outlook for Indian Stock Markets - 9th Feb to 13th Feb 2009

2009-02-08T07:45:00.000-08:00

Learning from the past
Let’s dwell the past see what happened in last one year… Since January 2008, the stock markets have seen one of its worst phases. Every month, we went down by few percentage points and finally October seen the worst when stock markets fell down by almost 50% in one month.

Since then, we have seen some kind of support levels coming in the markets worldwide. For instance, we have seen strong support levels between 7500-7800. We have seen Dow Jones rebounding from these levels at least 4 times since November. Similarly, we have seen strong institutional support coming in Sensex in 8000-9000 range. Even the worst quarterly results and Satyam fiasco failed to break these support levels.

Another trend that we have seen in Indian stock markets is the formation of upper support levels creating after every correction. During the first fall in October, we saw strong support coming in 2300 levels in Nifty and 7800 in Sensex. The next test came in November when markets after coming down to 2550, rebounded again to 2800. The next fall in December took markets down to 2650 and from those levels rebounded to 3100. In January when Satyam episode rocked the markets, markets went down to 2700 and from thereon, we again saw markets rebounded back.

This formation of upper levels at 2300 à 2550 à 2650 à 2700 are good indications for the markets… But these are only indications!!! As an investor / trader, we must watch these levels closely and one can safely go long till the time these indicators go false.

The purpose behind this discussion is to observe the institutional response in each correction and formulating a strategy. The above discussion indicates that we can go long as far as this trend remains true.

Last week indicators
The fag end of last week had seen markets again finding good support at around 2750-2800 Nifty levels. The hopes of Stimulus package in USA and possible RBI cuts have again given strength to the markets. This trend may continue during the next week and we may see Nifty again attempting to breach 3000 mark. Amidst such scenario, one can go long safely on Nifty with a Stop Loss of 2750. Option traders can buy 2800 Call and Sell 3000 Call with maximum profit of Rs. 8000 on each lot-pair and maximum loss of Rs. 4300.

Few Trading Strategies
Scrip – Buy / Sell –Target Price / Stop Loss
Syndicate Bank – Buy –70 / 56
Noida Toll – Buy – 26 / 22
GTL – Buy – 235 / 208
Indotech Transformers – Buy – 315 / 280
Mcleod Russell – Buy – 55 / 45
Ruchi Soya – Sell – 19.5 / 24.5
Finolex Cables – Sell – 18 / 22
KS Oils – Sell – 38 / 45
United Phosphorus – Buy – 105 / 89
GVK PIL – Buy – 21 / 17
Vijaya Bank – Buy – 31 / 27
Ashapur Minerals – Buy – 21.4 / 18.5
Dr Reddy – Buy – 469 / 427
Gujarat NRE Coke – Sell – 21.5 / 24

Wishing you a great week ahead!!!

Weekly Oulook for Indian Stock Markets - 2nd Feb to 6th Feb 2009

2009-02-01T08:08:00.000-08:00

The last week had seen January expiry, which ended rather smoothly. It was widely speculated that the month of January may see re-touching new lows, since the Q3 results were expected to come as worse for the companies.

Fundamentally though, the results announced by the companies were not bad. The companies are still reporting profits, though, not as good as the last quarter or year. The only real areas of concerns are those companies which have taken leverage on their balance sheet, for instance, Unitech and Tata Motors. Both the companies are facing serious credit crunch at the moment. Tata Motors has the strong backing of Tata group of companies but Unitech only hope of survival is the funding from PE firms which may help the company from the immediate cash crunch. But long-term scope of the company remains weak.

The February series is expected to do well. Though I may sound optimistic, but my view suggest that markets may touch new highs for last three months i.e. Nifty around 3250-3300. Similarly, for the Sensex, we may see the range of 10500-11000.

If we look at some of the previous data, strong delivery based buying is seen in Banking stocks, especially in PSU banks. The recent cut announced by SBI will trigger a fresh war in the banking sector. This will surely prop up the markets when they open on Monday. At this juncture, one can buy mid-sized PSU banks like Bank of India, Dena Bank, Allahabad Bank. The traders can hedge their positions by selling the Bankex or Bank Nifty future or buying their Puts of Strike Prices of around 10% lower than the spot price.

Another sector that looks interesting is the Information Technology space. HCL technologies has bounced back from 100-105 Rs twice. We may see an upside in this stock till around 130. One can put a stop-loss of around 105 Rs. One can also buy Infosys Technologies and TCS at the current levels.

The long-term investors with a horizon of around 1-2 years can buy frontline IT and Bank stocks. But they should not invest more than 30% of their intended portfolio. In IT sector, Infosys and TCS remain a good bet for long term. Whilst in the banking sector, SBI and HDFC Bank could be a better choice.

Among the last week recommendations, Era Infrastructure, MIC and State Bank have touched their targets. The other recommendations remain intact. Few recommendations for the coming week are mentioned below:

Scrip Name – Buy / Sell - Target price / Stop Loss
Ruchi Soya – Sell – 19.5/24.35
Axis Bank – Buy – 446/413
Finolex Cables – Sell – 18/22
KS Oils – Sell – 38/45
Rolta – Sell – 81/102
Nifty – Buy – 3110/2700
Nifty CA 3100 – Buy – 30 / No stop loss

Wishing you a great week ahead!!!

Weekly Outlook for Indian Stock Markets - 26th Jan to 30th Jan 2009

2009-01-26T07:54:00.001-08:00

The first month of the year 2009 is coming to an end. Technically though, the month looked set to close in a range bound territory, but fundamentally things have changed on ground, after Ramalinga Raju confessions about Satyam.

Stock markets, which were attempting to form a base, got the unexpected jolt and made the investors wary again. The situation is so grim that any investor doesn’t know whether the company where is putting his money is actually worth the same or not. Whether the results they have shown are authentic or not? Whether the auditors who stamped the balance sheets are paid beneath the table or not? Fundamentally, investors’ faith has been shaken pretty badly.

Some positive aspects of this problem are the steps taken by the SEBI. For instance, SEBI is now planning to put an independent auditor to verify the financial statements of any company listed on the bourses. Also, the regulator has made mandatory for the companies to disclose the promoters’ shares which are pledged with any financial institution. The shares of all such companies will surely be hammered by the investors. We have already seen one victim in the form of United Spirits.

Amidst such scenario, it is advised to remain prudent and stay away from the markets. The traders should strictly follow the “Stop-Loss and Target” method. The Long Term investors will now need to add another filter in their strategy called “Strong Corporate Governance’. For instance, companies like Infosys now emerge as the safer bet due to its strong operating margins and transparent way of working. It strengthens the faith of institutional and retail investors who think Information Technology (IT) is the sector to look out for in the future.

About the stocks that can be picked for trading purpose are from Infrastructure pack. These stocks are fundamentally better than real-estate stocks and look close to an intermediate bottom, especially in Mid cap space. One can pick “Era Infrastructure”, “GTL Infrastructure” “IRB Infrastructure”. Few other stocks that look strong are MIC, State Bank of India, Sterling Biotech, Mcleod Russell.

Given below are some trading strategies with their target price and stop loss:

Scrip Name – Buy / Sell - Target price / Stop Loss
Era Infra – Buy – 72/67
GTL – Buy – 235/208
IRB – Buy – 125/100
MIC – Buy – 25/19
Sterling Biotech – Buy - 167/152
Mcleod Russell – Buy – 55/45
State Bank – Buy-1100/1020
Indotech Transformers – Buy – 310/284

Long term investors can buy IRB, GTL, Indotech Transformers, out of the above lot.

Wishing you a great week ahead.

Weekly Outlook for Indian Stock Markets - 19th Jan to 23rd Jan 2009

2009-01-18T08:04:00.000-08:00

The last week has once again concluded un-conclusive. The markets were clearly lacking direction and slowly platform is getting set for another fierce battle between the bulls and the bears.

The quarterly results are so far good. The strong numbers posted by HDFC Bank and Infosys have re-ignited the faith among the bulls that things are not so bad at the fundamental level. Similarly, bears are closely watching the events occurring in fragile global economy. Filing of bankruptcy by Nortel Networks, splitting of Citi group were the major blows for the bulls in last one week. It is also widely speculated that once dust around Obama regime settle down, bears may again attempt to gain hold over the markets. Amidst such scenario, volatility is likely to increase in the coming days. Hence, traders must keep strict stop-losses to prevent sharp losses in their portfolio.

Long-term investors must keep a hold the temptation for a while. Obama hopes are yet to turn into a major action. He is having loads of problems in its kitty and how he deals with it, will decide the final outcome of the markets. Also, elections in India are round the corner as well, As of now, neither of the two parties hold the clear chance of attaining majority. The mixed government could further strain our growth. Hence, long term investors can wait for a while or invest partially. It is better to keep the cash for further downside, if problem in USA or India escalates.

Let’s look at some of the trading opportunities below:

Scrip – Buy/Sell – Recommended Price – Target / Stop Loss

WIPRO – Sell – 245 – 215/255
UNIPHOS - Buy – 107 -120/98
RECLTD – Buy – 77 – 83/73
STER – Buy – 261 – 295/245
SESAGOA – Buy – 73 – 83/68
INDIACEM – Buy – 105-115/97
RENUKA – Buy – 65 – 73/61
GTLINFRA – Buy – 29 – 32/28
ERAINFRA – Buy – 69 – 72/67
RADICO – Buy – 69 – 74/65
ASHOKLEY – Buy – 14.5 – 16/13.5
GAMMONIND – Buy – 77 – 83/74
BALRAMCHIN – Sell – 55 – 47/59
AMBUJACEM – Buy – 71 – 78/67

Wishing you a great week ahead!!

2009-01-18T07:57:00.001-08:00

The last week has once again concluded un-conclusive. The markets were clearly lacking direction and slowly platform is getting set for another fierce battle between the bulls and the bears.

The quarterly results are so far good. The strong numbers posted by HDFC Bank and Infosys have re-ignited the faith among the bulls that things are not so bad at the fundamental level. Similarly, bears are closely watching the events occurring in fragile global economy. Filing of bankruptcy by Nortel Networks, splitting of Citi group were the major blows for the bulls in last one week. It is also widely speculated that once dust around Obama regime settle down, bears may again attempt to gain hold over the markets. Amidst such scenario, volatility is likely to increase in the coming days. Hence, traders must keep strict stop-losses to prevent sharp losses in their portfolio.

Long-term investors must keep a hold the temptation for a while. Obama hopes are yet to turn into a major action. He is having loads of problems in its kitty and how he deals with it, will decide the final outcome of the markets. Also, elections in India are round the corner as well, As of now, neither of the two parties hold the clear chance of attaining majority. The mixed government could further strain our growth. Hence, long term investors can wait for a while or invest partially. It is better to keep the cash for further downside, if problem in USA or India escalates.

Let’s look at some of the trading opportunities below:

Scrip – Buy/Sell – Recommended Price – Target / Stop Loss
WIPRO – Sell – 245 – 215/255
UNIPHOS - Buy – 107 -120/98
RECLTD – Buy – 77 – 83/73
STER – Buy – 261 – 295/245
SESAGOA – Buy – 73 – 83/68
INDIACEM – Buy – 105-115/97
RENUKA – Buy – 65 – 73/61
GTLINFRA – Buy – 29 – 32/28
ERAINFRA – Buy – 69 – 72/67
RADICO – Buy – 69 – 74/65
ASHOKLEY – Buy – 14.5 – 16/13.5
GAMMONIND – Buy – 77 – 83/74
BALRAMCHIN – Sell – 55 – 47/59
AMBUJACEM – Buy – 71 – 78/67

Wishing you a great week ahead!!

2008-11-23T07:34:00.001-08:00

Weekly Introspection
The bloodbath on the Wall Street continues. First it was the turn of financial giants like AIG, Lehman Brothers, Washington Mutual, Merrill Lynch and many more that either became nationalized or were taken over by another financial institution. Now, it is the turn of Automobile players like General Motors, Ford, and Chrysler who are now knocking the doors of the Government and the Federal Reserve to bail them out of bankruptcy.

Amidst such uncertainty, financial markets could continue to remain volatile. Hence, investors should remain vigil and prepare to remain invested for long term in case markets behave contrary.

The markets look oversold at the moment. Almost every trader has taken position on the short-side on account of threats prevalent in the world markets. Similarly, the long-term investors remain on the sidelines, anticipating more fall in the equities during the days ahead. The combination of both the factors is making the market vulnerable and weak. Thus, even a marginal selling pressure results in complete collapse of markets during various days.

This has been happening for last two months and taken the markets on the over-sold territory. Hence, we may see a sudden buying in the markets, in the form of short-covering by FIIs, as we have seen late Friday in our Indian stock markets.

Trading Strategy
It is vitally important that as a trader don’t take one side view of the markets, say experts. Try to build positions on both sides of the markets and wait for the one-side movement to take place. The international factors will keep the markets volatile. Any bad news on General Motors / Citibank side could lead to free fall in the markets. On the contrary, policies actions in US and India will keep giving the markets hope on the recovery side. Markets have already started factoring in RBI rate cut, which can now come any time. Inflation figures also look encouraging in the coming weeks. Similarly, US government may announce some concrete steps to step up the confidence level in the financial system, which is badly shaken due to sudden collapse in the US banking system.

If you are a trader who trade in Options, try to take a closer Call option and far Put Options for the current week. Chances of recovery are high in this week of expiry, after continuous downtrend seen in the week, passed by. One of the Options strategies that can be adopted is to buy Nifty 3000Call and 2300Put for December. 3000Call comes at the premium of about 100-110 Rs. 2300Put comes at the premium of about 80 Rs. Thus, the total outflow comes out to be Rs.200.

Now, let’s suppose bad news on Citibank comes during the week. In this scenario, markets may go down till 2300-2400 levels. In this scenario, 2300Put could trade at around 220-230 Rs. One can sell Put at that time and take Call premium as profit.

On the contrary, let’s suppose RBI announces rate cut. We have already seen short-covering coming into the markets. The combination of both these factors could take markets up to 3000-3100 levels. Under this scenario, 3000Call could give a premium of 220-250 Rs. One can sell Call and take Put premium as profit.

Investing Strategy
On the long-term play, there are many good stories that are available at take-away prices. The most attractive sector is “Power” sector. Stocks like Powergrid, Reliance Power, NTPC, and PTC are trading at attractive levels and can be bought by those who believe in India growth story. On the Infrastructure front, stocks like GMR Infra, IDFC (financial institution that lends to Infrastructure companies), IRB infra, and L&T look an attractive buy.

The base of future India growth story will be in the hands of Power and Infrastructure sectors. Without both of these, India can’t hope to become a developed nation in future and hence, we may see encouraging steps taken by coming government towards these sectors.

The third and fourth most attractive sectors are “Information Technology” and “Telecom”. IT companies have accumulated huge funds reserve in the past, thanks to robust demand for outsourcing. This will now help them roll over this rough patch and one may see many of them consolidating through various acquisitions.

Telecom sector is another sector which is based on India growth story. The telecom sector is going through the consolidation phase and is an ideal sector for long-term.

Wishing you a great week of investing!!!

Weekly Outlook for Indian Stock Markets - 24th to 28th November, 2008

2008-11-15T02:49:00.000-08:00

The sub-prime crisis is no less than Tsunami. It has swept every country, every continent, every company that dared to touch, left alone those who attempt to ride it.

The early victims were the financial institutions who were directly involved in the mortgages business in US. Then came those financial institutions across Europe and Asia who bought boxes of exotic sub-prime mortgages, pasted with AAA credit ratings on them.

And now, this tsunami is taking its toll on almost every sector- linked directly or indirectly with it. It seems the next on the target is Auto Industry. GM bankruptcy news is getting louder with each passing day. Ford is feared to follow soon as well. If these two companies go bankrupt, it will be a huge setback for the US economy and for the world as well.

Amidst such gloomy atmosphere, there are some positive news as well. Warren Buffet, the world’s greatest investor, has shown his faith in US economy. His company, Berkshire Hathaway, has bought stakes in various companies. The ongoing financial crisis has brought together every economy across West and East together to tacke it. Also, there are talks about making stringent guidelines and regulations which will be common across all countries and hence, in the long term will build a road path for global free trade.

Isn’t “Bright Day come after a Dark Night??”

Inflation close to RBI comfort levels
RBI, in its Aug Monetary policy, had talked about 5-6% inflation by March-end. The current financial crisis has helped RBI in this regard. The global slowdown, which pulled down the crude prices, has helped in cooling off the inflation. Good Kharif crop has also helped in taming the food product prices across country.

The provisional figures for Inflation for the first week of November came at 8.98%, down by almost 2% from the preceding week. This will now encourage RBI to shift its priority to growth. It is now expected to cut both CRR and Reverse Repo rates in the coming weeks to stimulate the growth.

But consistent FII outflows are a concern ...
The FIIs have been consistently pulling out money from the equities. After the October mayhem which saw indices tumbling more than 40%, November has so far sober. The selling continues but intensity is much less. Nonetheless, it remains a concern, since FIIs are still net sellers for this month as well. Thus, markets are expected to remain range-bound this month as well. At every rise, we may see FIIs selling to take cash out from equities.

And that will put pressure on Re ...
Rupee has been under severe pressure for last few months due to consistent FII outflows from the markets. RBI, at its end, is trying its best to stem the Re depreciation. It has cut the CRR rates by 250 bps, cut reverse repo rates, reduce SLR to 24%, which has released more than 1 lakh crores rupees into the financial system, yet the pressure on Re remains intact.

Long-term story is still buoyant
India’s concerns are largely external. The problems in global economy have restricted the tremendous inflows which it was enjoying until last year. Fiscal Deficit, which rose for the first two quarters on account of high crude prices, are now expected to reduce for the remaining quarters since crude has fallen down considerably since then.

The concern regarding high growth will remain, till the time global economic conditions revive. Yet, our economy is expected to grow by 5-6%, as compared to negative growth rates expected in Europe and US.

Stocks at attractive valuations...
The price-earnings ratio for Sensex companies has reached single-digits, which makes them a compelling buy for long-term. IT companies like Infosys, TCS, Wipro, Mphasis are at long-term buying levels.

Another sector that can be bought is the telecom sector. Telecom companies like Bharti, Idea, RCOM have high cash reserves ratios, which enables them continue with high CAPEX plans. Also, the sector is continue to enjoy favor among consumers as they move into rural pockets of India, which is seeing a bit of revival on the back of good monsoons and loan waiver this year.

But the coming week may see another meltdown...
The coming week is expected to see another meltdown, on account of concerns regarding GM bankruptcy. Another negative trigger could be lack of strong steps taken during G-20 nation summit, called upon in Washington to discuss the ongoing financial crisis.

If no concrete decisions come this week, then we might see another round of selling coming into the markets worldwide.

And providing opportunities to buy quality stocks...
As discussed above, IT stocks like Infosys, Wipro, Mphasis can be bought at every correction. Similarly, telecom stocks like Bharti, RCOM, Idea can also be accumulated. A mid-cap stock, worth mentioning, is Karuturi Networks. The stock has fallen down to Rs. 7 from Rs. 23 in September. Yet the stock has seen FII shareholding increased to 37% from 34% a quarter back.

An interesting trading strategy is to buy 2500 Put and 3000 Calls. The accumulated premium will be around 150 and has the potential to give you more, once it takes a definite turn.

Wishing you a great week of investing!!!

2008-11-03T08:24:00.000-08:00

Remote-controlled Indian markets
For last few weeks or months rather, we have seen a great deal of uncertainty and unexpectedness coming into the Indian stock markets. During the days, when markets across the world collapse, we usually see Indian markets outperforming. On the contrary though, during the good days in global markets, we see muted response from Indian stock markets.

The last week trading carried both the instances. Monday morning has seen markets across the globe collapsing one after another on account of recessionary fears. Asian markets, including India, were down by more than 10% at one point before we see a strong buying support coming into Indian markets at lower levels and markets finally closed down by just 2% down, while the peers closed down by more than 10%.

On the flip side, the Indian markets gave a muted response on Wednesday, when Asia made a strong recovery on the back of tremendous rally in US markets overnight. The Indian markets closed down just a percentage up, while the other Asian markets were up by more than 8%.

What are the reasons behind such behavior? Is our markets totally governed by few institutions, who at will, can change the direction at any given day or we have started to run ahead of the curve?

The former has a strong case, since FIIs have been ruling our markets for last few years. If they sell, the markets fall. During the days, they don’t sell or do cherry picking, the markets go up. Currently, our Domestic Institutions and Life Insurance companies are not strong enough to compete with Foreign Institutions. Hence, a long term policy must be envisaged by the government to promote the equity route through Mutual Funds route and life insurances. Also, the young generation which doesn’t have any financial cushion in the form of pension, can be encouraged to save for longer term through equity route, since the best returns that any mode of investments can provide is the equity, provided it is done with knowledge and with a long term horizon.

RBI Rate Cut
Let’s come back to the stock markets. RBI has announced three major policy decisions on Saturday which will bring cheers to the banks and the stock markets. First, it has reduced the CRR ratio by 100 bps to 6%. Thus, it has provided around additional liquidity of 40000 crores Rs into the financial system. Secondly, it has decreased the repo rate by 50 bps. This step would ensure that banks can now borrow from RBI at lower rates, hence relieving them from desperate liquidity crunch.

Third step is the reduction of SLR (Statutory Liquidity Ratio) by 100 bps to 24%. SLR is the percentage of total funds that banks need to keep in the form of liquid instruments like Cash, Government bonds, and other safe mode of investments. It is said that the high SLR ratio in Indian Banking System saved the domestic banks from the sub-prime mess, since they never left with enough funds to invest in exotic overseas instruments after fulfilling the domestic needs. Now, RBI has reduced the SLR ratio to help banks tide over the extra-ordinary liquidity crunch, which was evident from the fact that Call Money rates shot to 22% in Inter-bank lending on Friday.

Strengthened Global Markets
The bulls worldwide have shown tremendous come back during the last week. The Dow Jones and Nasdaq have seen the biggest weekly gains since 1974 during the last week bull run. This also helped the Indian markets making a recovery of more than 14% during last week, despite some disappointing quarterly numbers.

For Indian stock markets, this would come as a big relief, since the fear of global recession and redemption pressure on hedge funds were putting the selling pressure on stocks. The stronger global markets will help in rebuilding the investors’ faith in equities and one might see less selling pressure on the equities than before.

US Recession
The fear of US recession is now clear in sight. Earlier, there were only reports of forthcoming recession but now the data about jobs, consumer spending, Inflation has clearly suggested that recession has finally arrived on US shores.

And it seems like a long path of consolidation for US before it can really stand up and start spending. First, the US people need to clear their outstanding debts on credit cards, homes, personal loans, before they can again storm the markets and hence for spending, hence boosting the other economies. Thus, it would be good that US exporting economies must now learn to live in an era of lower growth and lower inflation as well.

Economies Delinking
Till now, USA was driving the economies worldwide through exhaustive consumer spending and almost every ship moved towards US shores. But housing bubble burst has put brakes on the relentless, rather reckless spending. This may now force emerging economies like India, China or Brazil to look out for alternative grounds to sustain their growth rate. The first target could be Europe, which will now see more attention in the Sales and marketing Division of big corporate residing in Asia.

Another scenario which is emerging out is the bilateral trade agreements between countries. Every country exports things that it carries and imports things that it lacks. For instance, India has IT expertise that no other country has. Similarly, India doesn’t have sufficient Oil. Now, India may try signing bilateral agreements with Middle-East countries to push their IT into their regions and in return, buy Oil from these countries. This will help both the economies to grow together. If this indeed happens, would end the US monopoly in global trade and will ensure, more sustainable and long term growth for various countries.

Nervous Stock Markets
The stock markets, though, have been trying to revive, may continue to remain nervous due to various uncertain factors like US recession, sub-prime impact, increased raw materials cost, etc. Hence, one may continue to see the volatility prevalent in the market for some more time.

In Indian stock markets, the sector that may outperform in the longer term is the Information Technology sector. The sector was among the early ones to get the beating due to rich valuations that the companies had been enjoying. But things have changed now and IT stocks look attractive now.

The biggest advantage with IT companies have been the strong business model, they carry. The companies like Infosys or TCS may face some quarters of slowdown but are most likely to recover from it. These companies are sitting rich on cash and also they have the required capability and the expertise to survive this slowdown.

Also, we have seen many IT companies diversifying themselves across regions as well as domains. The US is no longer an attractive destination to work with. Similarly, BFSI domain (Banking and Finance) is not the only domain to serve with. Undoubtly, it will take some time to diversify, but once it happens, we will see rich valuations coming back again into this sector.

Book Profits at regular Intervals
It is said that “Markets behave irrational before it becomes rational again. The only problem is that they remain irrational for days more than you can remain solvent”.

Hence, one is advised to book profits and losses at regular intervals. Do not try to emulate Warren Buffet or George Soros. These guys have ample money to remain sleepy for longer time duration that I or you can remain. Hence, if you bought something a week back when Nifty was at 2200, the time to book partial profits is today.

Wishing you a great period of investing!!!
Sayonara

Weekly Outlook for The Indian Stock Markets - 21st September to 26th September

2008-09-21T18:32:00.000-07:00

Volatile last week
The last week had been a phenomenal for the stocks markets worldwide including India. It would have been terrible, had not emergency steps taken by US government given a new lease of life to the stock markets. Otherwise, the remaining week saw just one side movement and that is downwards.

Though Indian markets looked resilient at times. Nifty which went down almost to 3799 on Thursday came back strongly to close the day at 4050 and then went up by another 200 points on Friday to close at 4250 mark.

But again the concerns for the markets are real and grave. Where would markets be drifting to in the future? Will US survive the financial turmoil created by its own? Will Indian economy, which has been otherwise quite resilient will be affected greatly by the global financial mess. And amidst such hazy atmosphere, what should investors like you and me do???

Come; let us review the events that have shaken the global financial space and its possible impact on the markets. Also, let’s look at the steps taken by the governments to overcome those events.

Collapse of Wall Street Giants
The fear of Lehman bankruptcy started surfacing after Bear Sterns collapse. But somehow everyone was silent about it on the street. And hence, when it happens, the fear changed to panic all across the Wall Street. Within hours of Lehman collapse, we have seen some of the quickest reactions by the companies on the Wall Street to prevent themselves of becoming the next victim– Merrill Lynch merger with Bank of America, AIG 88 Billion US$ bailout by the Fed, Morgan Stanley hectic searching for the soul mate to get itself merged.

The immediate impact of Lehman Brothers was felt on those stocks where it has direct and indirect investments. For instance, it has invested extensively in the projects of real-estate companies like DLF, Unitech, etc. The shares of both these companies have almost collapsed in last one week. Though, there has been no indication of any liquidation in investments by Merrill Lynch. But Morgan Stanley has sold the stake of around 3000 crore in last one week to other financial institutions, mostly to Deutsche Securities and Goldman Sachs.

The impact of this event could be felt on growth, since these companies have been the easy source of funds for many who are looking to expand themselves. Also, the boost in equities came due to extensive buying and selling by the Wall Street giants. After the collapse of many, merger by some and survival of few, the equities will continue to suffer in the near future, till the time new companies take over their place.

The party seems over on the Wall Street.

Liquidity Crunch
Aftermath of Lehman collapse, the banks refused to lend and borrow in the money market, fearing that who will collapse next. This led to severe dearth of funds and overnight bank rates increased exponentially. During these times, the central banks across the world had to intervene and open their treasuries to provide the liquidity that many banks have been craving for.

Few months back, every small and medium financial institution was looking to expand, hoping to become a financial giant in a few years. But the times have now changed and many of these financial institutions are exploring the options to merge themselves.

One can see several mergers and acquisitions happening in the near future. Morgan Stanley has few days left only. Washington Mutual is another institution that will be acquired soon. Federal Reserve will remain busy for some more months trying to broker several deals to prevent another chain of panic reactions on the Wall Street.

Its impact on the equities will be sizeable since equities have always deemed as high risk-high gain investments. Now with weaker balance sheets, the financial majors will be averse investing in equities and rather move to safer havens like Govt Bills, Gold, etc.

Oil and Inflation remains a threat
The Oil has subdued in the recent past due to slowdown in the US. Also China which heavily bought Oil at the time of Olympics has also slowed down now. Hence, Oil seemed like cool-off. But it is still not out of danger.

Any new threat of war in the Gulf will propel the Oil again. The developing economies like India, which import more than 50% of Oil from international markets, will suffer in the backdrop of High il prices. Also, High Oil prices will have an impact on the Inflation as well, which is already in 2-digits.

The future-tense
The future for the equities doesn’t look good. All the factors that were behind the great equity boom are now over. The interest rates have increased, thus making equities less attractive. The Financial Institutions, who were behind the boom, have either collapsed or merged with a bank. Oil is at all-time high, which is fuelling the inflation too and subduing the growth rate.

Amidst such tough times, who will invest in equities? Will you take a risk at times when you have money only for food, cloth and shelter? Similarly, the financial institutions who have weak balance sheets will not be investing in equities, for sure.

Coming Relief rally
The coming week could see some relief rally in the Indian markets. Also, announcements by the Reliance Industries on Sunday regarding the Oil discovery in Godavari basin will be a positive trigger for the battered Indian markets.

Hence, one can be geared to book some profits in the stocks during the week. The stocks that one may buy are the power stocks like NTPC, Ppower Grid, and Reliance Power. The signing of nuclear deal during Manmohan US visit could boost these stocks. Reliance Industries will also be a good stock to buy at the current levels. It is the only firm that looks rock solid in the aftermath of financial distress.

It is advised to keep booking profits. Do not anticipate the great boom so soon. Let the things start rolling out before taking a long-term call.

Wishing you a great week of investing!!!

Weekly Outloot for the Indian Stock Markets - 15th to 19th September, 2008

2008-09-14T18:38:00.000-07:00

Unforgettable last week
The last week has been a trying one for the Indian Stock Markets. After a tremendous surge on Monday on account of NSG deal, markets fell down like nine pins and closed beaten down to the weekly lows. Nifty, which surged to 4500 on Monday, fell down below 4300 mark at the time of close on Friday.

The current volatility provides ominous signs for the Indian equities. The most worrying factor for the markets is their inability to discount the good news. Low Inflation, Low Crude oil, NSG deal were strong enough signs for the markets to gain and make new higher levels. Yet the FIIs relentless selling pulled down the markets every time an attempt is being made to reach new highs.

Some reports have indicated that the current bout of selling is made by Lehman group and its associates to cash out their holdings in their final attempt to save themselves from bankruptcy. If this report has some strong base, then these must be worrying signs for Indian markets, since Lehman & Co. have substantial stake in various Indian companies. The investors must be hoping that Lehman Brothers sell their entire stakes in Indian equities along with other assets to the acquiring company because if it doesn’t happen and Lehman is forced to sell their stake in the open markets, then the share prices of these companies could touch new lows, which will further dent the bruised sentiments of the investors.

Let’s analyze and gauge various indicators that may influence the Indian markets in the days ahead…

Re-$ movement
Rupee has depreciated steeply against the dollar, which has neutralized the gains that oil marketing companies may have on lower Crude oil. The Greenback is currently trading at 45.60 Rs. Levels.

IT companies, which would have gained on account of higher dollar, are unable to do so because of worries that US based financial companies will be spending less on IT in the next 2-3 years. Though, the silver lining could be the BPO / ITES companies, which will stand to gain on higher dollar. There is a strong hope that Outsourcing concept will again come into shore as overseas companies will be transferring some of their non-critical tasks to India to further reduce their input costs.

Double-digit Inflation
Despite the low inflation numbers for last 3 weeks, the inflation is still in double-digits, which remains a worrying factor. Any novice can understand that equities will not perform, till the time; inflation goes below 10% mark.

We must also remember that inflation going down on account of higher base effect is not the solution of this problem since it will be the setting of a new benchmark of prices for the essential products. There should be a genuine effect to either reduce the demand or increase the supply of products. The government should also reduce the prices of fuel to stimulate the companies whose input costs have risen due to high oil prices.

Hence, the inflation should come down to 6-7% mark, before it can make a positive impact on the markets. Any hope of change in long-term view from “sell” to “buy” will only occur if inflation comes to 5-6% levels.

High Interest rates
Looking at the historical figures, equities never had a genuine long term rally in the shadow of high interest rates. Also, the companies debt cost will rise on account of high interest rates. The maximum hit was suffered by Finance and Real-Estate companies. Real-Estate companies, who received doubly-hit due to high material costs and interest rates, have depreciated maximum in every round of selling.

Hence, any investor who holds real-estate stocks need to be patient enough to earn something out of their investments. Any chance of averaging out could be as risky, as having a fresh purchase, since downside still exists in these stocks.

Crude Oil
Two months back, Crude was the major threatening factor. Sadly though, even after falling near to 30% from their all-time highs, the equities have not responded at all. The markets are still trading at the same levels or lower, as were of two months back.

Personally though, I still feel that Crude can provide a big impetus to the markets in the near-term, especially when it sustains below 100$ a barrel.

Financial Turmoil in US
It has been more than a year since the US financial problem has come into shore. We must not forget that the roots of these problems lie in Greenspan era and it will surely take more than 3-4 years to amend the mistakes. Bear Sterns and Lehman Brothers have been the victims of the problem. Various reports indicate that Merill Lynch could be the next victim. These US based financial institutions have a major stake in the Indian bourses. Hence, markets will remain under pressure till the time financial sky gets cleared.

Next Week could be volatile
The coming week will see a renewed attempt by Bulls to take the charge. Also FIIs, who have been selling consistently for last few days may pause a bit to gauge the situation. Though, any bad news from US, especially regarding Hurricane Ike or Lehman Brothers, may see another round of selling coming into bourses all over Asia including India as well.

Hence, traders can hedge by buying Nifty 4000 Puts and buy quality stocks that are in offing at low prices. For instance, ICICI Bank, REL, Ranbaxy are trading at interesting levels and can see gaining in the short term.

In the mid cap space, MIC Electronics, DCB, Axis Bank, Karuturi Networks, TTML can see making gains.

Another interesting strategy for the week is to buy Nifty 4000 Puts and 4400 Calls. Somehow, it seems that almost every bad news has been discounted by the bourses and any positive news will be welcome by the markets. If it doesn’t react to the good news and goes down, then 4000 Puts will put into play. Alternatively, any good news on Crude Oil front (below 100$), Lehman Sale out (finally!!), Low Inflation (around 11%) can give a stimulus to the market and it may re-attempt to touch 4400 /4500 levels on Nifty.

What are your views on the Indian stock markets, do you have any stocks that one can buy, do you agree / disagree to my views, then please feel free to write in your comments by clicking Comments below.

Wishing you a great week of investing!!

Weekly Outlook for Indian Stock Markets - 08th September to 12th September, 2008

2008-09-07T08:13:00.001-07:00

Better Late than Never
As discussed during last week as well, Indian Stock Markets have been celebrating too much about low inflation, rather than taking a rational outlook on the broader picture. The global cues have been weak, Europe has been slowing down, US is under pressure, the central banks all across the world have been raising interest rates to cushion their economies from inflation.

Amidst such negative cues, expectation of Indian Stock Markets outperforming others had been too much of asking? And this was reflected last week as well when Lower Oil, Lower Inflation failed to propel the markets.

Hence, the realistic view at the moment is to “stay caution”. It is better to wait till the clouds of financial turmoil gets clear before one can start investing because days have gone when markets used to give you chances to come out of wrong investments. Now, one wrong investment could be enough to wipe out everything that one has earned over the past few months or at worse, years…

Last Week suggest more pain
The last week started with whole host of positive triggers like Lower Inflation, no major impact of Gustav hurricane on US refineries and good GDP numbers from US. Asian indices traded higher on Monday and Tuesday. US markets which were closed on Monday, hoped to rise on Tuesday. But financial turmoil in US pulled the DOW and NASDAQ down, despite the lower crude. That fall was a clear evidence of the intensity of financial turmoil that US is having at the moment. For the past few times, we have seen that every positive sentiment is quickly wiped out by one of the problems that US financial sector is facing at the moment.

Indian Equities did get another chance on Friday to regain the lost ground on lower inflation numbers for two consecutive weeks. But weak global cues again played a spoilt sport and markets surrendered meekly in front of them. Bears had a great party on Friday pulling down the Sensex by 500 points and Nifty by over 100 points respectively. Technically though, Nifty had rebounded many a times from 4350 which now look like a strong support levels for the Nifty.

Hence, the last week has suggested that until the US financial sector comes under control, the chances of equities outperforming any other investment class look remote.

NSG Outcome
Nuclear Suppliers Group has finally given its consent to India, which could have a positive impact on Indian economy in a longer term. But its short-term benefit is second to none, hence markets which may rise on Monday on the outcome of the deal, may yet to find a strong base to consolidate. Those who have bought equities last week at lower levels could find Monday as an opportunity to move out with good profits.

Crude below 100$ could be a strong trigger
The crude oil, which is hovering around 105$ / barrel mark, could go further below 100$ in next 2 weeks. If this actually happens, the markets will have a strong relief rally for sure. Also, government may have a relook at the oil prices and could reduce it to further tame the inflation.

So, Lower Crude could have a positive multiplier effect on the economy, where it will reduce the operational costs of various industries, and will also help government in taming the inflation.

Trading Ideas of the Week
The next week may see a rally in Power and Infrastructure stocks like REL, NTPC, Reliance Power, DLF, Unitech, etc. Also, one may continue to see good rally in stocks of Oil Marketing companies like BPCL, HPCL, Indian Oil, etc.

An interesting idea for this week is to buy Nifty Put of 4500, if it goes above 4550. Also, one can buy 4700 Call to hedge the position, somewhat a bit.

Investing Ideas
A stock that currently looks at attractive levels is Vishal Retail. It is currently trading at 400 Rs levels. We must not forget that Vishal Retail is among very few stocks that did not touch their IPO levels, during the meltdown. The company is on expansion spree and plays in the segment that has huge potential i.e., lower and middle class sector of India. Hence, one can buy Vishal Retail around 400-420 levels for 1-2 years perspective.

Besides, some of my old favorites like Karuturi Networks (KNL), Vakrangee Software, DCHL, Balasore Alloys are also at buying levels. One can buy these stocks with 1-2 years perspective.

If you have any views or wish to share your thoughts on the stock market, please feel to write in your comments by clicking Comments link below.

Wishing you a great week of investing!!

Weekly Outlook for Indian Stock Markets - 01st Sept -5th Sept, 2008

2008-08-31T09:37:00.000-07:00

Surprising Last Week
The week gone by was full of surprises, especially the market sentiments on Friday. One occasional drop in Inflation numbers was enough for the investors to have a round of renewed buying in the markets. Even the significant drop in Q1 GDP growth looked a weak downside trigger for the markets, which rather make me thinking on what kind of mindsets are trading in the Indian stock markets.

Equally surprising is the Government reaction on inflation. It makes me wonder on why the Government needs to issue a statement every week regarding the inflation? A week back, when inflation touched 12.63% from 12.44%, Government issued a statement that it is disappointed. This week, a marginal fall of 0.23% to 12.40% made the same government optimistic enough to suggest a fall in the inflation in the coming days. Whether this is an anxiety on the Government part or any foul play behind it, one needs to find the answers for these questions surely.

Coming days would be volatile
Coming days will be more challenging than before, especially when a robust and emerging economy fights the battle with a host of negative cues like Inflation, Higher Commodities, Global slowdown, High Interest Rates regime, financial turmoil, etc. Till the time a winner is declared, we will see markets moving both ways and remain volatile.

The inflation is still a big worry, especially when the government looks defeated on this front. The failure of a government can be seen from the fact that it is praying for higher base effects to have a moderate inflation, rather than fighting the causes from the front.

The prices of commodities are troubling the economy to a great extent. The whole basket of commodities like Crude, Gold, Silver, Steel, Iron Ore, Edible Oil, etc is trading at highest prices ever, which is putting further pressure on the inflation.

To counter the inflation, the central banks across the world had to increase the interest rates, which in turn slow down the economy. If Fed Reserve follows the same steps and increase the interest rates, then the consumption demand from US will reduce and will further slowdown the Global Economy.

Hence amidst such scenario, one should not be over-bullish on the equities, since the stocks already factor the future earnings of the companies. One should have stock-specific approach and try to buy the stocks which are rich in cash.

More downside can be seen next week
Nifty at the moment is tentatively poised. It is exactly in the middle of the 3800-4600 range and chances are ominous that it may try to re-test one of the levels soon. There is a bullish undertone in the market. Tonnes of money are waiting in the sidelines to enter the markets, but everyone is skeptical about the impact of the Global Slowdown on the Indian economy. Hence, people are still finding the levels below to invest their money.

Hence, the best thing to do under these circumstances is to “invest partially”, much like SIP mode to ensure you get the average value over the next one year.

Trading Strategy - 2:1 Put to Call Ratio
Traders can be best advised to keep their positions hedge with more downside bias. The oil can show some upward bias due to hurricane over Gulf of Mexico. If it indeed stops the oil production, then one may see rise in Crude prices. Also, the inflation data will always be a trigger point of nervousness on Thursday and Friday. Hence, one can now buy 4600 Calls and 4200 Puts in proportion of 1:2.

The traders can buy pharma stocks like Ranbaxy, and Glenmark Pharmaceuticals. Ranbaxy has the potential to reach 540 in next one week, on account of open buy back. Both the stocks have seen good amount of consolidation in last few days.

Another stock that looks interesting is the “Karuturi Networks”. This company is discussed in almost every post of mine. The company is looking to acquire a company in US sub-continent and is competing with various hedge funds for the same. If it indeed able to scrape through acquisition, then the stock may see some renewed action. The stock is currently trading below Rs 23 levels and is the best price to buy for both short-term and long-term.

Follow the Logic and not the Market
The markets remain volatile for 11 months in an year, hence one must to accept it and take it in its stride. Build your own logic and follow it whole-heartedly. Chances of success increases by manifold. Be knowledgeable on the companies where you are putting your money. Do consistent research and one will always sure of how his /her investments stand to fare in the future.

Wish you all a profitable investing!!!

Weekly Outlook for Indian Stock Markets - 25th August to 29th August, 2008

2008-08-25T18:07:00.000-07:00

Struggling Last Week
The last week was a pretty bad one for the Indian bourses. Nifty and Sensex went down by around 2% during the week, on account of grim outlook for the Indian economy. Also, the inflation continued its upward march this week as well, climbing all the way up to 12.63% from 12.44% last week. The inflation for 30 essential commodities went up from 6.34% to 6.71%, which are not at all good indications or the Indian economy.

Amidst such atmosphere, what should an investor do?? Should traders go long or go short during the coming week? Will we again see the lows of mid-July in the coming days? Let’s introspect and find out the answers for these questions?

Sugar is sweet this season
The current levels are still above the current year lows and there are several indicators that are pointing further downside in the markets. But downside now could be limited to specific sectors like Real-estate, Banking, Capital Goods. Whilst on the other side, one may see some value buying coming into several sectors that are dependent upon domestic factors or provide niche edge to India Inc.

For instance, Sugar Sector is the one that can be picked for long-term investments. India is among the largest producers and consumers of Sugar. Indian Sugar companies have grown themselves in last few years and have become competitive in the International markets.

The coming festive season in October will also see demand for Sugar rising and hence, profits and margins are also expected to increase. Another factor that goes in favor of Sugar companies is the permission of using ethanol as an alternative fuel. Hence, one can invest in companies like Renuka Sugars, India Glycol, Bajaj Hindustan for a long term view.

Information Technology is our forte
The sector that brought along the change in the outlook of Indian economy was the Information Technology sector, led by Infosys, TCS, Wipro and Satyam. Though, the recent slowdown in the US has hit the sector badly, yet it carries the potential to do well in future.

After beaten badly due to turmoil in US financial sector, the Indian IT companies have been diversifying into other sectors like telecom, logistics, Manufacturing, etc to protect themselves. The strengthening of Dollar against Rupee will also provide them some cushion against reducing margins.

Another factor that goes in favor of Indian IT companies is that these companies are run professionally. Hence, chances of success in their quest for grow are higher. The top-rung counters in IT sector like Infosys, TCS, Satyam and Wipro can be picked for a view of around 24 months.

Real-Estate is not so Real
The era of low interest rates saw tremendous rush for real-estate investments. Many a people purchased houses, not for shelter but also as a mode for making quick gains.

Sadly though, with rise in interest rates, the plans for many have gone awry. People who had taken mortgage loans have been suffering the most due to rise in EMIs. Also, the high interest rates are dampening the spirits of new breed of house-seekers who do not comfortable paying higher EMIs.

Hence, one thing is definite. The real-estate sector is must-must avoid at this moment. Also, the outlook doesn’t look good either. With slowdown in growth of Indian Inc, the salaried class will not get higher pay packages, and could lead to low demand for real-estate.

Some interesting Trading Strategies
The coming week will see the expiry of August contracts and building up of September positions. Hence, one may see a range bound market in the coming week. One may see short-positions building up in September futures, and hence, Tuesday and Wednesday may see a fall in the bourses.

This the best time to play a straddle of buying the Nifty 4000 Put and 4500 Call. There are several indicators that will keep markets volatile during the week. Some major ones are NSG deal, US Congress resolution on Indo-US Nuclear deal, Inflation, and Crude movement. Hence, this volatility will help you gain good gains out of this position.

Some stock-specific ideas
The stocks that could see some action in the coming week are Karuturi Networks, Renuka Sugars, and DCB and Indiabulls Real-Estate. Karuturi Networks is expected to announce some major decisions in its Board meeting on Monday, which may see some upward movement in this stock.

Indiabulls Real-Estate is seeing accumulation around 300 levels. The stock is currently trading at 290 odd levels and could see some upward movement during the week.

In case you have suggestions or want to share your stocks ideas, please feel free to write in your comments by clicking Comments link below.

Wish you all a very Happy Investing!!

Weekly Outlook for Indian Stock Markets - 18th August to 22nd August, 2008

2008-08-17T02:50:00.000-07:00

Reviewing the Past

Last Week, Indian Stock Markets have again turned into selling mode, after renewed concerns of low growth and high inflation emerged into the shore. The Industrial Output for the month of May have fallen to disappointing 5.4%. Besides, the inflation is not looking good either at 12.44%.

These negative triggers pulled the markets down, especially on Thursday. Nifty which had a major support at 4500 till now has fallen down to 4430 levels on Thursday. These are no good signs for the markets and the coming week may see further downside in the equities.

The Challenges
Amidst such uncertain environment, what an investors or traders should do? As we discussed last week as well, it is better to maintain “wait and watch” approach. The economy is going through a tough patch and there are more downside risks that the upwards.

Let’s look at some of the factors that can influence the stock markets in the near future.

Inflation
The Indian Economy has been hampered with dual concerns of High Inflation and Low Growth. The pay hike of Govt employees announced by the PM on eve of Independence Day will further fuel the price hikes of the essential commodities, hence taking the inflation upward.

Somehow, it seems that the steps taken by the government to tame the inflation are too naïve and shallow. The government has given emphasis towards implementing the monetary steps to control the inflation. No sincere effort has been taken by the government on the ground to control the hoarders who have been stacking up the stocks to artificially increase the prices.

Hence, investors would be advised to stay caution till the time we see any major success for the government towards controlling the inflation.

Money Supply
The initial India Story was written on the hopes of a developed economy. But the developed economy is based upon strong infrastructure, transparent public and private role and placement of regulators who can time-to-time remove the weeds out of the system.

The start was good but we somehow swayed away in the middle. If we see closely, the growth in last 2-3 years were more on account of aggressive lending by the banks, which in turn led to reckless consumption, hence fueling the sales of the companies and greater profit margins for them.

But the same cycle pushed more money into the system, thus increasing the inflation. RBI, on its own, had started taking steps since Last June (2007) towards tightening the money supply in the financial steps. Though, these steps are not enough but yet have somehow able to bow down one side of the inflation.

If inflation doesn’t come down, then we may see more stern actions taken by RBI to reduce it. But these steps will definitely reduce the growth rate of the country. Hence, one must need to keep an eye on the RBI future course of action towards the money supply problem.

Infrastructure
If we remember, many domestic and international research reports have indicated in the past of “level below normal” infrastructure facilities currently available in the country. The reports also emphasized that infrastructure space needs heavy investment through Public-Private partnerships to ensure India remain a strong and sustainable growth story.

But it is a human tendency to ignore the weaknesses till the time they catch you. If the government would have spent money on Infrastructure, then we would have been in much better position to face the global slowdown today.

Now, in the era of low growth and high interest rates, there will always be shortage of funds to aggressively back the infrastructure projects. The funds cost will be high now due to high interest regime coming into the economy and hence, maintaining high growth will be a big challenge.

Looking Ahead
The investors should maintain “wait and watch” approach and only the selective buying should be done. There are some stocks in the mid cap and large cap space that look good and are better insulated from inflation than others. Also, one can invest in companies that have high cash reserves, since funds will be the one resource that is scarcely available.

For 1 year horizon, one can buy Vakrangee Software, Karuturi Networks, and Vishal Retail. Vakrangee software has domestic clientele, no foreign currency challenge, less debt on his balance sheets and almost no rental expenses. The stock is currently trading at 210 Rs and can be accumulated between 180-200 Rs for at least one year target of 350 Rs.

Karuturi Networks has been World’s largest supplier of Roses with plantations in India, Ethopia and Nigeria. The company has been expanding at good rate and among the few companies where FIIs have been increasing their stake in every quarter. The stock is currently trading at 23 Rs and can be accumulated around these levels for one year target of Rs. 35.

The major benefit with Vishal Retail is the market that it caters to. Unlike other companies in Retail sector, Vishal Retail serves the lower segment of the market with low cost products at low margins but high volumes. Due to slowdown, the middle class now has less money to spend and has will attract towards low cost products that can satisfy their needs. The stock is currently trading at 400 Rs levels and can be accumulated between 350-400 levels for a target of 500 Rs in one year’s time.

Trading Ideas
The traders who had bought 4400 Puts last week can reap good gains in the coming week. The markets can go down below 4400 on Monday and one can close these positions for good profits.

Another interesting strategy for next week is to buy Ranbaxy 540 Calls and 480 Puts at the same time. The stock till now has remained unaffected from the downpour due to Open offer initiated by Daichii which has started from 16th August.

Now, one can see some action in this stock in the coming week. 480 put is trading at around 6 Rs. and 540 calls for Rs. 4 odd. One can take positions on both sides for maximum benefit from the volatility.

In case, you have some views that you want to share about equities, please feel to write in your comments.

Wishing you a great trading week ahead!!!
Saayonara

2008-08-11T04:14:00.000-07:00

A glimpse of the Past
Have good times come once again on the Dalal Street? The last week performance of Indian stock markets give indications of a possible revival, especially if we take a look at the Friday's trading. Despite the fall in US indices on Thursday night and bad inflation data, the markets managed to hold themselves pretty well on Friday.

What lies ahead?
Now what's next is the biggest question.

Has time come when one can start investing? Will markets able to consolidate and achieve new highs in the future? These are few questions that every investor must be asking himself.

My view is to "wait and watch" at this moment. One can invest but cautiously. Traders must book profits at the regular intervals. Because, there are several negative factors hovering around the equities that may pull it down.

Crude Oil has fallen sharply in last fortnight and chances do exist that Crude Oil may bounce back a bit to 120-125$ / barrel. If that indeed happens, then equities can see a sell-off once again because High Crude cannot live in harmony with high prices of equities.

Another negative factor is Inflation. Any sustainable bull run in equities cannot occur in the backdrop of high inflation and high interest rates. Hence, my view is that one should not build high hopes till the time, inflation cools down to below 8% levels.

Third negative factor are the elections in USA and India. The UPA government will be taking some steps towards reforms, but these initiatives will turn concrete only if UPA again comes to power. Hence, FIIs or MFs will only be putting money in equities, after seeing the outcome of the general elections next year. Hence, one is advised to maintain a "wait and watch" approach and closely monitor the movement of crude, inflation and elections.

Next week Scenario
The coming week may see some profit-booking. The indices have risen sharply, by about 15% in last 2 months and chances are imperative that some sort of profit-booking could be seen. Hence, my advice is to book some profits as well, especially in banking and real-estate sectors. Monday could be the day to do so, when markets are expected to open positive on account of sharp rally in Dow Jones.

Trading Strategy
Traders can buy 4400 Nifty Puts and 4900 Calls as a strategy. Nifty 4400 Put is trading at around 100 Rs, whereas, Nifty4900 Call is trading around 60 Rs. Thus, the total premium outlay comes out to be Rs 160.

Now, if crude oil goes below 110$ / barrel and no bad news come from US financial sector, then equities could see a fresh round of buying, which may take increase premium on Nifty 4900 Calls to 160-180 Rs. At that time, one can sell both the contracts to get the profit equal to premium in Nifty 4400 Puts.

Investment Mantras
I have been covering Karuturi Networks (KNL) for last few weeks. The stock is currently trading at 23 odd Rs. One can buy this stock with medium to long term perspective and target price of Rs 40-50.

Another stock is Balasore Alloys and Everest Kanto Cyclinder. Balasore Alloys is the subsidiary of Ispat Industries and generating more than expected profits for last few quarters. The stock is currently trading at Rs 55 and has a target of Rs 80-90 in next 6-9 months.

Everest Kanto Cylinder is another stock to look out for. The company is the niche market of manufacturing of cylinders for storing gases and inflammable liquids. The company Order Book is strong. The stock is currently trading at Rs 300 levels and can go till Rs 400 in next 3-4months.

Wishing you a Safe and Profitable Investing!!!

Weekly Outlook for Indian Stock Markets - 21st July to 25th July, 2008

2008-07-20T17:46:00.000-07:00

The word “Deal” is buzzing everywhere in economic and political circles. Some deals are being called-off, some deals are put at stake and some deals are getting finalized behind the close doors. In this frenzy season of deals, the common man is losing his prestige as an investor as well as the voter.

First let’s discuss the deal which is being called-off. On Friday, Reliance Communication (RCOM) and MTM have called off the proposed deals between them after about 2 months of hectic negotiations due to legal and regulatory constraints. Surely, Anil Ambani would be a disappointed man, since he expected RCOM to be on a global stage after this deal. The biggest spoiler in this deal is none other than his own brother Mukesh Ambani who threatened to revoke ROFP (Right of First Proposal) if this deal actually goes through. Where this sibling rivalry head to in the coming days, it will be an event to watch out for…

RCOM stock may see some initial selling pressure due to failed negotiations, but unlikely to go below 400 levels, since it never went up in expectations of the deal. Rather, the scrip has declined from 600 odd levels to 450 levels during the time when negotiations were going on. Hence, the stock may see some bounce back like the sam way, Bharti share had shown after their negotiations with MTN were called off. Surely, I would compel to buy this stock at around 400-410 levels, if it goes down on Monday.

Another deal that is at stake this week will be “Nuclear Deal”. UPA Government after 4.5 years of failed political marriage has finally listened to his conscience and decided to pursue with the Nuclear Deal with USA. But before this deal finalize, the govt is required to pass the “No-Confidence” motion on Tuesday. If the government fails to win over “No-Confidence” motion, then this deal will definitely moved to the back-burner till the time new governments take over in USA and India. And surely, stock market would get a definite hit as well.

On the contrary if government wins the “No-Confidence” motion, then not only Nuclear Deal but various other reforms like Pension Reforms, Banking Reforms, etc would also be carried out by the government. And this will strengthen markets, which is currently down on knees due to global gitters. Hence, stock market will be praying for Manmohan Singh led UPA govt to win the majority and also, some of these deals.

Another type of deals that were seen during the weekend” is the ones going behind closed doors in Political circles”. The troika of UPA, UNPA and NDA are doing hectic back door lobbying to win over the crucial votes for small political parties, independents and opposition party rebels. Some are offered as much as Rs 100 crores to vote for them during the “No-Confidence” motion. Seeing this kind of dirty power-play between the parties, my faith as a voter has shaken. Many of us would be contemplating whether to cast a vote in the coming elections or not.

Anyways, there is one good trading strategy that can be taken this week. In this volatile market, it is better to trade in the index. One can buy 3600 Puts and 4300 Calls on Monday. According to the outcome on Tuesday, the markets will take a definite one-side moment. If government wins the majority, the markets will see a definite upside turn towards 4300 levels. Similarly, if government fails to attain majority, markets could come down to as much as 3500 levels. Under both the circumstances, one can close the positions and get the profit (after accounting for losses on the other side).

Wishing you a week of Successful Deals!!!

Weekly Outlook on Indian Stock Markets - 14th July to 18th July, 2008

2008-07-14T04:47:00.000-07:00

In the background of economic turmoil, the Indian politics has reached its climax. Within a week’s time, the Indian Government ruled by Congress will be facing No-Confidence motion in the Parliament. With dark clouds of inflation, interest rates and slowdown looming over Indian economy, Indian stock market is wishing that government doesn’t fall down at this juncture.

But the fundamental concerns still remain the same whether this government remains or falls down. The inflation is inching up week-by-week. The economy is showing considerable slowdown. The latest example is the IIP data for the month of May that released last Friday, which indicates the decrease in industrial growth to 3.3% viz-a-viz 11% lat year. And the most important is the Crude Oil, which is showing no signs of relent.

The government is taking monetary steps, which is not enough. The government must clampdown on the hoarders who have been accumulating the commodity and then pushing up their prices. Mint published on Friday that Salt prices have been going up too. In country like India, where Mahatma Gandhi initiated the freedom struggle against Britishers in the name of Salt, the people (especially lower class) are again deprived of the basic item called Salt.

Anyways, back to the stock markets. What could be the strategy for the coming week? The best investment strategy seem to accumulate stocks but by hedging the index. The primary reason is the market sentiments. When markets go down, they pull down every stock, without any reason. Hence, to ensure, one doesn’t suffer any major losses, it is wise to either sell the July Nifty or buy 3800 Nifty Puts in a proportion of 70:30%. In other words, for every 100 Rs of stock you buy; also buy 30 Rs of Nifty Put (30 Rs is the contract value).

Another strategy that seems interesting is to buy Reliance Communication 400 Put and 500 Call Option. 400 Put is trading at around 9 Rs and 500 Call is trading at Rs 5. One can buy both the contracts to generate profits. Reliance Communication and MTN negotiation deadline is 21st July and contracts are expiring at 31st July this month. It is very likely that the stock may see some action around 21st.July.

If the deal goes through at favorable equity swaps ratio, the stock will see some tremendous trend. We must remember that it came down from 600 odd levels to 440 levels. If deal goes though, it can re-test the 500-550 levels. Hence, the 500 Call could fetch you more than 20 Rs. In such case, the net profit will be 20 – (9+5) = Rs 6 * number of shares.

On the contrary, if deal doesn’t go through, the stock could come down to 400 levels. In such case, the Put could be trading around 20-25 Rs again. Hence, the profit will again be Rs 6 * number of shares. Hence, the key factor that can generate profit in this strategy is the volatility in this stock. And the history is evident that ADAG stocks have been pretty good in this regard.

Wish you all a great trading week ahead!!!

Weekly Outlook on Indian Stock Markets - 06th July to 10th July, 2008

2008-07-06T21:09:00.000-07:00

Indian Stock Markets seem living dangerously at the moment, especially after witnessing the kind of movement they showed during last week's trading. Markets were up by 5% on Wednesday, then down 4% the next day and finally closed 2% up on Friday.

Such kind of volatility is interpreted in different ways by Bulls and Bears. Bulls are calling it a "Strong Resistance", whilst on the other side; Bears are calling it a "Final Resistance before 10000 mark". Well, who is right and who is wrong, only the future will decide, but as investors, we must keep hunting for good stocks. First let's look at some of the sectors that are in limelight now a days:

Real Estate (Stay Away)
The sector that hammered the most in last few weeks is the Real-Estate sector. And there are some voices raised in the markets about the attractive valuations for this sector. No doubt as a trader, the sector may see some pull back, but fundamentally the sector has more downside risks that upside potential. The economy slowdown will have an impact on pockets of everyone, especially in the Middle Class. At the same time, increase in interest rates has further pull people out of the housing markets. Besides, real-estate companies have been facing problems due to rise in prices of Cement and Steel that have further increased their input costs. In this vicious circle of less demand and increased input prices, the companies may put brakes on their expansion plans. Hence, it is better for investors like you and me to stay away from this sector.

Infrastructure (Hold)
Infrastructure Sector has also got a severe beating like Real estate but holds much more potential than its counter-part. The governments (both State and Center) have been emphasizing strongly on improving the infrastructure, and that is the strongest prospect for this sector. Another advantage is that this sector is insulated from consumer's behavior and rather more dependent upon the economy. Hence, any consistent downside in the growth rate of economy can hamper the prospects of this sector, whilst on the other side; consistent growth rate will push up this sector. As of now, the growth rate seems OK (without taking inflation into account). If inflation gets controlled, the sector will continue to grow. So, any investor who is looking in horizon of 2-3 years, can start putting money in this sector. Companies like GMR Infra, IRB Infra are good stocks to buy at these levels of below.

Information Technology (Buy)
Information Technology has been the blue-eyed boy of Indian economy for last few years and is expected to remain so in coming years as well. The IT companies have been performing well consistently, albeit, have faced the forex crisis last year. Their low-cost services due to currency parity (difference between foreign currency and Indian currency), quality labor, will help these companies in growing in coming years. As an investor, it is better to put money in those IT companies which are well-diversified into various domains (like Telecom, Finance, Logistics). For instance, Satyam and TCS are better than Infosys and Wipro in terms of domain diversification.

Trading Ideas for the week
This week is expected to see some buying interests in some of the real-estate and infrastructure stocks like DLF, REL, GMR, JP Associates. One can trade in these stocks. The best strategy, though, is to hedge the portfolio by buying a Nifty Put for 3800 in the proportion of 1:3 i.e., buying 10000 Rs value of Nifty Put {(LTP+ Strike Price)*50}, along with 30000 Rs of stocks in the Cash market.

The stocks which are at attractive levels and can be accumulated for long term are IRB Infra, Karuturi Networks, Vakrangee Software, Balasore Alloys, DCHL, NDTV. These companies have shown consistent growth in last 2-3 years and have seen FII interest, despite the slow down.

Wish you a great investing and profitable trading this week!!!

Weekly Outlook on Indian Stock Markets - 30th June to 4th July, 2008

2008-06-29T21:19:00.000-07:00

Sometimes, I wonder whether one should really be listening to the stock experts, brokers and economists who just keep murmur the new targets that stock markets will touch in the near future.The reason for such doubt is the pace with which these experts change their views on the channels.

Whilst the markets were bullish last year, these experts set new targets of 25000-30000 for the Sensex in 2008-09, sighting Asia-decoupling, strong FII inflows, etc as the reasons. And now when markets are looking bearish, the same stock experts are narrating stories about new lows, possibly in 4 digits,which markets could touch by end of this year, giving rising crude, inflation, etc as the excuses.

Sometimes, I doubt that these experts are paid well for creating such an atmosphere. Because, the inflation and the crude started giving ominous signs in the latter half of last year. Yet these experts came on the channels and talked bullish about the markets. Hence, I am slowly, but surely, starting having my own view point about the stock markets and economy than listening to the experts'advices and I am sure that many of you all would be having the same views about them.

Come let's have a rational discussion on the future of the Indian economy and the stock market. My view is that USA is artificially passing the inflation to the other economies, especially the Asianeconomies and Europe. On one side, the central banks all across the world have raised the interest rates, while on the other side, US cut its rates, hence increasing the money supply in the world, and giving further air to the inflation. The US policy makers want to curb the growth of the emerging countries through rising crude and ensure these countries do not emerge as the counter-part to USA.

There is no denying that the US economy is in dire straits at the moment. The fiscal deficit is at all time high and there is serious threat to the dollar reputation. Though, at the moment, dollar is gaining strength, but one thing is for sure that the moment interest rates go up in USA, the dollar will go down very quickly. The US cannot keep the interest rates low for long since, the inflation has gone out of comfort zone there as well and Bernanke would not like slow rate of growth and high inflation to persist in the financial system.

Hence, my long-term view for India and other emerging economies look strong. There are some very good companies in India that have made their mark in International arena. Information Technology is one such sector where Indian companies have offered the best services at low cost. Indian IT companies will stand to gain, if the companies world-wide resort to cost cutting, because this cost-cutting is done in areas like Customer Care and other back-office departments and various IT companies offer products in these domains only. Hence, any investor who is eager to invest can look at Indian IT companies for longer term perspective.

Another sector where Indian companies can do well is the Telecom and Media sectors. Telecom sector will definitely grow under any government - Left, Right or Straight. Hence, one can safely put in his money in this sector for longer term. Indian Media has emerged out as another upcoming sector in the last year and half. Many investors world-wide have increased their stake in this sector. Even in the current meltdown, the foreign stake in these companies has not decreased much, which indicates the bullishness in this sector.

Some of the stocks that can be purchased in the coming week are Vakrangee Software, TTML, Karutu Global, NDTV and Deccan Chronicle (DCHL). Vakrangee Software is the Banglore based IT company with domestic clients (CMP – 190). The company's major client is Election Commission. With elections in last one year, the company's hands will be full of projects from Election Commission.

Tata Teleservices Maharashtra (TTML) is another telecom company, which is offering good valuation (CMP - 25 Rs). The stock can be purchased with minimum target of Rs 35 in next 3-4 months.

Karutu Global has emerged as very few companies where FIIs have shown interest during this meltdown. The company is growing rapidly in the florocist industry. The stock is trading at Rs 25 Rs. and can touch 50 in next one year or so.

NDTV and DCHL belong to media industry. These companies hold good reputation in the media industry in terms of content provider. Foreign Investors and Global media conglomerates have shown interests in these companies. Recently, New York Times has bought some stake in DCHL. In the end, just want to conclude with a reminder that equities will again emerge, in an year or so. It's just the time to stay cautious and increase your investment perspective from 3-4 months to at least 1 year or so.

Wishing you a great Investing!

Weekly Outlook for Indian Stock Markets - 22nd-26th June, 2008

2008-06-22T21:13:00.000-07:00

OK… So, the worst nightmare that the Indian stock markets had, has finally happened.

inflation numbers have touched the double-digit mark and already speculations are rife that it may touch 15% mark in the near future, especially if crude oil resumes its upward journey.

Under such gloomy environment, the million dollar question is that what should investors do? Is India shining story under threat now? Will government fail to curb the inflation? Will the stock markets go down to as low as 4 digits in the near future? And hence, as an investor, should I put my money in the stock markets at the moment or not?

Let's put out all our fears and ration them logically. Right from our childhood, we are taught to follow the paths of great men at the time of adversity. If we talk same in the context of stock markets, no one comes near to Warren Buffet who, with his unique style of investing, has able to provide rich dividends to his shareholders in all good and bad times. The primary reason, as he says, for this success is VALUE INVESTING.

Stock Markets, at every stage – be it bad or good, will continue to offer some stocks at good values. As an investor, we must learn to identify them and buy such stocks at regular intervals.

Like its past golden days, stock markets will not remain in the bad days as well forever. Soon or later, it will again start buzzing with the voices of optimism. If we look at the past, Indian stock markets are able to tide over various adversities like Harshad Mehta Scam, Ketan Parekh Scam, South East Asian crisis and IT bubble bust and yet, it managed to touch new highs. Hence, the lesson that the past teaches us is to remain optimistic. Invest in the companies that hold future and are offering at good prices.

This week edition will look into such stocks and sectors.

One of the sectors that need mentioning is the Telecom sector. The sector is bound to succeed in coming future. The telecom revolution is bound to happen under any circumstances and under any government. Even the pure Leftist-government will continue to encourage rural telephony and broadband. On the contrary, Right wing parties will pitch for telecom more aggressively than their counter-parts. Hence, a long term investor can look at the companies that are into telecom sector or offering assistance to companies belonging to this sector.

For instance, TTML is one good telecom stock, which is coming at good price (28 Rs). Slowly and Steadily, Tata Teleservices are able to snatch a good pie of customer base. Though, it is not near to Reliance, Bharti or BSNL in terms of the customer base, yet it is able to fetch good chunk of customers through its low cost services. Also, one must not forget the strong backing of Tata conglomerate, which may help TTML acquire some other telecom company much larger than itself. If that actually happens, the shareholders could get rich dividends as well.

Another sector, which is worth mentioning, is the Information Technology. The last year has been a pretty bad one for the IT companies. But with Rupee again depreciating, the companies stand to gain extra in terms of currency parity. Though, the major risk that this sector is having is the slow down in US economy, which may have a bearing on their customer base. Personally though, I believe that US economy slow down may bring more business to the Indian IT companies, since US based customers will resort to cost-cutting and low-cost services of Indian IT companies will help them get extra business from their US customers.

The front-line company that holds well in this sector is Satyam Computer Services. Unlike Infosys and Wipro, who are having major US clientele from financial sector, Satyam clientele also comprises of companies from other sectors like Telecom, Courier, etc. Hence, the company will not face the brunt of mayhem in US financial sector as deeply as some of its peers like Infosys and Wipro may face.

In mid-cap space, companies like Nucleus Software and Patni Computers stand to gain as well. Last year, the investors completely exited from these stocks. But now with re-emergence of IT, these companies may see heavy bout of buying than other IT companies.

Besides, there are few Indian companies that are doing well, despite the slowdown. Take for Instance, Karuturi Global. This Banglore-based company is the World's largest producer of Roses. The company has recently acquired land in Africa and looking to expand itself in Europe as well. The company exports largely to Europe and is insulated from Dollar-Rupee fluctuation. Karuturi stock is trading at 25 Rs (Face Value =1 Rs) and going by various research reports, the stock is poised to touch 35 in the near term (3 months).

Despite the setbacks, I would like to end this week edition with the note of Optimism.

It is good that markets have corrected in last 6 months. Events like Inflation, Oil crisis, Sub-prime will continue to come and offer long term investors some good buying opportunities into the quality stocks. Though, one must not lose "Patience" and invest after "Thorough Research".

Wish you all a very Happy and Quality Investing.

Weekly Outlook for Indian Stock Markets - 20th May-25th May, 2008

2008-05-19T09:53:00.000-07:00

Hum kis gali jaa rahe hain, apna koi thikaana nahi

These lines from a famous song sum up the mood prevalent on the Dalal Street. The market clearly lacks direction and it is necessary that investors remain cautious and invest their money carefully.

There are several threats looming over the Indian economy. The most threatening is Inflation. The last two governments – NDA and UPA have ignored the agriculture sector and it is showing the results now. Also, Crude Oil has made the matters worst for the government and it is highly unlikely that inflation will come down to comfortable levels soon. At the same time, the high inflation forced Central Bank to raise the interest rates. This has made the funds raising expensive for the companies, and hence, slow down their growth.

This complete cycle teaches a lesson that any economy cannot prosper by giving attention to only specific sectors and ignoring the rest. Thus, till the time, government takes some serious steps in encouraging the lagging sectors like Agriculture, India cannot become a developed nation.

OK… Let’s review the last week performance of our Stock markets. Despite a series of bad news coming throughout the week, the markets have shown the resilience. The Inflation at 8% cannot be ignored at all. Industrial Production at 3% cannot be taken lightly. But still, the resilience that markets have shown is on some strong foundation or just a blip to trap the invertors, only time has the answer.

Though as an investor, one needs to look at some sectors like Information Technology, Textile processing, Retail, and Telecom with optimism. Information Technology sector was always a good sector to invest in, but off lately, the rupee appreciation has made it look vulnerable. Now, when Rupee has again depreciated to 42 Rs / US Dollars levels, the sector is poised to do well.

In Retail space, Indian consumers have found a new passion in the form of Malls and Big Shopping outlets. This has made companies like Vishal Retail, Pantaloon, Future Capital Holding, attractive for a long term perspective and can always been bought in dips.

As discussed before as well, Telecom sector has the strength to grow significantly in near future. Once this spectrum issue gets over, one will see telecom companies competing for Rural India where the majority of India’s population still resides. The company of which I am fond of is TTML. The share at 30 Rs is the most attractive Buy and could touch 60 Rs in the 1 year span.

Though, I must again reiterate that one must remain cautious. One bad news may led markets drop its resilience and can again take markets back to 4800 levels or below.

Wishing me and you a very Happy Investing!!!