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

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...

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

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

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

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

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

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 - 16th to 20th Feb, 2009

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 - 26th Jan to 30th Jan 2009

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

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!!

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!!

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

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

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

Weekly Outlook on Indian Stock Markets - 06th July to 10th July, 2008

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!!!

Indian Stock Market - Weekly update 13th - 17th August, 2007

Last week has been extra-ordinary for the markets. Aftre the initial meltdown, markets seems to have recovered, till Thursday afternoon, when BNP Paribas sub-prime mortgage woes came into surface.

This acted as a trigger that took global indices to another low. It seems that markets have catched the sub-prime mortgage fever that may take another few weeks or months to recover.

One of the major concerns pertaining to this fall is the "uncertainity" - uncertainity on how deep the issue of sub-prime mortgage is and how many banks / financial insttutions have burnt their fingers in it?

Thus, it seems unlikely that markets will go up steadily this week. Though, some amount of short-covering is seen, which is common after such volatility. Long term and medium term investors can still wait as more correction can be seen in the markets. Intraday Traders need to
track local and global events quite carefully since every name dragging into sub-prime mortgage woes will trigger a fresh correction in the market. Hence, caution is the word one must remember. Till the time, the cloud of uncertainity about sub-prime clears a bit, the market expected to remain volatile.

Below are some of the upside and downside factors that are expected this week:

Upside
1) The current side last week may result in a bit of short-covering this week around.
2) The money from Middle-east, is yet to enter into Indian markets. Thus, this correction may result in some of this money coming in.
3) RBI annoucement that Indian Banks and FInancial Institutions are laregly unaffected from sub-prime woes
4) Hawkish stance by Fed and European banks on this issue.
5) Rate cut by Fed to infuse fresh liquidty into the equities.

Downside
1) Fresh names of banks and financial institutions coming into sub-pprime trap
2) yen appreciation against dollor will eject more liquidity from stock market.
3) Rupee appreciation against doller will invite more volatility in the stock market
4) Sub-prime turn out to be a global disease
5) fear of Global Recession due to US economy slowdown.

Wish you a very happy investing this week!!!!!