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!!
Showing posts with label weekly forecast. Show all posts
Showing posts with label weekly forecast. Show all posts
Sunday, June 28, 2009
Weekly Outlook on Indian Stock Markets - 29th June to 3rd July 2009
Sunday, June 14, 2009
Weekly Outlook for Indian Stock Markets - 15th - 19th June 2009
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!!
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!!
Sunday, May 3, 2009
Weekly Outlook for Indian stock markets - 4th to 8th May 2009
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!!
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!!
Sunday, April 26, 2009
Weekly Outlook for Indian Stock Markets - 27th to 29th April 2009
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!!
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!!
Sunday, April 12, 2009
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!!!
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!!!
Sunday, March 29, 2009
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!!
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!!
Sunday, March 22, 2009
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!!
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!!
Sunday, March 15, 2009
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!!!
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!!!
Sunday, February 22, 2009
Weekly Outlook for Indian Stock Markets - 24th Feb to 27th Feb, 2009
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!!!!
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!!!!
Sunday, February 8, 2009
Weekly Outlook for Indian Stock Markets - 9th Feb to 13th Feb 2009
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!!!
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!!!
Sunday, February 1, 2009
Weekly Oulook for Indian Stock Markets - 2nd Feb to 6th Feb 2009
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!!!
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!!!
Sunday, January 18, 2009
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 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!!
Monday, November 3, 2008
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.
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.
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.
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.
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.
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.
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”.
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
Sayonara
Sunday, September 14, 2008
Weekly Outloot for the Indian Stock Markets - 15th to 19th September, 2008
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 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.
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.
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.
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.
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.
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.
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!!
Wishing you a great week of investing!!
Sunday, August 31, 2008
Weekly Outlook for Indian Stock Markets - 01st Sept -5th Sept, 2008
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.
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.
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.
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.
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!!!
Sunday, August 17, 2008
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
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
Monday, August 11, 2008
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!!!
Monday, July 14, 2008
Weekly Outlook on Indian Stock Markets - 14th July to 18th July, 2008
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!!!
Sunday, May 4, 2008
Weekly Outlook for Indian Stock Markets - 05th May - 09th May, 2008
Hey!!!! Is everyone back???
Well, the most important thing about which every investor is concerned about is the re-emergence of FIIs in the stock market.
If we look closely at the FII investment data for the last few weeks, the data is not so encouraging but it is not discouraging either. The outflow of funds was severe in the months of January, February and March. But in April, the situation is somewhat good. Even if we look at Friday’s data, FIIs have been the Net Buyers in the tune of Rs 600 Crore., which indicates that they are again back on the streets hunting for good quality stocks.
The sector that has rebounded strongly after the January meltdown is the Information Technology (IT) sector. Almost all the frontline stocks like TCS, Infosys, HCL, Satyam, Wipro, have gained by almost 20-30% in the last two months. There are several reasons for it:
Dollar Appreciation
Last year, Information Technology had got a severe hit due to Rupee Appreciation. The Rupee appreciated to 39.30 / dollar in January, 2008 from around 44 Rs. /dollar in January 2007, which impacted the profitability of these companies a lot, since the revenues for these companies are in dollars.
The major cause of this appreciation was the tremendous inflow of funds into Indian stock markets, which put extra pressure on the local currency. But since January, the scenario has changed completely. The months of February, March and April have seen net FII outflow from Indian stock markets and that helped the Dollar in rebounding to somewhat higher levels. Currently, Dollar is trading around Rs. 40.50 a piece.
The temporary rise of Dollar from 39.30 levels to 40.50 levels will help IT companies in their revenues. Also, the companies will get some more time to adjust themselves in the new global conditions pertaining to currency.
Most of the IT companies now, are signing new deals either in the local currency or at the fixed currency price to save them from currency fluctuation. Many companies have also taken the route of derivatives to hedge their future revenues. In other words, IT companies are now trying to come back on track and the dollar appreciation will help them doing it.
Revival of BFI space
Sub-prime has hit the most to Banking, Finance and Investments (BFI) space and markets feared that companies in this space will resort to cost-cutting by reducing their technology bills. This factor prompted many experts to announce a bleak future outlook for the IT companies who have major clients in BFI space.
But till now, no major organization in BFI space has announced any major cut in Technology spending. And this has revived hopes among IT companies that the impact of sub-prime will not be much on them.
Support from Indian Government
Indian Government is giving its active support to the IT companies. The government has recently announced that it is extending the tax holiday for IT companies till 2010, which was earlier due to over in 2008. This announcement could be a major relief for IT companies, since the tax burden will be less for these companies and will help in earning more profits.
IT Stocks to look out for
This week, we will look at some of the stocks belonging to IT sector. One of the stocks that will definitely do well in coming days is TCS. The company has good mixture of products for various domains including BFI, telecom and retail. Also their clientele include big companies from Europe, US, Middle-east. Some of the Indian banks have also been using TCS product for their operational needs.
Also, the company has hedge its revenues to around 40 Rs/ dollar levels, which make them almost immune to currency fluctuation. Hence with such diversified range of products and clientele, the company will probably fare much better than its peers.
Also one can have a look at the companies that are working for local clients only and are doing quite well. Two such companies are Vakrangee Software and Tera Software.
Vakrangee Software works primarily in the area of digitization of records and has clients like Election Commission. It ensures safe and steady revenues from them. The company is also expanding in the telecom domains offering bill-digitization products to the companies.
Major FIIs have bought this stock around Rs 180-200. Currently, it is trading at around Rs 250 levels and has the strength to up to 400-450 levels in a years’ time.
Similarly, Tera Software offers educational products to government companies and is bound to do well in future, since the government is now actively looking to promote education in the rural areas. Kotak and other major Financial Institutions have purchased this stock around 80 Rs. It is currently trading at Rs 60.
Be the original
In the end, equities investments are always subjected to risks. It is better to listen to everybody, but follows what’s your mind says. Please do not use your heart, use your knowledge and logic before buying any stock.
A very good poem by Harivansh Rai Bachhan teaches a lot. In his poem called Madhushala, there are four lines:
Madiralaya Jaane ko Ghar Se Chalta hai peene waala,
Kiss path pe jaaoon, asmanjas mein hai who bhola-bhala
Alag Alag path batlaate sab, par main yeh batalata hun
Raah pakad tu ek chala chal, paa jaayega Madhushala
(To attain wisdom, you will be shown various paths by various people, but is better that you pick one path and follow it whole-heartedly. By doing this, you are destined to succeed because every path takes you to one destination and that is Almighty, the God)
If we mix this philosophy with investment, it can be said:
While investing, you will read various ideas, and various views, but it is better to build your own logic which your mind creates and then just follow it. In the end, you will end up with good returns from your investments. On the contrary, if you keep changing your investment style, you will end up with nothing, but only the wisdom.
Wishing you a happy investing!!!
Well, the most important thing about which every investor is concerned about is the re-emergence of FIIs in the stock market.
If we look closely at the FII investment data for the last few weeks, the data is not so encouraging but it is not discouraging either. The outflow of funds was severe in the months of January, February and March. But in April, the situation is somewhat good. Even if we look at Friday’s data, FIIs have been the Net Buyers in the tune of Rs 600 Crore., which indicates that they are again back on the streets hunting for good quality stocks.
The sector that has rebounded strongly after the January meltdown is the Information Technology (IT) sector. Almost all the frontline stocks like TCS, Infosys, HCL, Satyam, Wipro, have gained by almost 20-30% in the last two months. There are several reasons for it:
Dollar Appreciation
Last year, Information Technology had got a severe hit due to Rupee Appreciation. The Rupee appreciated to 39.30 / dollar in January, 2008 from around 44 Rs. /dollar in January 2007, which impacted the profitability of these companies a lot, since the revenues for these companies are in dollars.
The major cause of this appreciation was the tremendous inflow of funds into Indian stock markets, which put extra pressure on the local currency. But since January, the scenario has changed completely. The months of February, March and April have seen net FII outflow from Indian stock markets and that helped the Dollar in rebounding to somewhat higher levels. Currently, Dollar is trading around Rs. 40.50 a piece.
The temporary rise of Dollar from 39.30 levels to 40.50 levels will help IT companies in their revenues. Also, the companies will get some more time to adjust themselves in the new global conditions pertaining to currency.
Most of the IT companies now, are signing new deals either in the local currency or at the fixed currency price to save them from currency fluctuation. Many companies have also taken the route of derivatives to hedge their future revenues. In other words, IT companies are now trying to come back on track and the dollar appreciation will help them doing it.
Revival of BFI space
Sub-prime has hit the most to Banking, Finance and Investments (BFI) space and markets feared that companies in this space will resort to cost-cutting by reducing their technology bills. This factor prompted many experts to announce a bleak future outlook for the IT companies who have major clients in BFI space.
But till now, no major organization in BFI space has announced any major cut in Technology spending. And this has revived hopes among IT companies that the impact of sub-prime will not be much on them.
Support from Indian Government
Indian Government is giving its active support to the IT companies. The government has recently announced that it is extending the tax holiday for IT companies till 2010, which was earlier due to over in 2008. This announcement could be a major relief for IT companies, since the tax burden will be less for these companies and will help in earning more profits.
IT Stocks to look out for
This week, we will look at some of the stocks belonging to IT sector. One of the stocks that will definitely do well in coming days is TCS. The company has good mixture of products for various domains including BFI, telecom and retail. Also their clientele include big companies from Europe, US, Middle-east. Some of the Indian banks have also been using TCS product for their operational needs.
Also, the company has hedge its revenues to around 40 Rs/ dollar levels, which make them almost immune to currency fluctuation. Hence with such diversified range of products and clientele, the company will probably fare much better than its peers.
Also one can have a look at the companies that are working for local clients only and are doing quite well. Two such companies are Vakrangee Software and Tera Software.
Vakrangee Software works primarily in the area of digitization of records and has clients like Election Commission. It ensures safe and steady revenues from them. The company is also expanding in the telecom domains offering bill-digitization products to the companies.
Major FIIs have bought this stock around Rs 180-200. Currently, it is trading at around Rs 250 levels and has the strength to up to 400-450 levels in a years’ time.
Similarly, Tera Software offers educational products to government companies and is bound to do well in future, since the government is now actively looking to promote education in the rural areas. Kotak and other major Financial Institutions have purchased this stock around 80 Rs. It is currently trading at Rs 60.
Be the original
In the end, equities investments are always subjected to risks. It is better to listen to everybody, but follows what’s your mind says. Please do not use your heart, use your knowledge and logic before buying any stock.
A very good poem by Harivansh Rai Bachhan teaches a lot. In his poem called Madhushala, there are four lines:
Madiralaya Jaane ko Ghar Se Chalta hai peene waala,
Kiss path pe jaaoon, asmanjas mein hai who bhola-bhala
Alag Alag path batlaate sab, par main yeh batalata hun
Raah pakad tu ek chala chal, paa jaayega Madhushala
(To attain wisdom, you will be shown various paths by various people, but is better that you pick one path and follow it whole-heartedly. By doing this, you are destined to succeed because every path takes you to one destination and that is Almighty, the God)
If we mix this philosophy with investment, it can be said:
While investing, you will read various ideas, and various views, but it is better to build your own logic which your mind creates and then just follow it. In the end, you will end up with good returns from your investments. On the contrary, if you keep changing your investment style, you will end up with nothing, but only the wisdom.
Wishing you a happy investing!!!
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