18TH NEWSLETTER

Market may open down. Market may down between 09.58 and 10.14 Market may steady or up side between 12.27 and 12.55. Market may close at down to previous closing.




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Opening Bell Call
Buy

ACC - ACC Limited
SBIN - State Bank of India
KSK - KSK Energy Ventures Limited
INFOSYSTCH - Infosys Technologies Ltd.
GOLDBEES - Benchmark Mutual Fund - Gold Benchmark Exchange Traded Scheme

On 17th September 2008 - The BSE Sensex closed at 13,262 (down 255 points) while the NSE Nifty closed at 4,008 (down 66 points).

Opening Bell Call
Sell

BAJAJHIND - Bajaj Hindusthan Ltd
HEROHONDA - Hero Honda Motors Ltd.
RELIANCE - Reliance Industries Ltd
TATACHEM - Tata Chemicals Ltd.
GAIL - GAIL (India) Limited

Technical Analysis for 18th September 2008

BSE-SENSEX - Major Support - 13336, 13194, 13052, 12948, 12843, 12596, 12350
BSE-SENSEX - Major Resistance - 13441, 13545, 13687, 13829, 14075, 14322, 14568

NSE-NIFTY - Major Support - 4032, 3991, 3949, 3920, 3890, 3819, 3748, 3677
NSE-NIFTY - Major Resistance - 4062, 4091, 4133, 4174, 4245, 4316, 4387, 4458

Sectors, Counters in +ve bias BANKNIFTY, Albk, Educomp, AndhraBank, Auropharma, SBI, HeroHonda

Buy Bankindia-290 for 304 with sl 285 [Trading]
Buy CanBank-217 for 225-231 with sl 214

Short KTKbank-140 @147 for 140 with sl 150
Short HDFCBank-1230 @ 1300 for 1250 with sl 1315
Short PNB-504 @ 527 for 500 with sl 535

Buy ABan-2327 for 2345-2389-2414 for with sl 2300

Before delving into the current chart people can have a look into the chart presented in our presentation come look into the future and also posted some days back. We are now into the purple zone.

BEAR PHASE 2008 .

Technical Views ////

If we see the chart above 2 major things have been shown is the supporting trendline of the down channel and important points.

1) There are two sets of views of different technical analysts or fundamental analysts.One which considers the equity or India story to be over and we could well be headed to 6k-9k levels in the future. The another set has the view that India/equities go through this phase of trouble and pain sustaining above the 11-12k mark an embark into a new move in later part of 2009. There could be different theories analysis to explain the views and both may seem to be right ! . But common thing is in both the views investors/traders will get good opportunities if they are able to time their moves. I remain on the second set view which says we will sail through but with pains and patience.

Although a longer term scenario may be difficult to gauge as an investor /trader one needs to find opportunities and make full use of it . Coz in Bear markets the Bear rallies have moves which can be much more profitable in the short term compared to the smooth bull markets only thing is one needs to time them better.

Sensex Chart Explained :

In the above chart we have used two main things the channel and trendlines alongwith the important points symbolized.

If one sees closely the markets Sensex has continously followed the lower top lower bottom bear channel but has seen good bounces from the lower end and good falls from the upper end. The oval symbols shows the zone of support and panic levels on lower side.

Technically we are in the last leg of the bear market which can be highly painfull in terms of sentiments and price as the recovery period after the capitulation is decently long. In either case of a prolonged bear market it would see Huge Bear Rallies which can be extremely profitable.

Now in terms of levels 13100 was the first level to watch which we can assume to have been taken out. Below this 12800 zone if broken could lead to a new low !. On the lower side the pain could last from Septemeber to Mid-Oct ( although i was expecting a fall to come around last week of September ) .

The lower channel support comes around 11500 zone . On a longer term basis the 50 % correction level ( for 2.6k to 21k ) comes to around 11900. So if 12500 is taken of convincingly and a further panic or drifting move should find a bottom around 11900/11500. Investors who have already taken positions at 13100 can wait for 11900-12500 zone to add and traders could follow the levels to take trades accordingly.

Although 13100/12500/11900 and a worse area for current fall 11500 are important levels all of which may not necessarily be seen . So investors with a long term view those who did use our staggered buying approach at 14k-12.5k and sell at 15k + can now again follow the same process with discipline . no hurry and patience.

Although not all investors would have that much patience or courage to go out staggered in the rough weather right now but all of them should look to buy if 11900-12500 zone comes in. Pick quality large caps and solid mid caps with good track record !!!. Investing a serious business so do your research check your risks and apetite !!

We would see sectoral stocks later on coming days .

Before we start on the technical analysis and view detail on Sensex lets briefly review the observations on fundamental/economic view i was looking at .

1)
Since June/July our technical/fundamental projection through the blog/ppt has been that the correction could make a low around5/8 or in the extreme case make a correction till Jan 09. But the preferred scenario was Sep/Oct 08. Many a times it has been mentioned Economic data would peak out around this month!!!! Of the peaking out things Crude has peaked out / inflation peak is not far/Global skeletons are out n will get buried soon.

2)
2) Also since June/July i have been very critical of Private Banks /Real Estate and Capital goods and have not given any long term investment bets on them ( ICICI , Kotak ,BHEl etc ) and have maintained an avoid rating. All through the period our favorite sector has been PSU banks ( SBI , BOI , BOB , LIC Housing( not bank though)) . PSU banks have stood out in the correction and are trading much higher from July ( 12500 ) lows.

3)
The view for Sensex was clear to exit all at 17500/16800/16100 and wait for 14700/14100/12500 zones to buy systematically which was yet again suggested book fully at 15100/15500. We have initiated buying at 13100 which can be termed a little early also but the next lot can now be delayed if scenario weakens.

NOW lets have a look at current views and what could be the projections from
Fundamental/Economical :

1)
Many investment banks/insurance bigwigs/mortgage in the US have gone bust and a couple of skeletons may still be left. This is going inline with the projection of September peaking out with worse economic data. Sub-prime /mortage /leverage/real estate /forex exposures etc have been the reasons for the collapse of US machinery. My expectation is that by end of October the major skeletons would be out !! although repercussions and lagged effect would stay till Jan 09 and a new thought process could emerge around March - May 09.
Although this is a projection which may go wrong as i am not an economist but these are my views which can be very naive.

2)
For India majority of the banks have only commercial banking as the core . The mortgage/home loans market has a distinct advantage compared to the develop countries. The advantage is the 60/40 or 70/30 % of white black component which insulates the Banks from getting into a highly leveraged scenario. On the forex derivative losses its been a known thing that many of the corporates had been trying to hide them through accounting measures but as its open will definitely lead to M2M lossed being converted to books and substantially reducing the exposure and the risk involved. So there can be good amount of losses on books of pvt banks /aggressive corporates but still the structure of Indian system keeps them far faraway from bankruptcy. The timing period of change in view remains the same Sept/Oct may see inflation/commodity prices peaking out and good base effect could come into play after Jan or March.

Many of these projections are based on my personal view which may be naive and short sighted. This is what the scenario seems to me as of now.

Dow Jones :

Short Term View :

In extreme short term the chart seems to be forming a weak pattern which can also be a inverted cup and handle pattern. Confirmation would be a break below 10500 which could lead to 10000/9800 and 9500 in worst case. But one thing to note is the support comes around 10600 zone which if it does hold could lead to a bounce also. Technically one needs to watch the 10500-10650 levels closely.

Long term View :

If we see the long term charts

1) Dow Jones moved from 7181 to 14280 levels from 2002 to 2008. The current downslide should correct to 50/61 % of the entire rally . And on a very long term basis if we take from 1980s it should correct to 38 % of it.

2) In the last dip it made a low around 10700-10800 which was very close to the 50 % correction level.

3) The next dip should take it to the 61 % correction level which comes to 9800-10000 zone. And for the very long basis 38 % comes around 9500 .

So in the bear scenario it is in the index could well settle out closer to 9800 +- 200 points.

This is just a technical view , not considering the ecconomic or fundamental scenario. Although for last few months my expectation has been September would be the month where economic data could Peak out.

NIFTY FALLS AGAIN, might open around 3906, and it is weak below it. can see 3860-3810 for the day.

any buying should be done only above these levels, please dont try bottom fishing and get trapped.

3810 is considered to be the ultimate support which might hold, however if broken this time, downmove will be furious, and i dont have any tgts yet.

i am not able to give any more levels as of now, and for intraday, once we make a bottom, i will give u levels live in the chat room.

only closing above 3952 can bring some respite, else downtrend might continue.

ALSO ABOUT DOW, IT HAS SUPPORT AROUND 10,660, 2-3 CLOSING BELOW IT WILL TGT 10,300-10,100, SO KEEP A WATCH

CMP : Rs 770

Inference from 15 min Charts(15days)

This is the chart is like to produce this time. It is a 15 min chart of Bharti Airtel.
In My Last post about Bharti Airtel i said that Bharti is repeating a pattern called
H-R1-R2-L-H-R1-R2-L for the past 1 Year. And following the same trend this time.

Iam this time able to spot the retracemnt Point R2 as shown in fig. Remember in

my last posting i said that R1 and R2 are the good points to short. And ofcouse R2

will be followed by new low L.

From the 15 day - 15 min chart i found that the past low comes near 695 and the

new Low Shoud be anywhere below the Past low 695. As the 1 Year Trend Channel

for the Bharti is in downtrend. And following the way of the stock behaved.. It is good

to short bharti at cmp with stop loss at 785 is opinion for a target of 700-680.

I recommend to go for futures and as per pattern formed one can go for short even near

750 for a target of 700.

For My Last Posting About Bharti Airtel Please visit
Bharti Airtel - Simple Trend Line Analysis

Infterence from EOD Charts :

1) MACD Dips below the importane level Zero : Current Value : -8.378 - Bearish

2) Stock Trading below 20 day EMA(799.4) - Bearish Short Term

3) Falling RSI - Bearish and Rising Stocastics (Bearish).

In Summary

Short Bharti Airtel September futures at current level(CMP : Rs 770) for a target of 720 and 695

with stirct stop loss near 785

Maximum loss = Rs 15/Lot = 15*250 = Rs 3750

Maximum Profit =Rs 75/Lot = Rs 18750

Remeber Failing to trade without stop loss may trigger you heavy losses. So do your trade

with strict stop loss.

Nifty :: As we say in yesterday post Nifty face strong resistance between 4110 to 4165.. Correct from 4116.We see bottom fishing from last 3 days, but for 18th Sep. avoid buying at lower level. Strong support at 3926 below it next strong support at 3884/3825/3805.. Our strategy for 18th Sep. Sell at high (S.L 4030) Buy on deep (S.L 3805). Or if hold support level 3805 then buy with S.L 3805 and sell at high for intraday small swing up.. Resistance for up move at 4030/4085/4110/4116/4115/4165..

To give you a different perspective, here are 1-1/2 year daily charts of Nifty and Reliance. Two things of note - Reliance has just broken its July 07 high of around 1954 which has now become a resistance while Nifty has again gone down below its August 07 lows. That means there is a high probability of Reliance going down below its August lows.

The Indian market opened on higher note but selling pressure at higher levels pull down and close in red zone. Nifty is getting stiff resistances near 4120, if it cross 4130 it can test 4160-4193 on the lower side 3920 will act support if break 3920 it will test 3800.

The markets struggling to keeps it head above the crying (flood) waters of US financial crises. Though our houses were not set to blaze but while staying in the same colony of global equalities it is prudent measures to sprinkle the waters to calm down the impetus, the markets are down and adjusting to shred out the husk from the grain.

The US markets always enjoys the surprises of publishing wrong financial statements or false statements, be it Enron, Baer Streans, Fennie Mae, Freddie Mac or the recent collapses of Lehman, Merrill Lynch and AIG, all went through sound until a day before the death warrant announced by their CEOs. Now no news is good news than the bad news of the crumbling fellow neighbor. As of now, the markets crashed due to simply mismanagement by the world renowned companies and the regulators at the helm. There is no hope for next 10-15 days, till the fallout debris is cleared and the new beginning begins.

The ADAG announces that RNRL is the sole beneficiary of the future projects in Cement, Steel and transportation with a whooping 65000 cr investment plans. Yesterday announced the Relcap will become the leader in insurance, asset management with one lakh crore AUM and other banking services. A day before yesterday announced that the RelInfra will bid the Mumbai metrotrans, fly over and other infra businesses. The Rpower will bid for private Nuclear power generation apart from the earlier planned Rs 60,000 cr power business.

Our planners are expecting huge investments in infra structure, SEZs to a tune of 16 lakh crore for next 4-5 years. The investment potential and rate of return is positive in India but the global financial chaos may force to draw different rules for the future investments that may take a longer period than expected.

Never Forget: I may be wrong, You may be wrong but markets always RIGHT.

DOW JONES CURRENTLY TRADING -284 SEEMS TO BE IN PROCESS OF FAST RECOVERY IN NEXT FEW DAYS AS RSI SHOWS POSITIVE DIVERGENCE IN 60 MINUTE CHART.

1. Reliance Industries is witnessing downward trend and can fall till 1800 levels. In any short upmove stock can target the levels of Rs 2051. However as a long term investor one can undertake the buying in the stock if it falls close to Rs 1751 levels.

2. However buy with a caution as overall trend for Reliance is negative and one will be benefitting from the short upmoves being seen in the

The Nifty today opened weak, stayed weak, made a weak attempt to recover after noon but failed and became weaker after the European markets opened weak. So, there is weakness all around. The only thing that’s not weak is Gold, which went up sharply today rising $84, almost 11%.

After breaking down from the double top pattern formed on the 30 minutes charts a few days ago, the Nifty achieved its target at the opening bell of the third day. After achieving the target, the Nifty has now slipped into another range, this time on the 30 minutes charts, as seen above. This range is between 3950 and 4100. While the target on the daily charts remains 3800, it will be only after this range is broken through on the downside. In case the prices break out decisively above this range, that target of 3800 will be cancelled, at least for the time being.

If the prices do break out of this range on the downside, what will be the target on the 30 minutes charts? Well, this range is 150 points wide (4100-3950) and a breakdown will give us an additional 150 points which gives us a target of 3800 (3950-150). So, well, that conforms to our views/target on the daily charts.

That’s fine, but which side is the market likely to break out on? Well, we don’t know. That is what happens in a range. In a range, not only is the market confused/unsure, it confuses us too. Well, we may get some early indication from oscillator indicators when there is a divergence visible, but in this case the Relative Strength Index (RSI) is also not showing any visible divergences. This means, that we shall have to wait till a divergence is visible (which may or may not come) or for the market to come out of the range. So, for now, it is buy above 4100 and sell below 3950 (in the short term). Investors are advised to wait for now and not take any long positions, at least not till the market either achieves 3800 or breaks out on the upside above 4100.

But the international markets may provide some cues. There is some good news from the US. The Fed government has agreed to bail out AIG by giving them a $85 billion loan (that will be repaid by liquidating the company) in exchange for a 80% stake in the company. But there are fresh concerns about Morgan Stanley and Goldman Sachs (the two remaining independent securities firms), the result being that, at the moment, Dow Jones is trading 240 points in the red while the Nasdaq has lost 75 points. Crude remains flat near $97 a barrel. So, all in all, it looks like we are going to have a downside breakout from the range that we are in.

RELCAPITAL range for today 960 to 1040

ICICIBANK range for today 512 to 545

Nifty futures range for today 3875 to 3960

BANKNIFTY range for today 5870 to 5725

-:ANYLYSIS:-

U.S. MKT. AN ANOTHER CRASH, ASINA MKT. IN DEEP RED. CRUDE 97 $/BBL, GOLD & SILVER NOW RISING. FII SELL FIGURE AND DII BUY FIGURE.

SGX NIFTY 3830-3870. DOWN BY 170 POINTS. TWO SELLER CIRCUITS TO RUSSIAN MKT.

-: STRATEGY:-

U.S. MKT TUMBLED AGAIN. CRUDE SHARPLY MOVED UP WITH GOLD AND SILVER. AFTER ICICI, NOW RABAXY, RELIANCE STERLITE AND OTHER BANKS HAVE SOME NEGATIVE NEWS. CURRENCY MARKET 46.91/95 RS. IS THE STRONG RES. FOR RS. IT MAY RISE AGAINST $ (I WROTE THIS YESTERDAY AND SEE RBI TOOK STEPS AND RS. NOW AT LEVEL OF 46.33 AGAINST $)

I TOLD TO BUY 4400 CALL WHICH WAS AVAILABLE AT 6/7 RS. AND WENT UP TO RS. 19 YESTERDAY.

ALL ARDs ARE LOKKING DOWN BETWEEN 2 TO 9% NAGATIVE. BE CAREFULL.

YESTERDAY I CLEARLY MENTIONED IN THIS NEWS LETTER TO BOOK PROFIT IN DELV. STOCKS THAT I TOLD TO BUY ON MONDAY AND TUESDAY. IF YOU HAVE DONE IT THAN O.K. OTHERWISE YOUR PURCHASE PRICE WILL BE FOUND TODAY. NO OVER NIGHT POSITION. NO TRADING (EXCELLENT STRATEGY GIVEN IN FREE TO ALL.)

I GAVE A BUY CALL ON CRUDE, GOLD AND SILVER ON GROUP YESTERDAY. WHICH ALSO RESULTED IN AN EXCELLENT RUN.

3800 AROUND LEVEL IN NIFTY MUST SUSTAIN OTHERWISE…..

YESTERDAY I GAVE SELL CALL ON NIFTY FROM THE LEVEL OF 4098 AND CLEARLY INDICATED IN THE MSG. OF 2.00 PM THAT IF NIFTY FUT. REMAINS AT LEVEL OF 4000 CLOSED ALL YOUR LONG POSITION. CLIENTS MAY GET FRUITS OF THAT TODAY.

KEEP CASH IN HAND AND NO DELV. BUYING IS RECOMMENDED.

-:WORLD MARKET:-

> U.S. MARKET

DOW: -450 NASDAQ : -109

> ASIAN MARKET (AT 8 AM)

NIKKEI: -330 HANG SENG: -750 SANGHAI: -30

MARKET OPEN UP BUT COULD NOT CROSS LAST TWO DAY'S HIGH. BAD NEWS FROM WORLD MKT. AND LOCAL BIG BEAR SANKAR SHARMA TOLD THAT SENSEX COULD NOT CLIMB NEW HIGH FOR YEARS. INFLATION AND GDP COULD NOT BE MAINTAINED SO BASKET SELLING WAS SEEN WHICH RESULTED IN DOWN FALL FROM RECOVERY LEVEL.

GOOD NEWS: ADVANCE TAX FIGURE, GOOD RAIN FALL, LOWER COMMODITY PRICE MAY PUSH MKT. STRONG SUPPORT ARE AT 3875/3800 LEVEL.

"GETTING MARRIED TO A MARKET OUTLOOK ENDS IN A BAD DIVORCE"

# WORLD MARKET

> U.S. MARKET

DOW : -450 NASDAQ : -109

> ASIAN MARKET (AT 8 AM)

NIKKEI : -330 HANG SENG : -750 SANGHAI : -30

# ADRS (POSITIVE) : ---

# ADRS (NEGATIVE) : all by 2-9%

POINTS TO WATCH FOR TODAY'S TRADING

# U.S. MKT. AN ANOTHER CRASH

# ASINA MKT. IN DEEP RED

# CRUDE 97 $/BBL, GOLD & SILVER NOW RISING

# FII SELL FIGURE AND DII BUY FIGURE

# SGX NIFTY 3830-3870. DOWN BY 170 POINTS.

# TWO SELLER CIRCUITS TO RUSSIAN MKT.

# TODAY'S STRATEGY :

> U.S. MKT TUMBLED AGAIN

> CRUDE SHARPLY MOVED UP WITH GOLD AND SILVER.

> AFTER ICICI, NOW RABAXY, RELIANCE STERLITE AND OTHER BANKS HAVE SOME NEGATIVE NEWS.

> CURRENCY MARKET 46.91/95 RS. IS THE STRONG RES. FOR RS. IT MAY RISE AGAINST $ (I WROTE THIS YESTERDAY AND SEE RBI TOOK STEPS AND RS. NOW AT LEVEL OF 46.33 AGAINST $)

> I TOLD TO BUY 4400 CALL WHICH WAS AVAILABLE AT 6/7 RS. AND WENT UP TO RS. 19 YESTERDAY.

> YESTERDAY I CLEARLY MENTIONED IN THIS NEWS LETTER TO BOOK PROFIT IN DELV. STOCKS THAT I TOLD TO BUY ON MONDAY AND TUESDAY. IF YOU HAVE DONE IT THAN O.K. OTHERWISE YOUR PURCHASE PRICE WILL BE FOUND TODAY. I HAVE ALSO MENTIONED IT ON MY WEB.

> NO OVER NIGHT POSITION. NO TRADING (EXCELLENT STRATEGY GIVEN IN FREE TO ALL.)

> I GAVE A BUY CALL ON CRUDE, GOLD AND SILVER ON WEB YESTERDAY. WHICH ALSO RESULTED IN AN EXCELLENT RUN.

> 3800 AROUND LEVEL IN NIFTY MUST SUSTAIN OTHERWISE…..

> YESTERDAY I GAVE SELL CALL ON NIFTY FROM THE LEVEL OF 4098 AND CLEARLY INDICATED IN THE MSG. OF 2.00 PM THAT IF NIFTY FUT. REMAINS AT LEVEL OF 4000 CLOSED ALL YOUR LONG POSITION. CLIENTS MAY GET FRUITS OF THAT TODAY.

> KEEP CASH IN HAND AND NO DELV. BUYING IS RECOMMENDED.

MARKET OPEN UP BUT COULD NOT CROSS LAST TWO DAY'S HIGH. BAD NEWS FROM WORLD MKT. AND LOCAL BIG BEAR SANKAR SHARMA TOLD THAT SENSEX COULD NOT CLIMB NEW HIGH FOR YEARS. INFLATION AND GDP COULD NOT BE MAINTAINED SO BASKET SELLING WAS SEEN WHICH RESULTED IN DOWN FALL FROM RECOVERY LEVEL.

GOOD NEWS: ADVANCE TAX FIGURE, GOOD RAIN FALL, LOWER COMMODITY PRICE MAY PUSH MKT. STRONG SUPPORT ARE AT 3875/3800 LEVEL.