5. Bear Phase , Bottom Formations, Reversals and Big Signal
Till now we have seen the broader picture on the longer term and have concluded that a bottom formation is very close .
The next thing to look out is to confirm a major bottom and the end of the bear phase.
But more important is to find the next big signal before the start of the next bull wave.
Sensex has had two notable bear phases after 1992 and 2000 which were characterized by unveiling of scams ( Harshad Mehta , Ketan Parekh )
Bear Phases after 1992 and 2000 :
In the bear phase after 1992 top Sensex took around 13 months and after the 2000 top it took around 19 months.
The consolidation phase later on took around 6 -7 months in the 1992 correction and around 19 months in the 2000 correction before markets gave a good breakout signal.
There is another theory 8 year cycle which warrants for a 55 % absolute fall just like 1992 and 2000.
Although the topping out scenario is different this time around as we are no more in the earlier flag scenario but in a much bigger 13 yr cycle and a bigger wave.
The previous two charts show a very similar pattern. This could be termed as waves, channels, triangles etc and different notations in between but explaining them in Dow Theory would be easier for all to understand.
As we see Sensex made a series of lower tops and lower bottom during the bear phase.
Later part sees falls becoming lesser in magnitude and a formation of higher tops and higher bottoms with a simple trend line breakout above previous high gives the Big Signal of a REVERSAL.
Lets See Sensex chart now !
SENSEX current Bear Phase and Reversal !!!
A similar comparison with current scenario of Sensex it seems its very close to the end of bear phase and a few down legs and consolidation maybe left.
Although there would be different views regarding the bottom but the conclusions from the above analysis it should either be close to 11900 + - few hundred points or even 12500 itself.
But at the current stage what is more important is the downside is limited and the upside potential in the longer run is still maintained !!! Although markets could remain in a trading range and consolidate till Sept/Oct 08 or till Jan 09 before giving the big Signal which can come any time after but is not faraway .
Resultantly, the benchmark Indian indices registered gains of 3% each on the first trading day of the week. However, the euphoria was short-lived as concerns over the falling rupee and future loss estimates of Lehman Brothers (the stock lost 55 % of its value in three days and reported third quarter net loss of USD 3.9 billion) led to sharp losses during the mid-week.
Aggravating concerns was India's core infrastructure industries recording sluggish growth of 3.7% during April-July 2008 as compared to 6.6% registered during the corresponding period last year.
Of the major stocks, India’s largest private sector company interms of market capitalization, Reliance Industries dipped to its new 52 week low on the last trading day of the week. Selling pressure was also seen in banking and realty stocks during the week gone by.
Thus, lower inflation figures, falling crude prices and better than expected IIP numbers too failed to provide respite from the overall selling pressure.
For now, though India has achieved an important breakthrough on nuclear trade, the nuclear deal still needs to be ratified by the US Congress before it kicks in. Notably, the US Congress must act before adjourning in late September 2008 for US presidential elections as, in case of any delay the deal could be left to an uncertain fate under a new US administration which would take office next year.
Even though inflation seems to be cooling off, sharp depreciation in the Indian Rupee which has now breached the crucial and psychological level of Rs 45 per dollar mark for the first time in 21 months may fuel inflation which presently remains above RBI’s stated tolerance level. Sharp appreciation of the dollar against most of the currencies can be attributed to the recent bail-out of Fannie Mae and Freddie Mac while the depreciation in the domestic currency was also due to a sharp sell off by the FII’s (net sellers to the tune of Rs 30,000 crore in 2008 and major selling witnessed in the past three months).
Nevertheless, the fall in crude prices alongside a depreciating rupee has given some respite in the near term.
However, with declining crude, prices aviation stocks and oil marketing companies could witness some buying interest in the coming week. Better than expected IIP numbers could also lead to some short covering in the capital goods space.
On the global economic front, in the Federal Reserve policy meeting is to be held on Tuesday and the Central bank is expected to hold rates steady at 2%. However, it may commence lowering rates by the end of the year due to the continued economic slowdown. Any such indication can provide a boost to markets across the globe.
It seems evident that there is little conviction amongst market participants against the backdrop of uncertainty. Nevertheless, there is an underlying hope that the worst may now be over and market sell-offs could provide decent investment opportunities for medium to long term investors. However, in the week ahead, signs of recovery could be followed by profit booking making it necessary for traders to be nimble-footed.
Stock : Bharti Airtel Ltd
CMP : Rs 773
From the charts it is clearly visible that Bharti is in a strong downtrend for the past one year and it is simply repeating the pattern (H-R1-R2-L)-(H-R1-R2-L) (Where H- High, R1 - Retracement 1, R2 - Retracement 2, L - Low ) and this pattern is repeating for past three times.Means every time the stock see a new low it immdiately bounce back to a new high and whenever the stock reaches its lower high it is not immediately ready to give its gain and the stock losses its potential after few retracements.
And the retracement R1 & R2 levels provide us good oppurtunity to short the stock and whenever the stock reached new low it provide us the huge oppurtunifty to go long in this stock.If you follow the pattern you would get a
great buy around the lower trendline which comes roughly near 650(Buy for short term) and a breakout buy above the upper tredline 850(Long Term).
Glod Mini : We are given bearish Wolfe wave pattern at top.. And Gold correct sharply from top.. Cycle Wave X is running and target of X wave in between 11800 to 10000.. Intramediate B wave also match target 12350 to 11160.. And made multiple bottom near 11100.. Fair chance to move up from here as corrective Flat (b) with target between 11800 to 12400.. If break 11085 then easily reach target near 10,000..
(11085 works as make or break level )
US $ V Indian Rupees:: We are given buy signal in Dollar at 40 Rupees. Now Dollar enters in strong resistance zone or in Target Zone. Maybe finish this Double Zigzag Y wave in between 45.5 to 46.25. Maximum target of this double zigzag Y wave in between 45.5 to 47/48. Start to convert your Dollar in Indian Rupees in every rise and buy again in deep…
Nifty is giving a rather perfect Head and Shoulder Pattern for a down side to test the previous lows. Can this work ? If it does .... it shall be a beautiful trade to initiate. What more things do we need to look into to be sure that this works ? We are at supports or close to supports and can do a break out breaking everyone's contention that things are going bad now. This is what the big fellas must be thinking as they trades verses the rest of the herd. If you are an Elliot wave counter, try to visualize if the trend is down or up. Volumes have to seen in response as well. Volumes give a good picture. But the punter is again smarter. Doing a massive volatile gap up or gap down spoils the whole volume perspective. Here comes a different item to track. See the delivery volumes. Lots more .... lost of other parameters can be visualized. Do your study before you do any thing. All the best !
WEEKLY REPORT CARD
(15th to 19th of September 200
All eyes will be on Lehman brothers sell out
Hope all are fine as usual the reader of the magazine are fine if u have consider our view to exit from market on Tuesday which we have boldly written in the magazine and also told u that by two days run don’t understand that bull run has start and what happen all analyst trap and it behave exact what we have told. if u are not following our word then now try to follow.
Friends this time we wants to talk different issue .if u have read other magazines and news paper hardly any one gives the view on nifty fu we don’t give nifty view but also gives in depth analysis and levels from that nifty fu up and down from that u can earn good amount if u read the levels carefully and act like that –don’t read and act blindly any ones levels. last week we have given calculations how u can have earn 15250 form one week this time one of our read of the magazine has sent how this time reader can have taken good amount home lets see what he has sent to us.
On the Monday nifty fu made high of 4556 and low of 4498 and it actually close below our resistance level of 4513 and from that down journey start after good news of nuke deal index fails to close above our resistance levels and see what happen? Just panic .he has sent us with different category of trader and on which day they may have short nifty fu and what they have earned.
Trader Sell day Selling price - Per unit profit Per lot of 50 profit
High Monday 4528 276 13800
Medium Tuesday 4476 224 11200
Low Wednesday 4438 186 9300
We have considered that every trader has book profit at 4252 and see how they have earn. THIS KIND OF ANALYSIS ONLY IN THE THE ECONOMIC REVOLUATION AND IN THE PANIC AND PROFIT COLUMN.
Inflation and crude oil is going down and iip numbers come good though market is going down due to only and only selling from fii.
DERAVATIVE ANALYSIS-
Derivatives analysis suggest that put-call ration is trading below 1 that it suggest that market is trading in oversold zone. And against that trader were short covering various strike price put options like 4200-4100-4000 what does that indicates? Trader are expecting this kind of levels will come soon both are against let’s see what happen.
TECHNICAL ANALYSIS-
Friends today we don’t wants to just give u levels this time we wants to share something of technical analysis so u can get understanding why nifty dancing on our support and resistance levels and how u can make profit form this levels where no magazine and analyst is giving such kind of levels in such low cost.
1-vary short term moving averages are trading narrow –we call this is cheating on charts it may help the short seller or long it dependence on the market situation-if Monday we have news of Lehman brothers selling out then it will favors only to bulls and vice a versa.
2-index has close at trend lines if index close below that trend line on Monday then panic selling will be seen if not then power full bullish trend line for short term.
3-indxex has formed bearish engulfing pattern on weekly charts and after down trend that indicates that if market close in green on monody then it will rally .
4-nifty fu ahs also formed head and shoulders pattern on daily charts worth of 492 points if nifty fu close below 4083 then it will soon hit the 3670 levels.
5-remember friend before one month ago we have given red alert and told u that nifty fu has broken triangle of 1078 points and it will hit 3398.remember that red alert.
ASTROLOGYCAL ANALYSIS-
As per astrology we will have recover from hear and we will see nifty fu 4600 soon .
As per the astro view Lehman brothers will be sold out before the Asian market open on Monday.
INTERNATIONAL MATTER THAT WILL AFFECT TO GLOBAL MARKET-
1-Monday morning we will may hear news of Lehman brothers sell out.
2-17th japan will unchange interest rates.
3-18th Merrill lynch will talk with Korean co koren investemnst about fund rising.
Friends looking at the news and analysis don’t u think it is vary unpredictable but lets see about the sensex and nifty .
SENSEX-just again we have given levels of 15128 and it made high of 15107 after nuke deal news and just crashed.
Index has strong support at 13727 if index gives two close below that it will confirm the head and shoulders pattern of 1853 points and will hit 11874 soon.
While on the upper side resistance at 14511-15128-15745.
NIFTY FU-support at 4124 and 4083 if index close below 4083 then it will fall by 492 points to 3670 to complete head and shoulders pattern.
While on the upper side it has resistance at 4460-4513-4590.
Last Monday , Index had given the faulty rise of 461.14…but after that due to heavy selling upto Friday by FII,HNI and operators, index had came down very heavily. On Monday it had hits the high of 15107.01 and on Friday it had hits the low of 13933.87………almost 1173.14 points from high. This time decline led by reliance industries. Heavy selling in reliance industries by FII. Every rise FII, HNI and operators had offloaded the scripts………
In coming week, there may be huge volatility both side….so Be carefull with your position and keep index, nifty future level in mind with strict stoploss…… May small caps will attract buying in this decline and it may outperform for few days. So Keep watch on smallcaps on priority basis.
See Since last 4-5 months we are giving index, nifty future, stock future and delivery based stock predictions……..and in this negative and huge volatile market it was inline with our expectations and predictions……… U also can check our previous articles for the same.
For 2-3 month investment, coming week is the best opportunity for buying… Remember my words…….but buy in phased manner only and according to your capacity only……. Feel free to contact me on phone for paid services. Please do not send sms or email.
| Close Above 14325,then 14435,14558,14664…Close Below 13801,then 13634,13525… | ||||||
| Close Above 4346,then 4418,4490,4526…..Close Below 4198,then 4162,4131…. | ||||||
BSE Index Prediction for Week (15.09.08 To 19.09.0 :- | ||||||
| Index | Closing Price | Support | Stoploss | Target 1 | Target 2 | Target 3 |
| BSE | 14000.81 | 13801 | 13634 | 14325 | 14435 | 14558 |
| Nifty Future's Prediction for Week (15.09.08 To 19.09.0 :- | ||||||
| Index | Closing Price | Support | Stoploss | Target 1 | Target 2 | Target 3 |
| Nifty | 4245.80 | 4198 | 4162 | 4346 | 4418 | 4490 |
| Nifty Future's Hot Scripts for Week (15.09.08 To 19.09.0 :- | ||||||
| Sr.No. | Company Name | Closing Price | Support | Stoploss | Target 1 | Target 2 |
| 1 | Union Bank | 151.40 | 148 | 146 | 158 | 164 |
| 2 | R Power | 166.90 | 163 | 161 | 174 | 180 |
| 3 | Kotak Bank | 582.00 | 576 | 570 | 599 | 624 |
| 4 | ICICI | 657.85 | 650 | 642 | 676 | 697 |
| 5 | Reliance | 1948.15 | 1924 | 1909 | 1999 | 2058 |
| Weekly Trading's Hot Scripts for Week (15.09.08 To 19.09.0 :- | ||||||
| Sr.No. | Company Name | Closing Price | Support | Stoploss | Target 1 | Target 2 |
| 1 | Infosys | 1655.30 | 1638 | 1621 | 1689 | 1723 |
| 2 | Maruti | 689.95 | 680 | 670 | 699 | 718 |
| 3 | Sail | 140.00 | 137 | 134 | 145 | 149 |
| 4 | Cummins | 294.10 | 289 | 285 | 300 | 310 |
| 5 | PNB | 514.15 | 507 | 500 | 529 | 544 |
| For Delivery Based Investment Hot Midcaps/Smallcaps for Week (15.09.08 To 19.09.0 :- | ||||||
| Sr.No. | Company Name | BSE Code | Closing Price | Stoploss | Target 1 | Target 2 |
| 1 | Ganesh Forging | 532643 | 25.35 | 22.00 | 30 | 34 |
| 2 | Sita Shree Food | 532961 | 15.90 | 14.00 | 18 | 21 |
| 3 | Harisson | 500467 | 101.00 | 96.00 | 108 | 115 |
| 4 | Matrix | 524794 | 149.10 | 145.00 | 154 | 158 |
| 5 | Sterling Bio | 512299 | 180.45 | 173.00 | 185 | 190 |
| 6 | Hotel Leela | 500193 | 33.10 | 31.00 | 36 | 39 |
| 7 | Marico | 531642 | 59.85 | 55.00 | 64 | 68 |
| 8 | Saregama | 532163 | 111.10 | 106.00 | 116 | 122 |
| 9 | Salzer Electro | 517059 | 66.20 | 62.00 | 71 | 75 |
| 10 | Invicta | 523844 | 15.70 | 13.00 | 18 | 21 |
| 11 | Rajesh Export | 531500 | 46.00 | 43.00 | 50 | 55 |
| 12 | ||||||
Week started with a 500+ rally and then lost over 900 points making 482 points down or -3.44% to 14,000 and Nifty lost 124 points or -2.92% to 4,228.
Remember we had warned you about a FII doing heavy selling and may be totally leaving India. I am sure you must have read the news about Lehman Brothers.
Crude Oil is now $101 per barrel.
FII have sold worth 3,445 Cr and Domestic MF have also been selling around during the last week.
Inflation at 12.1% was lower than 12.34% for the previous week.
IIP numbers were strong @ 7%
US $ to Rs is 45.70
Market is under extreme pressure of selling. Despite several good news, market is on a continous downtrend.
| VALUE CHART - 11 September 2008 HOME | |
| Sensex: At the speed of light I wonder if its the 9/11 effect but but its worth a dial. My mind has been running all month and I did not know whether to pen the thoughts down cause they are quite extreme but as evidence grows the viewpoints can be made into strategies with clearly defined risk rewards and then it can be spoken about with an assumed risk. The risk to the view I explain here is just a few hundred Sensex points [15100]. Before looking at the long term wave structure let me first explain the starting point. In April-May I was holding onto the view that the market was about to commence wave C down and that the fall into March was wave A [a 5 wave decline]. But after the fall in July which was a 3 wave decline I changed it to W-X-Y-X-Z. Now on the home page till proven I may still carry that count but I have a feeling that the original count [as is often the case] might still be right. Why and what does it mean? Experience that triangular patterns often occur in wave B and especially near neckline breaks. I have recently been seeing this one after the other on stocks and today when I finally looked at some more cases it struck me why not the Sensex. That is why all the moves since May-08 are in 3 waves. Below [the first chart] I show how the entire post May pattern is a running wave B triangle and wave C has not started and therefore we have probably only completed a wave B. The implications are more dramatic first the immediate one is that today we formed an island top and closed below the triangles lower trendline confirming start of C. Second a secondary larger H&S pattern shown above might be at play[N2] instead of the earlier one discussed on the home page[N1]. The target of C=A is 10400 close to the Z wave target so not much change there either. But the H&S classical measuring target and the C=1.618*A are at 7600-7400. So while 10400 is a good target provided the patterns discussed here are right and that C often extends in H&S reversals the lower target is open till proven otherwise. The idea of highlighting this is the potential of the next move down if it does not stop at 10400. Now then lets go to the long term implications. To a lot of people it feels as though the post 2001 period was a new bull market and the pre 2001 period was a different era of stock market. Now it may feel like that due changes in social mood from wave 4 correction to wave 5 bull market; but it might not be the case. While it can be debated the proof may take time to come and that would be at the 9700 Sensex level. 9700 marks 61.8% retracement of the entire bull run since 2001 so a fall below that if at all would mean that we are in a deeper bear market than originally thought and it might not be over so soon. If not price or time wise it would mean that wave count wise I would like to consider the chart below. Now on my long term count on the home page I usually only discuss the post 2001 five wave bull market which is over. Here I throw light on the 30 year bull market since 1978. After taking lots of alternatives and fibonacci ratios of the waves [5=1 and 3=2.618*1] into account I find it best fitting to consider that a five wave bull market lasting 30 years long might be over. See the volume pattern at the bottom of the chart and you can see a clear divergence in the volumes seen in wave 3 and 5. Volumes at the end of wave 3 were huge and in wave 5 were moderated. The risk of this is still 9700 on the downside, meaning if we don't break that level alternative more bullish long term scenarios will kick in so if 9700 holds I am a bull with horns. However right now its time to weigh the evidence before taking a call on bulls. The long term trendline from 1978 is close to 7500 too. A 61.8% retracement of the 30 year period is at 8250. Calling for a larger bear market does not always mean lower index levels, it could mean a long consolidation phase as well within a range [ex:2-4 years from Jan 2008]. It could mean several bullish periods of 6-8 months long in between, but without new all time highs being made till the consolidation or correction is over. Wave theory however has it that larger degree corrections can often extend to wave 4 of lower degree and therefore a 78.6% retracement of the 30 year bull run [up to 4750] cannot be ruled out theoretically as yet but as of today appears too grave to even be possible. The object of this analysis is to highlight possible situations some of which may not be clear but are open situations based on Elliott wave analysis and therefore highlight potential risk of the next leg down, and the implications it will have in helping us understand where we stand on the long term trend for the Indian market. |
| VALUE CHART - 11 September 2008 HOME | |
| The bear commodities-II If you have been reading this page I had discussed the double H&S top in Gold for targets close to 700$. Now some fibonacci targets also converge. Below 745$ gold will confirm that it is not stopping but heading for much lower levels right away. So oversold reading might not work [just like overbought does not work in a bull market]. Therefore trying to catch a bottom will be like catching a falling knife. Now the first H&S target is at 738$ and the second one targets 718$. Wave A*1.618=700$=target for C extended. But if C is a 5 wave decline whose 1 and 2 are a triangle [instead of wave 4 in the same area as in silver] then wave 3=1=684$. So somewhere in this range we might get some short term respite from the falling trend but if its only wave 4 of C then the respite might not be more than a week long and wave 5 will unfold. With silver already below the larger wave 4 low [equivalent of 640$] gold is definitely lagging the decline. |
Explanatory Note:
Wave c of Z should be a five wave decline with speed confirming only after 14100 breaks.
OTHER MARKET SEGMENTS
THE VALUE WAVE : What are the inflection points in the process of market expansion and contraction in the wave context. How does it happen and what relevance does it have with the stock selection process in terms of psychology.
VALUE CHART 11/09/08 : The bear commodities-II: Gold breaks long term trendlines. Why catch a falling knife?
VALUE CHART 05/08/08 : World stock index: A neckline pullback appears global. Next we should head to the H&S targets.
VALUE CHART 11/09/08 : Sensex: At the speed of light: When you get hit by lightening its hard not to burn fire. I think I've been hit so let me just burn it on the net. The ideas here should help me conclude the debate on the long term wave count and the immediate targets.
SHORT TERM COUNT
Failure to cross 15100 keeps the preferred count that wave Z has started and we should now be in wave c of Z [Z being an a-b-c decline]. Z is a zig-zag and so c should be a five wave decline. However will the decline be one sided or split is hard to say. With neckline support near 14100 speed and confirmation would be below 14100. 14864-15100 continue to be key resistance areas from retracement and long term trendlines. The 20dma is at 14705 and a close below that would mean the downward trend is in tact, as both the 20/40averages were broken on Friday.
MEDIUM TERM COUNT
Last weeks hammer was followed by a long upper shadow and a close below the hammers real body. This selling off from the 20 week average appears like a sign of weakness and that maybe wave b is over in a one week pullback. Wave c once breaks below 14100 will confirm new lows. In an extraordinary case if 15100 is crossed then we can stretch to 15800 as highlighted last week but from Fridays behavior that does not appear to be the preferred case, and it looks like X is mostly over.
LONG TERM COUNT
On the monthly charts we have a higher closing again but clear selling pressure at the 20mma at 15888. The 40mema is at 13295. This should remain the range for the market till a clear break beyond it. Till the upper end of the range holds we are in an X wave to be followed by Z.
despite of all bearishness in world market our market able to sustain at higher lvl.compare to other Asian markets we not joined with them.see Dow and ftse able to save their last low made in July.but Nikkei,hengseng and other markets failed to do this.major reason for this is Nikkei joined later to complete it's c wave and other Asians heavily follows Nikkei.that is why they continue down and down..our market at present with the ftse and dow yes our chart follows their formations ,but major difference is we are strongest among these three.means in all world market we are strongest. this shows investor's faith in our market.
technically our market as well as Dow and ftse at sideways kind of market.ABC x ABC formation continue in all this three markets.
the lower range is 4160 4200 in nifty and 13800,14000 in sensex where you can buy easily. upper range is nifty 4550,4650.
fundamental view;....
bear market lower range is 14,15 PE band and upper range is 25 to 30 PE band.
at present we are at lower band of sensex PE at 14,15 near.
sensex this year earnings are 850 easily achievable and this estimate will give positive surprise to fund managers.
sensex next year estimate is 950 to 1000 EPST is giving us discounted target for sensex for lower band near 12500 to 14000 and for upper band 22000 to 25000.for next year march ending tgt.
our GDP growth will remain in the range of 7 to 9%,this is far more better than other emerging markets.except china.
our companies delivering good results and no any negative surprises till the date from corporates front.their estimated profit right on the tgt.
we are at the upper range of the interest cycle and inflation cycle so correction needed in all asset class.particularly in real estate,commodities and equity.
equity;....
commodities;.....
commodities bubble finally burst and had started correction for at least six month time period.this will ease the inflation problem for our as well as all other world's emerging markets.this will result in interest rate down.and this will vary positive fornext coming years corporate performance.
real estate....
prices in Indian real estate are far out of reach for common people this is worst
problem for our economy now.in fact this will prove worst problem for next two three year for Indian economy.this will prove major hurdle for next year.land prices need to soft further.
Marc Faber, Editor and Publisher of ‘The Gloom, Boom & Doom Report’ feels that the Sensex may not see a new high for many years.
Sensex may not see a new high for many yrs: Marc Faber
Excerpts from CNBC-TV18’s exclusive interview with Marc Faber:
Click here for the full article.
Click here to watch the video.
Source: Moneycontrol.com
Jim Rogers, investment guru and author of “Hot Commodities” was in India recently. He is a co-founder, along with George Soros, of the Quantum Fund. He has created the Rogers International Commodities Index (RICI). He predicted the commodities bull market in 1999 and identified China’s potential early on.
He was in Mumbai on Friday, 12th Sep and spoke on the bull market in commodities, inflation, crude oil and the subprime crisis.
Invest in commodities now: Jim Rogers
Excerpts from CNBC-TV18’s exclusive interview with Jim Rogers:
Click here for the full article.
Click here to watch the video.
Source: Moneycontrol.com
In a decade, farmers will drive Maseratis & brokers tractors
Click here for the full article.
Source: DNA Money
Invest in what India needs to have and use: Jim Rogers
Click here for the full article.
Source: Livemint.com
Commodity guru Rogers bets on gold, oil & sugar
Click here for the full article.
Source: Financial Express
 | TATA 84K View as HTML Download |
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| GLENMARK 133K View as HTML Download |
| MOSt 3x3- 06 Sep 08.pdf 315K View as HTML Download |
All BRIC nations and parts of Eastern Europe were funded by cheap dollar and yens. Beginning with Shanghai most markets ranging up to Bucharest have lost close to 80 per cent from their peak in 2008. Bombay has done better, down 44 per cent in US Dollar terms.
So what should we do? Some Short Ideas-Alternate Energy & Ethanol
Or for that matter millions of acres of land to grow Sugar sucks water from the Earth, to convert cane juice into Ethanol and yet an Ethanol producer will never make money unless OMCs pay ridiclulous prices for that Ethanol, and further blend it with Motor Spirits, then you realise this industry too like all other Alternate Energy plays will swing like a yo-yo. These sectors can be added to Banks, Real Estate and Construction stocks, for shorting.
"You know, you saw subprime go first, and then, on a slight lag, you saw home equity, and now in the lag, you're seeing prime go. And it's exactly the same loss factors. But remember, the components of where we are in the states… [Are] very different. And we started doing more jumbos in '07, so a lot of that is — part of that is '07 vintage, which I think I told you at the time we were going to do and grow our balance sheet and gain share. And we were wrong. You know, we, obviously, wish we hadn't done it.
"So when you adjust for all of those things — vintages, CLTV, stated income, where it's done — that's what we're seeing. You know, it's very early in the loss curves…Prime looks terrible, and we're sorry." — J.P. Morgan CEO Jamie Dimon
But the hysteria about "rumors" bringing down financial companies has gone too far, I think. This is the defense of CEOs who are looking to blame someone for their own incompetence — incompetence that put their firms in a vulnerable position in the first place.
Short sellers did not conspire to force Wall Street firms to enter the business of securitizing dodgy debts. Firms like Bear Stearns ruined their own companies with the poor strategic decisions they made.
Legitimate short sellers are very beneficial for the market. They provide liquidity at market bottoms by buying to cover their positions, and they are often the first to discover and put an end to accounting frauds and stock promotion schemes that siphon capital away from legitimate businesses.
Timing is important in the banking business. Also, as in investing, it pays to be a smart contrarian. Ideally, banks should make as many loans as possible once the economy bottoms. In an improving economy, borrowers can more easily pay down debts.
Once credit cycles turn, loan portfolios, or loan books, become sources of risk, rather than profit. Look at the experience of Countrywide, which just got acquired by Bank of America for a fraction of is peak value. It blew itself up by aggressively expanding its mortgage loan book at the peak of the credit cycle — which happened to coincide with the biggest housing bubble in history.
* About 28% of invoices are denominated in GBP, Euro and A$.
* The adverse movement of these currencies against the US$ is creating a "cross-currency" headwind.
* The 19-21%YY FY09 US$ revenue growth guidance will need to be revised down to 17-19% - a 2ppts cut in the least. These are our estimates...the company is still estimating the
full hit.
* The ~6%QQ US$ revenue growth guidance for Sep quarter will most likely be missed, once again due to the cross currency effect.
* Infosys was emphatic that its volume growth would remain in line with the 19-21% range for the full year and per outlook for Sep quarter. The US$ headline revenue will come in lower due to the currency effect.
Implications:
* While the comment on volume growth coming in sync with extant guidance is a relief, the issue of cross currency effect does raise the question - "What is the margin of safety with which Indian IT vendors are operating this year"? The margin of safety, even at Infosys, does not seem to be even 2%.
* This comes close on the heels of Satyam revenue guidance miss in June quarter, due to a ramp down in a single BPO client. While Infosys' problems are qualitatively different, the issues remain the same - the buffers for this year have disappeared.
* We believe that this issue will need to be analysed for all Indian IT stocks.
What is Infosys saying on the business currently?
* Infosys believes that it may take two quarters for a visible recovery in sentiment. Per the CFO, there needs to be a "finality to the credit crisis", rather than a lingering doubt on
the state of the economy. The CEO, Kris Gopalakrishnan, added that clients continue to be
hesitant in making decisions.
* That said, there were positives as well. Infosys is on track to hire 10,000 employees on a gross basis in the Sep quarter, and the management commented that there have been some new deal flow recently - things have "begun to move" but only just.
* Infosys also rejected suggestions that a pricing war is impending in the industry. While admitting to one-off pricing cuts in select clients, Infosys also added that some raises have happened too, and overall, it does not currently expect the pricing discipline across
the industry to fail.
* Infosys also commented that volatile swings in its top client should reduce. We suspect that BT revenues could be flattish in Sep quarter, after the 22%QQ fall in Jun.
What has changed since Mar 08?
* Infosys believes that the uncertainty in the market has lingered longer than earlier thought. The pain points have persisted.
* Given current state of uncertainty, Infosys is unwilling to comment on impending budgeting cycle in Dec08/Jan09. We believe that the risk remains that this budgeting cycle will be as delayed and inconclusive as the last one.
FII trading activity on NSE and BSE on Capital Market Segment
The following is combined FII trading data across NSE and BSE collated on the basis of trades executed by FIIs on 12-Sep-2008.
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 12-Sep-2008 | 2377.28 | 3874.95 | -1497.67 |
Sterlite Industries Restructuring?
Highlights of restructuring?
A ) Demerge Sterlite?s equity interests in BALCO ( 51% stake) , Vedanta Alumina ( 29.5% stake) and Sterlite Energy ( 100% stake) to MALCO ( to be renamed as Sterlite Aluminium).? Share exchange ratio of seven (7) MALCO shares for four (4) Sterlite shares for this leg of the restructuring.?
B) Eliminate cross holding of MALCO in Sterlite ( MALCO holds 3.6% of Sterlite)
Exchange ratio of One (1) Sterlite share for fifty one (51) MALCO shares.?
C) Merge Vedanta (parent company of Sterlite) ?s 79% holding in Konkola Copper Mine ( KCM) into Sterlite . Exchange ratio of One (1) Sterlite share for one (1) THL KCM share.
D) Merge Vedanta?s holding in MALCO into Vedanta Alumina.?
?
Post the restructuring, Sterlite Industries would hold all copper and zinc assets, namely 100% ASARCO, 100% CMT (Tasmanian copper mines), 79% KCM and 64.9% in Hindustan Zinc.?
MALCO (renamed as Sterlite Aluminium) would hold all the aluminium and energy assets through BALCO (51% stake) and Sterlite Energy (100%). Vedanta Alumina would finally hold 61% of MALCO.?
Vednata Resources also has announced a USD 9.8 bn investment programme to increase its fully integrated aluminium smelting capacity to ~ 2.6 mtpa by 2012, which upon completion would take Vedanta among the top 5 integrated producers of aluminium worldwide.?
Strategic rationale cited by the company for the restructuring?
- Simplifies corporate structure
- Eliminates conflicts of interest
- Optimizes efficiency.
Nifty is in 4200-4550 range since many days and 4200 tested second time. So chances of 4200 support get violated are very high now.
Below 4200 (14000 in sensex) downtrend will begin with targets of 4110,3960, 3800.
If 4200 held intact then nifty can bounce back up to 4450.
~FIIs net in Index fut. -1233 cr
~FIIs net in Stock Fut. –191 cr
~FIIs in Cash Market -1410 cr
~ Net fund flow of 6474 cr in July series. (Nifty 18 in series, closed at 4333)
~ Net fund flow of -8071 cr in June series (Nifty -520 in series, closed at 4315)
~Net fund flow of -6641 cr in August series. (Nifty -119 in series, closed at 4214)
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The policy has also suggested to remove all central taxes on bio-diesel and accord `declared goods’ status to biofuels that would ensure a uniform 4% sales tax (VAT) on the product across states. As per the policy, a certification mechanism would be put in place for the blending exercise that would have to conform to BIS specifications.
The government has already initiated a bio-fuel strategy, under which 5% ethanol blending in petrol is mandatory across the country and this would go up to 10% from October this year. The use of blended diesel, however, is yet to kick-off due to non-availability of adequate land for plantation of bio-fuel plants like jhatropha.
The Cabinet also approved setting up of National Biofuel Co-ordination Committee headed by the prime minister and Biofuel Steering Committee chaired by cabinet secretary and comprising secretaries of 10 concerned departments.
In other decisions, the Cabinet approved amendment to the Collection of Statistics Bill, 2007, which paves the way for introduction of strict guidelines for bringing even individuals under the purview of collection of data.
The Cabinet committee on economic affairs (CCEA) also met on Thursday and approved a scheme for infrastructure development for food processing sector by setting up mega food parks.
Under the scheme, in the first phase 10 out of a total of 30 mega parks proposed for 11th Plan would be set up with government providing 50% of the project cost in general areas and 75% in north-eastern region as grant subject to a maximum amount of Rs 50 crore.
The CCEA also gave its approval to enhance emoluments of the president, vice-president and governors of states to Rs 1.50 lakh, Rs 1.25 lakh and Rs 1.10 lakh, respectively.
It also approved changes in funding pattern from 75:25 to 90:10 for north-eastern states in respect of schemes of department of rural development and gave nod to a Rs 774 crore project for implementing global positioning system aided geo augmented navigation (GAGAN) system for seamless navigation of aircraft over Indian airspace.
The Cabinet also approved restructuring the National Minorities Development and Finance Corporation, increase in quota of Haj pilgrims, extradition treaty with Iran and procurement of new electronic voting machines for Lok Sabha polls in 2009
Global Holdings Company (GHC), the holding company of telecom firms GTL and GTL Infrastructure, is in talks to acquire Mumbai-based Indmar Aviation Services Company for an undisclosed amount. The deal is expected to be concluded within the next 15-20 days.
Global Projects and Aviations, a subsidiary of Global Holdings Company (GHC), will be the designated company to acquire Indmar, sources close to the development said.
Cash-strapped Indmar, which provides maintenance and repair services to general aviation, was in talks with investors for fund-raising.
Both, Global Projects and Aviations and Indmar officials confirmed the development. While an Indmar top source said Global Projects and Aviations has acquired Indmar, Aviations Group COO Rajiv Wadhwa said GTL and GTL Infrastructure have not directly or indirectly invested in the company. However, a GHC spokesperson denied the development.
Headquartered at the Mumbai International Airport, Indmar has presence across nine locations in the country. It has 40 engineers and is currently entangled in a legal suit with the Mumbai International Airport Ltd (MIAL) that has served an eviction notice to the company through Airports Authority of India to vacate the premises as the designated lease period has expired. The matter is in the court.
Global Projects has plans to build a Maintenance, Repair and Overhauling (MRO) facility and venture into air cargo business with base at Baramati in Maharashtra.
Global Projects also plans to expand in the aviation-related businesses and services through acquisitions. It plans to set up maintenance, repair and overhauling services facility and a flying training institute at Baramati, Maharashtra.
The company also plans to expand into heli-charter services with Mumbai as its base. Aviation companies plan to expand into heli-taxi, charter and heli-tourism services as the sector is underserviced and with the companies expanding into nearby cities it is a lucrative business proposition.
The civil aviation ministry plans to develop heliports in Mumbai, which is under consideration.
Source: Business Standard
- Aristotle
In a major initiative, the government plans to integrate foreign direct investment (FDI) regulations, to bring them on a par with those of mature economies. The new, principles-based regulations will phase out the present regime of arbitrary FDI caps in all sectors.
More, the new regime will do away with the additional conditions that have been inserted for several sectors in the FDI policy, which often force companies to circumvent them.
In the new regime, the focus will be on who wields management control in each sector. This means rules will be framed to ensure that the management rights of each group of investors, foreign or Indian, are made transparent.
Experts acknowledge that this is a difficult call. Accordingly, the exercise has pitched several ministries, including commerce & industry ministry, finance and ministry of corporate affairs, into devising an investment regime that is simple and yet tough enough to make all investors stick to the rules. Officials involved with the exercise are hopeful that the set of clear, principles-based regulations will be in line with the Know Your Clients norms and yet make India a far more attractive investment destination. India has targeted a sum of $40 billion in this fiscal, $16 billion more than last year.
The government feels that this approach is significantly superior to the present regime of scrutinising direct and indirect investments made by domestic and foreign entities in companies. This means the new rules would require listed and unlisted companies planning to bring in foreign investment to make mandatory disclosures on the composition of their boards and also make open the voting rights that would be exercised by the foreign and local shareholders and transfer of shares, among others.
Now, the FDI policy makes a passing reference to the concept of management control for defence and telecom and for investment companies in infrastructure sectors. This concept would be extended as a generic definition of management control across sectors.
Srinivas Kotni, managing associate at law firm Corporate Lexport, said, “The phrase ‘management control’ is not defined in any law. So, for determining the meaning of management control reference may be made to the definition of “control” as provided under the Sebi (Substantial Acquisition of Shares & Takeovers) Regulations, 1997.” Neither the Sebi regulations nor the Companies Act, 1956 defines the term management control and so these may need a revisit.
The Sebi regulations of control define it as the right to appoint the majority of directors or to control the management or policy decisions. Internationally, management control is defined from the taxation perspective, where a residential status of a company is defined on the basis of economic criteria or on its presence in a country, for it to be taxed in that country.
“There are judicial precedents in India on management and control in the context of income tax. According to these, management control resides with the board of directors and not just CEO or CFO,” said Ajit Krishnan of Ernst & Young
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nifty chart with labelling of the minor elliott waves inside the ongoing assumed zig zag correction leg C of ABC-X-ABC.
THIS IS THE DATA WE RECD FROM RELIANCE MONEY..
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| Alert Name: India, Bearish Alert Criteria: Stocks (Any Indian Exchange); Price at least 50.00 and below the 200-day moving average; Volume at least 10,000; Classic Patterns; Bearish; Pattern Duration at least 25 days; Possible Price Move of at least 10%. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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