Market may open down. Market may up between 12.09 and 12.27 Market may steady or up side between 13.55 and 14.22. Market may close at down to previous closing.
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Opening Bell Call
Buy
CIPLA - Cipla Ltd
IDEA - Idea Cellular Limited
ONGC - Oil & Natural Gas Corpn Ltd
TATAPOWER - Tata Power Co. Ltd.
BALRAMCHIN - Balrampur Chini Mills Ltd
On 23rd September 2008 - The BSE Sensex closed at 13,570 (down 424 points) while the NSE Nifty closed at 4,4126 (down 96 points).
Opening Bell Call
Sell
AXISBANK - Axis Bank Limited
BANKINDIA - Bank of India
ABIRLANUVO - Aditya Birla Nuvo Limited
HDFC - Housing Development Finance Corporation Ltd.
IDBI - IDBI Bank Limited
Technical Analysis for 24th September 2008
BSE-SENSEX - Major Support - 13697, 13556, 13416, 13339, 13263, 13044, 12827
BSE-SENSEX - Major Resistance - 13774, 13851, 13991, 14132, 14349, 14567, 14784
NSE-NIFTY - Major Support - 4155, 4121, 4087, 4068, 4048, 3995, 3941, 3888
NSE-NIFTY - Major Resistance - 4175, 4194, 4228, 4262, 4316, 4369, 4423, 4476
Sensex Technical View :
Sensex takes a dip from 14200 and has already reached 13500. The gap is placed at 13300 . The dip to 13200-13300 range could be used for buying for a bounce back. Lots of stocks gave good returns in the bounce back and after locking gains investors can again go with partial quantities in specific stocks around Sensex support levels.
Market Observations :
The current 15 % move up from the lows of 12500 surprised a lot of people ! and many must have missed it completely. Sesa goa , Rolta , RCAP bounced back 30 % from the lows which were recommended to clients. As i mention bear rallies can give much quicker returns then bull runs. Continue to be stock specific and be focussed on good value stock in declines whenever markets make a dip.
CRUDE :
Huge move upto 125-130 $ in October contracts and still not able to cross 111 in November . A classical short squeeze was seen yesterday in the last day of expiry in Nymex and dint see any pullup in other exchanges of the world i believe. This clearly shows the amount of speculation going around in the commodities markets !!!. And currently as i check its quoting around 107 !!.
Technically the resistance remains at 108-112 zone and a dip is possible from those zones. On a higher side i would be surprised to see 118-120 to be crossed for some time.
Stocks to watchout for :
Rolta ... Has again declined after making a good 20 % move. Had a buy call at 240 for investment which got booked at 290-300 in the day itself. Investors can again look to add around 255-260 and 240-245 with a medium term view and stop of 230 tgt 300.
Syndicate Bank and VSNL are close to technical breakouts keep a watch on volumes or buy on dips for short term with 3-4 % stop.
NIFTY SUSTAINING BELOW 4129, can fall to 4090-4068 for the day
again keep an eye on 4068, coz breaking this level, nifty will get weak for positional basis.
just 1 day for expiry, so expect maximum volatility. Trading above 4129, nifty can pull up to 4175 levels
The markets remained volatile and sluggish head of the sun outage and f/ o expiry .
Technically the markets looks weak and some more downsides could be witnessed .
However the markets are close to supports and a technical bounce is not ruled out.
The structure of the markets are still undecisive and waiting for a fresh direction and trigger.
Until then it looks range bound and volatile.
The falling iv’s in the options data , the sudden increase of call writing at 4300 , and simultaneous put shedding at 4000 levels indicates that the markets will find supports near to this levels and resistance at higher levels.
The nifty rsi is also in a tempting territory of 55 with macd levels of –23 which further indicates a range bound movement.
However the 30 hema and 60 hema are changing trendlines in hourly charts but are facing resistance at higher levels.
This indicates that the markets are to be very volatile and could change tide any time.
The crucial levels for the sensex is at 13300 levels and nifty at 4050 levels and should provide cushion to markets
The supports for the nifty is at 4050 levels and resistance at 4300 levels
The supports for the sensex is at 13350 levels and resistance at 4050 levels
Stocks to watch
Onmobile global
Syndicate bank
Akruti nirman
The Indian market opened gap down on the back of the weak global cues but saw smart pullback towards day high ,However selling pressure at higher level pull down the nifty and close in deep red zone .For coming session 4104 is key to watch above 4175 it can test 4225 on the lower side 4140-4104 will act support zone .
Seen above is the tick by tick chart of the Nifty. As seen from the chart, the Nifty, early in the morning, after going to 4150 started going up, made a top near 4190, and came down to 4171.35. Then a small recovery took it past its highs of the day, went up to 4224.60 came down to 4171.35 again, climbed to 4203.30 and finally broke through 4171.35, thus completing a bearish head and shoulders pattern. With the top of the head at 4224.60 and the neckline at 4171.35, the target was 53.25 points (4224.60-4171.35) below 4171.35. This gave us a target level of 4118.10 (4171.35-53.25) on the Nifty. So, we saw a bearish head and shoulders pattern being formed, being confirmed and the target achieved, all in one day. And we can see that after this head and shoulders pattern target was achieved, there was an immediate bounce in the price from that level. This case was more like a case of a perfect head and shoulders pattern. In most cases, either the neckline is not straight, or the shoulders are not perfect or the target is not achieved or the price overshoots the target. But then, life is never perfect. One has to live it the way it is offered to us and make the best of it.
Well, that was the intra day chart for today only, but what is the forecast for tomorrow or the days after that? To try and forecast what the market would do is like trying and forecasting whether the next toss of a coin would be a heads or a tail. The market remains as unpredictable as ever and most of the times move against our wishes/forecast. But we also know that when it does move in our favour, most of the times we get a move big enough to wipe off most of our losses. That is where technical analysis comes in handy, where 7 trades out of 10 turn out to be loss making trades, but the remaining three trades are big enough to wipe the 7 losses and giving us a net profit. Technical Analysis only helps us increase the probability of making a profit. One of my previous posts title “The Probability of Profitability” very well explains this. Well, and to do that we have to analyse to see what our analysis says.
Attached above is the 30 minutes chart of the Nifty, which gives us a slightly longer term view than what the intra day chart gives us. Notice that in this chart, the bearish head and shoulders pattern, which was so clear in the tick by tick chart, is not visible here. Last week we had seen the Nifty slip into a narrow range between 3950 and 4100. This range has been marked by a trend channel/rectangle. Notice that the upper end of the rectangle lies somewhere between 4090 and 4100 and not exactly 4100. Also shown in this chart is the Moving Averages Convergence Divergence (MACD) and the upper line of the rectangle extended till date. This extended line tells us that there is support available between 4090 and 4100. The MACD, which had given a sell signal yesterday, reaffirmed it today by going below the equilibrium line at 0. Notice that there is a blue coloured trendline here too which shows that there maybe support available for the MACD at current levels, which, if broken, would have bearish implications. There are also Fibonacci retracement levels drawn on the chart for the two day rise from 3800 to 4300. These Fibonacci levels tell us that the 38.2% level is still intact may (or may not) provide support at 4112. If this is breached, the next Fibonacci levels of support are at 4050 and 3995, being the 50% and the 61.8% retracement levels, respectively. For now, we can just wait and watch, which of these levels does the Nifty feel worthy enough to respect. As far as the international markets are concerned, the London FTSE and French CAC closed with a loss of about 2% while the German DAX lost 1% of its value. American markets are more or less flat at the moment while the crude has come off its yesterday's highs and was today in the vicinity of $106 a barrel.
the current big support for nifty on the p/e chart is 3500 about 15 times current eps where it should bounce in near term(although roughly 3250-3550 i prefer acc to ew etc), below that in long term will probably go to 2700 etc acc to p/e chart, pls note these are not tgt lvls but support lvls if nifty goes down there(pls refer to charts previously posted on this blog). p/b currently also not near to the lvls where normally market bounces off but is trending down means there was currently no case for great amount of bullishness(the price/macd chart posted many days ago had warned about the downmove from 4650 to 3800 much earlier).
i have been using p/e charts with good amount of success since this blog started, infact the 6400 top( perhaps i had posted a thread/post reg this on vfm/my blog before jan 2008) acc to peak p/e was predicted(nifty topped at 6357!), p/e expansion/contraction also worked well on charts and all these can be used for investment deci i guess alongwith ew and tradional ta.
after 5 years of bull run, a period upto 2 years of sideways/down mkt is but natural, when the bear mkt is over(is not in a hurry to do so presently and for good it should not) we'll know for sure from ta and start investing again till then trading(in nifty in small lots only intra etc) to be done if ppl must, else may sit on sidelines and enter only when correction gets over for great value buying(picking the exact bottom will be a difficult task).
going up or down.
ew view:
this is the grey area/million dollar question, are we going up(i.e fresh upmove) or down(correction resuming) from here. so far nothing has changed in my earlier view that i was holding about 3500 or more etc.
view 1) is C over at 3799. so if all 5 downwaves of C are over then, either an x up followed by correction(will be difficult to anlyse this situation) or a fresh upmove which will have uptrend after ret upto 4110-3990. so if this is correct not much downside will be left below 4000.
view 2) C-1 to C-4 are over and C-5 begins: though at glance it looks like that but structurally all conditions for this are not satisfied.
view 3) first downwave(which was large) of C i.e C-3-(1) over at 3799(iam biased toward this for reasons like p/e etc explained earlier here).
acc to this, 4268 the 0.618 ret of 4558-3779(wave C-3-(2)) and slightly more which is normal and expected and within acceptable limit, is over and probably C-3-(3)-i started down from there. so after this a small bounce will be there and it will again slide fast after that below 3990 and 3790 etc. the max lvl on upside for C-3-(2) earlier was 4268-4377, any bounce should not exceed this range i feel for this view to be correct.
if this view is correct then C-3-(1) was very large and final tgt will also be deep i would settle for 3250-3550(exact target not calculated). a break of 3790 on closing basis is needed for confirmation of C-3-(3) running.
so from above, it looks like the lvls 3790 and 3990 become kind of deciding factor for further moves.
the final target whatever and whenever it comes doesn't matter much to a long term investor since even now valuations are attractive, but whenever that happens and mkt bottoms out finally and starts fresh upmove should not be missed as an investment opportunity.
I spent hours trying to formulate wonderful portfolio only to realise that I do not know what to do with it now. Why am I in such a peril situation. It was because I wanted to be the crowd. I wanted to buy because I saw anyone who invested got quick money. My expectation as against 9% in a bank in a year rose to 200% in a month. I don't know how and when to invest. I do not know how and when to get out of the markets. Neither I know nor I care because I always had a net inflow. When I started out with a portfolio - I took Large cap names in the industry. I had reliance at 100/-, L&T, Infosys.... you name it. Then suddenly I thought that I could be an investment banker or a portfolio manager - after all my money was growing. Then suddenly I looked around and saw that people were making more money in mid cap stocks. I disposed off my large cap stocks and shifted to mid cap. Then I wanted to lead the race by investing in small cap to catch the winners. My investment in large cap was just for stability and fell to 10% against the advise of 85%. -- Then one day it happened. The market took a hit and all stumbled... I was a disbeliever. After all who could beat me in stocks? - I made money. I had the midas touch. The penny stocks (read small cap) became worthless. I pooled in more money and bought the same junk stock I held - Averaging It I told others. The market fell more - I put in more money. It fell even more - I contemplated that this is the bottom - these so called learned do not know what they are saying on the idiot box. I borrowed money and put it in markets to Average my investments (read junk stocks). The markets are not looking up - Oh my GOD I will loose it all. I am panicking but still holding on to the junk I have (I want to be a millionare still). The markets are not recovering - I walk up to the highest building and want to look down - I wish I could fly.
What I have written above is what I am sure would have happened with a vast majority of people because they were wrong in taking markets for granted. They refused to see reality. The mistakes?
I am too good.
Shifted to mid cap.
Shifted to small cap.
Shifted to penny stocks.
Do not have an entry policy.
Do not have an exit policy.
My Stock advisor is my neighbour.
I invested what ever I had when I thought the market was at its bottom.
I was the crowd.
Today You have time to make a new beginning. You have time to study, prepare and make amends. That is if you are ready to learn to be the leader and not the crowd. This market may remain here for a few months, a few years and wait for you to jump aboard. Be a smart investor. Invest small but at these levels rather than where you did last time. buy Large cap companies - it is a misnomer that since a stock is at 20 and I can buy 100 - I will get better returns. 10 percent of both the stock will remain same and whenever the stocks revive - they will start from large cap. I will say small amounts. You will find the money grow. Like I was explained by Jaggu yesterday night - the don't mix economy with the crisis. It may slow us down - but we will not drown. Invest the money you do not require next month for buying that car you wanted. Do not borrow and invest. Invest with a Term horizon. that term can be medium or long but not a month (to double the money - marry your daughter and save for your honeymoon trip)
Okay once again I am sitting waiting for my sortie and it is 0241 at night now. The world markets upto US have closed and nothing good has emerged. Asia ended down with Hang Seng down 3.87% and Strait Times down 2.66%. Europe closed, FTSE 1.91% red, Dax 0.64% down and CAC 1.98% down. The problem with the Europe is that it is neither US nor Asia. It tries to show that this developed part of the world is independant. But has to look to US and snub asia to find support. Basically it is in middle ground. US was green till the mid session. then it dived red as there was apprehension of the bail out working out and the urgency in US lawmakers. The markets tried to recover but dived in red again closing well in red. Dow was down 1.47%, Nasdaq down 1.18% and S&P down 1.56%. This is about to ensure a red opening - unless the Asia now is fedup of the bad news from US on daily basis. Will have to wait and that is all.
The candle today on the charts was a black one but let me tell you that last two days of black candles have really not been able to write off the advance we made on monday. SO do not loose heart. The bollinger bands are widening still so the down turn might continue for some time. 5 EMA still is below the 20 EMA. volumes were lesser than yesterday. the MACD divergence has actually reduced inspite of the black candle but the red line continues to be below blue line. Mass index continues to look up RSI look down - both are bad signals. TRIX that was steeply down is now flatishly down - whatever that would imply. On the slow stochastics the red line continues to be above the blue line and the red line has touched the 80 marker. There is an divergence in the Slow Stochastics and our markets. This may work in our favour.
You want to know what will happen today when the markets open? Well I do not know. The markets are not behaving rationally and there are no simple answers. Events that are of importance are the Nuc deal that is likely to see the sunlight in US congress - infact our PM is there in anticipation. The bail out of its financial institutes will come through one way or the other. And the crude is at 107 $ - but I feel it should cool down again. (emphasise - I feel)
“Who is next?”
That seems to be the biggest question and the reason for the extraordinary uncertainty prevailing in the world financial markets. Clearly the US Govt coming to the rescue of AIG did not help recoup the sentiments and the fear psychosis continued till the mid morning, after which the Asian markets and the Indian markets staged a recovery. For India, the Finance Minister coming out and assuring that India need not panic and going on record to state that Indian banks, especially the PSU banks had virtually no exposure to Lehman helped bolster the sentiments. Mr.Chidambaram stated that the Govt would be going ahead with its reform process and expected the Indian economy to grow at around 8%. Dalal Street felt assured and banking stocks were the first to recover.
Prior to this assurance from the Finance Minister, the moods remained despondent and all eyes were on developments unfolding in USA. The market has now learnt to read the signs and based on yesterday’s market data, it has emerged that Morgan Stanley was a major seller on Dalal Street. Morgan Stanley Mauritius Company, the company through which Morgan Stanley trades in India, executed block deals through P-Note transfers. It sold stocks worth Rs.871 crore. It sold 25.51 lakh shares of United Spirits at Rs.1,328 per share which was entirely purchased by Goldman Sachs. It sold 57.47 lakh shares of Pantaloon Retail at Rs 359 per share and this was purchased by Deutsche Securities Mauritius. It sold stocks of Educomp (5.32 lakh shares); Jindal saw (17.72 lakh shares); Subhash Projects (8.1 lakh shares) and all these were also purchased by Deutsche Securities Mauritius. It also sold Opto Circuits (7.53 lakh shares) to JF Eastern Smaller Companies Fund and Gujarat NRE Coke (18.31 lakh shares).
Morgan has totally invested Rs.11,200 crore in Indian stocks and this sell off yesterday, indicates that it has sold off around 8.5% of its total holdings. But the point to be noted here is that for every sale, there has been another FII buying, everyone is not just selling and running off. Doesn’t this mean that some well-to-do FIIs (a rare breed today!) are still favourably disposed towards India?
This is exactly what happened before Bear Stearns publicly announced that it was in irreversible trouble and ditto with Lehman too. These FIIs had started selling in bulk their holdings in the Indian markets, a few days before going bankrupt, trying to shore-up as much liquidity as possible. The name of Goldman Sachs also seems to keep popping up and keeping a close tab on the trades would indicate whether it too has started selling.
News on the street is that Morgan has sent out an SOS and is looking for a suitor. The one name which is coming in is of Wachovia, the fourth largest bank of USA.
Washington Mutual is also stated to be in trouble and JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co are expected to bid for parts of USA’s biggest savings and loan company. The perception on the street is that such deals which would help bail out troubled institutions would help revive some confidence back into the world markets.
The markets also started recovering on news that UK’s troubled bank – HBOS would be bailed out by Lloyds TBS for $22.2 billion. HBOS, based in Edinburgh is the largest provider of home loans in UK. There is some sense of belief that banks and institutions which could go phut, would be bought over and might not go the Lehman way. That is the only shred of optimism on the streets now. Plus of course the fact that all that is bad will happen in this week, we cannot go down any more. The big banks going bust would mean that smaller ones would also go down but this is probably the fag end of the entire sub-prime mortgage crisis.
From here, in a fortnight from now, Wall Street would never be the same and the entire world financial scene would have undergone a monumental change, liquidity pressure would be very high, and accessing capital would be a major issue and yet, with the markets being in such an oversold position, there would be smart short rallies once rebuilding starts.
Gitanjali Gems : (201.60) Buy GITANJALI at current price for a short term target of 243 and 276 , stoploss at 190.
Maruti : (700.90) Buy MARUTI above 703 for a target of 720 and 766, stoploss at 685.
ICICI Bank : (599.15) Sell ICICIBANK below 604 for a target 586 and 574, stoploss at 610.
Reliance : (2006.45) Sell RELIANCE below 1998 for a target 1972 and 1937, stoploss at 2038.
BHEL : (1625.05) Buy BHEL above 1642 for a target of 1660 -1695-1747, stoploss at 1595.
Sensex : (13570.31) Today Sensex face resistance at 13702, if cross 13702 then goes up to 13863 and 14156. Sensex find support at 13409, if break 13409 then goes down up to 13248 and 13000.
Nifty : (4126.90) Today Nifty face resistance at 4156, if cross 4156 then goes up to 4196 and 4265. Nifty find support at 4087, if 4087 break then goes down up to 4047 and 4000.
Nifty :: Now Nifty enter in strong support zone as our yesterday post. Still Nifty above 4111/4052.. As far as close above 4052 swing and momentum is up.. In one level below 4146 momentum seems down above 4146 momentum up.. Watch 4052 for 24th Sep. If Nifty hold above this support our strategy Buy in deep (S.L 4052) Sell at high (S.L 4146).. Or once break 4111 Sell at high buy on deep.. Avoid short sell at lower level Sell only at higher level...Resistance for up move at 4146/4157/4200/4213/4238/4252/4300.. Supports 4111/4100/4052/3992.. (& Final supports 3925/3900)..
(In Sensex watch strong Gap support 13347 & 13193).
Still a gap near 4090 left unfilled which may act as a intermediate as of now.
Failing to close below 4090 may target nifty towards 3800 once again.
The markets remained volatile and sluggish head of the sun outage and f/ o expiry .
Technically the markets looks weak and some more downsides could be witnessed .
However the markets are close to supports and a technical bounce is not ruled out.
The structure of the markets are still undecisive and waiting for a fresh direction and trigger.
Until then it looks range bound and volatile.
The falling iv’s in the options data , the sudden increase of call writing at 4300 , and simultaneous put shedding at 4000 levels indicates that the markets will find supports near to this levels and resistance at higher levels.
The nifty rsi is also in a tempting territory of 55 with macd levels of –23 which further indicates a range bound movement.
However the 30 hema and 60 hema are changing trendlines in hourly charts but are facing resistance at higher levels.
This indicates that the markets are to be very volatile and could change tide any time.
The crucial levels for the sensex is at 13300 levels and nifty at 4050 levels and should provide cushion to markets
The supports for the nifty is at 4050 levels and resistance at 4300 levels
The supports for the sensex is at 13350 levels and resistance at 4050 levels
Stocks to watch
Onmobile global
Syndicate bank
Akruti nirman
The Indian market opened gap down on the back of the weak global cues but saw smart pullback towards day high ,However selling pressure at higher level pull down the nifty and close in deep red zone .For coming session 4104 is key to watch above 4175 it can test 4225 on the lower side 4140-4104 will act support zone .The Nifty opened weak today, as was expected, because of the weak American and Asian markets. The Dow Jones was down 372 points overnight while all Asian markets, except Nikkei, were trading in the red with Hang Seng leading the pack, which finally closed with a loss of 759 points, down 3.87%. Followed by a weak opening, the Nifty did try to recover but the happiness lasting only about an hour or so, after which the index started its decline. Another attempt at recovery came shortly after noon but that too didn’t last long and from there it was a steady decline for the Nifty through the day. The island reversal pattern seen on the Nifty two days back was completely ignored today.
Seen above is the tick by tick chart of the Nifty. As seen from the chart, the Nifty, early in the morning, after going to 4150 started going up, made a top near 4190, and came down to 4171.35. Then a small recovery took it past its highs of the day, went up to 4224.60 came down to 4171.35 again, climbed to 4203.30 and finally broke through 4171.35, thus completing a bearish head and shoulders pattern. With the top of the head at 4224.60 and the neckline at 4171.35, the target was 53.25 points (4224.60-4171.35) below 4171.35. This gave us a target level of 4118.10 (4171.35-53.25) on the Nifty. So, we saw a bearish head and shoulders pattern being formed, being confirmed and the target achieved, all in one day. And we can see that after this head and shoulders pattern target was achieved, there was an immediate bounce in the price from that level. This case was more like a case of a perfect head and shoulders pattern. In most cases, either the neckline is not straight, or the shoulders are not perfect or the target is not achieved or the price overshoots the target. But then, life is never perfect. One has to live it the way it is offered to us and make the best of it.Well, that was the intra day chart for today only, but what is the forecast for tomorrow or the days after that? To try and forecast what the market would do is like trying and forecasting whether the next toss of a coin would be a heads or a tail. The market remains as unpredictable as ever and most of the times move against our wishes/forecast. But we also know that when it does move in our favour, most of the times we get a move big enough to wipe off most of our losses. That is where technical analysis comes in handy, where 7 trades out of 10 turn out to be loss making trades, but the remaining three trades are big enough to wipe the 7 losses and giving us a net profit. Technical Analysis only helps us increase the probability of making a profit. One of my previous posts title “The Probability of Profitability” very well explains this. Well, and to do that we have to analyse to see what our analysis says.
Attached above is the 30 minutes chart of the Nifty, which gives us a slightly longer term view than what the intra day chart gives us. Notice that in this chart, the bearish head and shoulders pattern, which was so clear in the tick by tick chart, is not visible here. Last week we had seen the Nifty slip into a narrow range between 3950 and 4100. This range has been marked by a trend channel/rectangle. Notice that the upper end of the rectangle lies somewhere between 4090 and 4100 and not exactly 4100. Also shown in this chart is the Moving Averages Convergence Divergence (MACD) and the upper line of the rectangle extended till date. This extended line tells us that there is support available between 4090 and 4100. The MACD, which had given a sell signal yesterday, reaffirmed it today by going below the equilibrium line at 0. Notice that there is a blue coloured trendline here too which shows that there maybe support available for the MACD at current levels, which, if broken, would have bearish implications. There are also Fibonacci retracement levels drawn on the chart for the two day rise from 3800 to 4300. These Fibonacci levels tell us that the 38.2% level is still intact may (or may not) provide support at 4112. If this is breached, the next Fibonacci levels of support are at 4050 and 3995, being the 50% and the 61.8% retracement levels, respectively. For now, we can just wait and watch, which of these levels does the Nifty feel worthy enough to respect. As far as the international markets are concerned, the London FTSE and French CAC closed with a loss of about 2% while the German DAX lost 1% of its value. American markets are more or less flat at the moment while the crude has come off its yesterday's highs and was today in the vicinity of $106 a barrel.the current big support for nifty on the p/e chart is 3500 about 15 times current eps where it should bounce in near term(although roughly 3250-3550 i prefer acc to ew etc), below that in long term will probably go to 2700 etc acc to p/e chart, pls note these are not tgt lvls but support lvls if nifty goes down there(pls refer to charts previously posted on this blog). p/b currently also not near to the lvls where normally market bounces off but is trending down means there was currently no case for great amount of bullishness(the price/macd chart posted many days ago had warned about the downmove from 4650 to 3800 much earlier).
i have been using p/e charts with good amount of success since this blog started, infact the 6400 top( perhaps i had posted a thread/post reg this on vfm/my blog before jan 2008) acc to peak p/e was predicted(nifty topped at 6357!), p/e expansion/contraction also worked well on charts and all these can be used for investment deci i guess alongwith ew and tradional ta.
after 5 years of bull run, a period upto 2 years of sideways/down mkt is but natural, when the bear mkt is over(is not in a hurry to do so presently and for good it should not) we'll know for sure from ta and start investing again till then trading(in nifty in small lots only intra etc) to be done if ppl must, else may sit on sidelines and enter only when correction gets over for great value buying(picking the exact bottom will be a difficult task).
going up or down.
ew view:
this is the grey area/million dollar question, are we going up(i.e fresh upmove) or down(correction resuming) from here. so far nothing has changed in my earlier view that i was holding about 3500 or more etc.
view 1) is C over at 3799. so if all 5 downwaves of C are over then, either an x up followed by correction(will be difficult to anlyse this situation) or a fresh upmove which will have uptrend after ret upto 4110-3990. so if this is correct not much downside will be left below 4000.
view 2) C-1 to C-4 are over and C-5 begins: though at glance it looks like that but structurally all conditions for this are not satisfied.
view 3) first downwave(which was large) of C i.e C-3-(1) over at 3799(iam biased toward this for reasons like p/e etc explained earlier here).
acc to this, 4268 the 0.618 ret of 4558-3779(wave C-3-(2)) and slightly more which is normal and expected and within acceptable limit, is over and probably C-3-(3)-i started down from there. so after this a small bounce will be there and it will again slide fast after that below 3990 and 3790 etc. the max lvl on upside for C-3-(2) earlier was 4268-4377, any bounce should not exceed this range i feel for this view to be correct.
if this view is correct then C-3-(1) was very large and final tgt will also be deep i would settle for 3250-3550(exact target not calculated). a break of 3790 on closing basis is needed for confirmation of C-3-(3) running.
so from above, it looks like the lvls 3790 and 3990 become kind of deciding factor for further moves.
the final target whatever and whenever it comes doesn't matter much to a long term investor since even now valuations are attractive, but whenever that happens and mkt bottoms out finally and starts fresh upmove should not be missed as an investment opportunity.
I spent hours trying to formulate wonderful portfolio only to realise that I do not know what to do with it now. Why am I in such a peril situation. It was because I wanted to be the crowd. I wanted to buy because I saw anyone who invested got quick money. My expectation as against 9% in a bank in a year rose to 200% in a month. I don't know how and when to invest. I do not know how and when to get out of the markets. Neither I know nor I care because I always had a net inflow. When I started out with a portfolio - I took Large cap names in the industry. I had reliance at 100/-, L&T, Infosys.... you name it. Then suddenly I thought that I could be an investment banker or a portfolio manager - after all my money was growing. Then suddenly I looked around and saw that people were making more money in mid cap stocks. I disposed off my large cap stocks and shifted to mid cap. Then I wanted to lead the race by investing in small cap to catch the winners. My investment in large cap was just for stability and fell to 10% against the advise of 85%. -- Then one day it happened. The market took a hit and all stumbled... I was a disbeliever. After all who could beat me in stocks? - I made money. I had the midas touch. The penny stocks (read small cap) became worthless. I pooled in more money and bought the same junk stock I held - Averaging It I told others. The market fell more - I put in more money. It fell even more - I contemplated that this is the bottom - these so called learned do not know what they are saying on the idiot box. I borrowed money and put it in markets to Average my investments (read junk stocks). The markets are not looking up - Oh my GOD I will loose it all. I am panicking but still holding on to the junk I have (I want to be a millionare still). The markets are not recovering - I walk up to the highest building and want to look down - I wish I could fly.
What I have written above is what I am sure would have happened with a vast majority of people because they were wrong in taking markets for granted. They refused to see reality. The mistakes?
I am too good.
Shifted to mid cap.
Shifted to small cap.
Shifted to penny stocks.
Do not have an entry policy.
Do not have an exit policy.
My Stock advisor is my neighbour.
I invested what ever I had when I thought the market was at its bottom.
I was the crowd.
Today You have time to make a new beginning. You have time to study, prepare and make amends. That is if you are ready to learn to be the leader and not the crowd. This market may remain here for a few months, a few years and wait for you to jump aboard. Be a smart investor. Invest small but at these levels rather than where you did last time. buy Large cap companies - it is a misnomer that since a stock is at 20 and I can buy 100 - I will get better returns. 10 percent of both the stock will remain same and whenever the stocks revive - they will start from large cap. I will say small amounts. You will find the money grow. Like I was explained by Jaggu yesterday night - the don't mix economy with the crisis. It may slow us down - but we will not drown. Invest the money you do not require next month for buying that car you wanted. Do not borrow and invest. Invest with a Term horizon. that term can be medium or long but not a month (to double the money - marry your daughter and save for your honeymoon trip)
Okay once again I am sitting waiting for my sortie and it is 0241 at night now. The world markets upto US have closed and nothing good has emerged. Asia ended down with Hang Seng down 3.87% and Strait Times down 2.66%. Europe closed, FTSE 1.91% red, Dax 0.64% down and CAC 1.98% down. The problem with the Europe is that it is neither US nor Asia. It tries to show that this developed part of the world is independant. But has to look to US and snub asia to find support. Basically it is in middle ground. US was green till the mid session. then it dived red as there was apprehension of the bail out working out and the urgency in US lawmakers. The markets tried to recover but dived in red again closing well in red. Dow was down 1.47%, Nasdaq down 1.18% and S&P down 1.56%. This is about to ensure a red opening - unless the Asia now is fedup of the bad news from US on daily basis. Will have to wait and that is all.
The candle today on the charts was a black one but let me tell you that last two days of black candles have really not been able to write off the advance we made on monday. SO do not loose heart. The bollinger bands are widening still so the down turn might continue for some time. 5 EMA still is below the 20 EMA. volumes were lesser than yesterday. the MACD divergence has actually reduced inspite of the black candle but the red line continues to be below blue line. Mass index continues to look up RSI look down - both are bad signals. TRIX that was steeply down is now flatishly down - whatever that would imply. On the slow stochastics the red line continues to be above the blue line and the red line has touched the 80 marker. There is an divergence in the Slow Stochastics and our markets. This may work in our favour.
You want to know what will happen today when the markets open? Well I do not know. The markets are not behaving rationally and there are no simple answers. Events that are of importance are the Nuc deal that is likely to see the sunlight in US congress - infact our PM is there in anticipation. The bail out of its financial institutes will come through one way or the other. And the crude is at 107 $ - but I feel it should cool down again. (emphasise - I feel)
“Who is next?”
That seems to be the biggest question and the reason for the extraordinary uncertainty prevailing in the world financial markets. Clearly the US Govt coming to the rescue of AIG did not help recoup the sentiments and the fear psychosis continued till the mid morning, after which the Asian markets and the Indian markets staged a recovery. For India, the Finance Minister coming out and assuring that India need not panic and going on record to state that Indian banks, especially the PSU banks had virtually no exposure to Lehman helped bolster the sentiments. Mr.Chidambaram stated that the Govt would be going ahead with its reform process and expected the Indian economy to grow at around 8%. Dalal Street felt assured and banking stocks were the first to recover.
Prior to this assurance from the Finance Minister, the moods remained despondent and all eyes were on developments unfolding in USA. The market has now learnt to read the signs and based on yesterday’s market data, it has emerged that Morgan Stanley was a major seller on Dalal Street. Morgan Stanley Mauritius Company, the company through which Morgan Stanley trades in India, executed block deals through P-Note transfers. It sold stocks worth Rs.871 crore. It sold 25.51 lakh shares of United Spirits at Rs.1,328 per share which was entirely purchased by Goldman Sachs. It sold 57.47 lakh shares of Pantaloon Retail at Rs 359 per share and this was purchased by Deutsche Securities Mauritius. It sold stocks of Educomp (5.32 lakh shares); Jindal saw (17.72 lakh shares); Subhash Projects (8.1 lakh shares) and all these were also purchased by Deutsche Securities Mauritius. It also sold Opto Circuits (7.53 lakh shares) to JF Eastern Smaller Companies Fund and Gujarat NRE Coke (18.31 lakh shares).
Morgan has totally invested Rs.11,200 crore in Indian stocks and this sell off yesterday, indicates that it has sold off around 8.5% of its total holdings. But the point to be noted here is that for every sale, there has been another FII buying, everyone is not just selling and running off. Doesn’t this mean that some well-to-do FIIs (a rare breed today!) are still favourably disposed towards India?
This is exactly what happened before Bear Stearns publicly announced that it was in irreversible trouble and ditto with Lehman too. These FIIs had started selling in bulk their holdings in the Indian markets, a few days before going bankrupt, trying to shore-up as much liquidity as possible. The name of Goldman Sachs also seems to keep popping up and keeping a close tab on the trades would indicate whether it too has started selling.
News on the street is that Morgan has sent out an SOS and is looking for a suitor. The one name which is coming in is of Wachovia, the fourth largest bank of USA.
Washington Mutual is also stated to be in trouble and JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co are expected to bid for parts of USA’s biggest savings and loan company. The perception on the street is that such deals which would help bail out troubled institutions would help revive some confidence back into the world markets.
The markets also started recovering on news that UK’s troubled bank – HBOS would be bailed out by Lloyds TBS for $22.2 billion. HBOS, based in Edinburgh is the largest provider of home loans in UK. There is some sense of belief that banks and institutions which could go phut, would be bought over and might not go the Lehman way. That is the only shred of optimism on the streets now. Plus of course the fact that all that is bad will happen in this week, we cannot go down any more. The big banks going bust would mean that smaller ones would also go down but this is probably the fag end of the entire sub-prime mortgage crisis.
From here, in a fortnight from now, Wall Street would never be the same and the entire world financial scene would have undergone a monumental change, liquidity pressure would be very high, and accessing capital would be a major issue and yet, with the markets being in such an oversold position, there would be smart short rallies once rebuilding starts.
Gitanjali Gems : (201.60) Buy GITANJALI at current price for a short term target of 243 and 276 , stoploss at 190.
Maruti : (700.90) Buy MARUTI above 703 for a target of 720 and 766, stoploss at 685.
ICICI Bank : (599.15) Sell ICICIBANK below 604 for a target 586 and 574, stoploss at 610.
Reliance : (2006.45) Sell RELIANCE below 1998 for a target 1972 and 1937, stoploss at 2038.
BHEL : (1625.05) Buy BHEL above 1642 for a target of 1660 -1695-1747, stoploss at 1595.
Sensex : (13570.31) Today Sensex face resistance at 13702, if cross 13702 then goes up to 13863 and 14156. Sensex find support at 13409, if break 13409 then goes down up to 13248 and 13000.
Nifty : (4126.90) Today Nifty face resistance at 4156, if cross 4156 then goes up to 4196 and 4265. Nifty find support at 4087, if 4087 break then goes down up to 4047 and 4000.
Nifty :: Now Nifty enter in strong support zone as our yesterday post. Still Nifty above 4111/4052.. As far as close above 4052 swing and momentum is up.. In one level below 4146 momentum seems down above 4146 momentum up.. Watch 4052 for 24th Sep. If Nifty hold above this support our strategy Buy in deep (S.L 4052) Sell at high (S.L 4146).. Or once break 4111 Sell at high buy on deep.. Avoid short sell at lower level Sell only at higher level...Resistance for up move at 4146/4157/4200/4213/4238/4252/4300.. Supports 4111/4100/4052/3992.. (& Final supports 3925/3900)..
(In Sensex watch strong Gap support 13347 & 13193).
Nifty (spot) 4126.90
Nifty Intraday trading levels
Today, if Nifty trades below 4160, then it could test 4050 and below 4050, it could test 3950. Instead, if it trades above 4160, then it could test 4200.
Nifty Trading Strategy for intraday and positional trading
For intraday, the crucial level is 4160. Trade short below this level and trade long above this level.
Positional traders can initiate shorts if it fails to sustain above 4160.
Short term Technical View of Nifty
Now, the rally from the low of 3800 to 4305 is being corrected. The most likely level for Nifty to terminate its correction is around 3900-3950 level.
In the upper side, Nifty is likely to turn bullish for short term, if it trades above 4160. Until then the trend would remain bearish.
Medium term outlook of Nifty dated on 02 July 2008
The medium term outlook of Nifty has turned bullish and it is likely to move towards 5500 by this year end and this view holds good as long as Nifty stays above 3600.
Long term outlook of Nifty dated on 02 July 2008
The long term outlook of Nifty is looking bullish and it seems that Nifty is in the middle of this bull run. So, the bull run is likely to continue for another 4 to 5 years and this view holds good as long as Nifty stays above 3600.
Short term trading calls of Stocks for spot market
Reliance
The level 2030 in the upper side and the level 3890 in the lower are crucial level for this scrip for the short term. If it fails to sustain above 2030, then it is likely to decline towards 1890.
Like wise, if it fails to move below 1890 in coming trading sessions, then it is likely to turn bullish and it could rally from these levels towards 2200 initially.
Trading Strategy for Reliance
For intraday, the crucial level is 2017. Trade long above this level and trade short below this level.
Positional traders can initiate shorts if it fails to sustain above 2030 for a target of 1900. Initiate longs if it fails to move below 1890 for a target 2200.
Rcom
The crucial level for the short term for this scrip is 340. If it sustains above this level, then it is likely to turn bullish and in the upper side it could test 400.
Instead, if it fails to sustain above 340, then the short term trend would turn bearish and in the downside it is likely to decline towards 300.
Trading Strategy for Rcom
For Intraday, the crucial level is 365. Trade long above this level and trade short below this level.
Positional traders can initiate longs if it fails to move below 340. And initiate shorts if it sustains below 340.
Rpl
The level 140 is crucial in the short term. If the scrip trades above this level, the short term would turn bullish and in the upper side it could test 165.
If it fails to sustain above 140, then the trend would turn bearish and in the downside it is likely to decline towards 125.
Trading Strategy for Rpl
For intraday, the crucial level is 150. Trade long above this level and be short below this level.
Positional traders can initiate shorts if it fails to sustain above 150. Initiate longs if it sustains above 140 for a target of 165.
RPower
The level 150 is crucial for this scrip in the short term. If it sustains above this level, then it is likely to see a rally from these levels to 180.
Instead, if it fails to trade above 150, the short term trend would turn bearish and in the downside it is likely to decline towards 125.
Trading Strategy for Rpower
For intraday, the crucial level is 157. Trade long above this level and be short below this level.
Positional traders can initiate shorts if the scrip fails to sustain above 150. Initiate longs if it sustains above 150.
Reliance Capital
The crucial level for the scrip in the short term is 1220 and 1030. The trend would remain bearish for this scrip if it sustains below 1220 and in the down side it could test 1120 and below this level it is likely to decline towards 1020.
If the level 1020 is violated in the short term, then the scrip is likely to make a major bottom around this level.
Trading Strategy for Reliance Capital
For intraday, the crucial level is 1220. Trade long above this level and be short below this level.
Positional traders can initiate longs if the level 1020 is held in coming trading sessions. Short if it fails to sustain above 1220 for a target of 1120 and 1020.
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