NEWSLETTER

After flat American and Asian markets, nothing much was expected from the Indian markets too. And, as expected, the opening was nothing to talk about. Today was F&O expiry day and on F&O expiry days markets generally remain volatile. That was not the case this expiry. The Nifty, after a week opening, started going down and it wasn’t until 1:45pm that the fall stopped. But by that time, the NSE index had already shed about 80 points. A little bit of recovery came about post 2 but as the market neared closing, the movement too stopped and the Nifty slipped into a 10-15 points range after that. Today, Thursday, was a good day for the European markets and so does it look for the American markets. The London FTSE and the German DAX closed with gains of 2% while the French CAC was up 3%. The Dow Jones, at the time of writing, was trading with gains of almost 3%. Crude had increased to $108.65 intra day but had come back to $106.90.

Attached above is the daily chart of Nifty along with two moving averages and a stochastics oscillator. The chart has been zoomed in to show only 3 months data so that we get a closer look at the moving averages. The thick green line at the bottom is the support that the Nifty respected twice at 3800. Among the moving averages, the green one is the 21 day moving average while the brown one is the 10 day moving average. Both moving averages are important and provide good signals in their respective time frames. Here, as discussed in one of my previous newsletters, the prices had come below the 21 day exponential moving average and had given a sell signal on 11th Sep 2008. The 10 day moving average also gives similar signals, except that it gives a quicker response than a 21 day moving average. Here, the prices are below both the moving averages and both of them should provide resistance to the Nifty. The 10 day moving average provides resistance near 4170 while 4229 happens to be the level for the 21 day moving average. As regards stochastics, the 5,3 day stochastics slowed to 3 days has given us a sell signal yesterday.

With the American and European markets good today, chances are that we might open strong too. In case we don’t, or if we do and then come down then support comes in near the green line (the thinner one) near 4073-4075. A move below this level should, rather could, bring us to levels of 4000, 3950 and possibly 3800. With the new F&O series taking over tomorrow, let us see how it makes the Nifty behave.

-: SPOT NIFTY:-

U.S. GOV. ALSO GOING TO PASS N-DEAL & 700 BN$ BAIL OUT PLAN BOTH WILL BE SOLVED TODAY. BUT CHANNELS SPREADING NEWS THAT IT IS IN SUSPENSE. JP MORGAN GOT A CONTROL ON "WAMU" U.S. FINANCIAL CO.

NIFTY HAS STRONG SUPPORT AROUND 4050. ALSO GAP WILL BE COVERED AT THAT LEVEL SO EXIT SHORT AROUND THAT LEVEL AND START DELV. BUYING IN STEPS.

PREDICTION: ON THE ADRS, ONLY ICICI LOOKING NAGATIVE ZONE, EXPECT ALL ADRS MAY POSITIVE.

OCTOBER 4100 PUT ADDED 14 LACKS SHARES AND 4000 PUT ADDED 5 LACKS SHARES. SHOWS STRONG SUP. AROUND THAT LEVEL.

MARC FABBER APPEARED AGAIN SAYING SENSEX MAY GO BLW. 10000. (GOD SAVE THE PEOPLE!!!)

GOOD NEWS: SHORT POSITION IS NOT ROLL OVER.

# WORLD MARKET

> U.S. MARKET

DOW : +197 NASDAQ : +31

> ASIAN MARKET (AT 8 AM)

NIKKEI : -50 HANG SENG : -113 SANGHAI : -17

# ADRS (POSITIVE) : INFOSYS, SATYAM, WIPRO, HDFC, TELCO

# ADRS (NEGATIVE) : ONLY ICICI

POINTS TO WATCH FOR TODAY'S TRADING

# U.S. MKT. IN GREEN

# ASINA MKT. MIXED

# CRUDE 106 $/BBL.

# SGX NIFTY 4140-4153. UP ONLY 1 POINTS.

# NUCLEAR DEAL CLEARANCE.

# INFLATION UNCHANGED.

# TODAY'S STRATEGY :

> U.S. GOV. ALSO GOING TO PASS N-DEAL & 700 BN$ BAIL OUT PLAN BOTH WILL BE SOLVED TODAY. BUT CHANNELS SPREADING NEWS THAT IT IS IN SUSPENSE.

> JP MORGAN GOT A CONTROL ON "WAMU". U.S. FINANCIAL CO.

> NIFTY HAS STRONG SUPPORT AROUND 4050. ALSO GAP WILL BE COVERED AT THAT LEVEL SO EXIT SHORT AROUND THAT LEVEL AND START DELV. BUYING IN STEPS.

> I HAVE ADDED PIVOT LEVELS FOR THE FIRST TIME TO EDUCATION SECTION AT WEB. THE LEVELS ARE OF NEARLY 35 COM. OF NIFTY-50. VISIT WEB TO CHECK.

> OCTOBER 4100 PUT ADDED 14 LACKS SHARES AND 4000 PUT ADDED 5 LACKS SHARES. SHOWS STRONG SUP. AROUND THAT LEVEL.

> MARC FABBER APPEARED AGAIN SAYING SENSEX MAY GO BLW. 10000. (GOD SAVE THE PEOPLE!!!)

> GOOD NEWS : SHORT POSITION IS NOT ROLL OVER. __._,_.___


Sensex Technical View :

Sensex has almost retraced 50 % of the current bounce from the low of 12550. 61 % of the current pullback comes to 13200 . So till markets stay above 13200-13300 on a closing basis markets could take a shot at the upper range of 14300. Traders can continue to be stock specific and look for investment bets in fundamentally sound stocks with a medium term view.
Only on a close below 13k or above 14500 could we see good momentum in markets or we could remain sluggish for some days and one will need patience.

Market Observations and Thoughts :

Crude :
Continues to remain in the range of 102-110 . Till its below 120 crude can continue to remain in a tight range.

Gold :
Gold as being seen is quite volatile with the swings on economic bailout etc. As mentioned yesterday a dip to 865 should see support and it made a dip to those levels. On the downside there is a good support at 840.

Lots of mid caps have lost 60-85% from the highs and many of them are available at 2005 price but one needs to be selective and choosy about the stocks as circumstances have changed so have to go with a fresh view! . Be selective and patient as the turnaround time would be more from current levels and one will need to graduallly build an investment position.

Stocks to watchout for :

AXIS Bank looks set for a quick move to 750 -770 levels if market sentiments remain good . Can buy with a stop of 704 .

HDFC bank if sustains 1325 could see 1400 in quick time but a risky call .

Rolta hold on for 280-290 zone to book profits. Guj Ambuja stop 82 tgt 90-93.

Some thoughts :

In the last few months have been meeting lot of investors who just have a standard line i am stuck in xyz stock at high price of 20-21k. Some of the traders kept on carrying positions which finally had to be closed coz of margin pressures. All through the last 6 -8 mths from january markets gave bounces to 18900/17735/15580 which could have been used to exit and re-enter at lower levels to reduce average or losses. But many investors continue to wait in hope for the acquisition price!!!!

All through this period we had been mentioning about generating cash in Jan 1st week then around 18900/17500 to reduce leverage and exit totally below 16800. Those who have made use of the views have been able to pick good quality stocks at dips to sell on good 30-50 % bounces. But those are gone things now lets c what can be done in case one has not exitted /booked partial losses/stuck at higher levels and seen a portfolio detoriation from 10-60 % .

Markets have come down from 21k to 13k which in itself is a 40 % drop and the downside from here could be limited to roughly 11500-12500 which is just an assumption. So on a price correction there may not be much but for the recovery the time correction may stretch quite long. So one will need to strategize differently now !!! Also in the longer run upside potential is much more then the downside from current stage but one will need patience !

Many of the hopeful people are trying to expect they may get their stuck prices 20-21k very soon which implies more then 60 % returns on the INDEX !!! !!! which berates logic and imagintation although markets can surprise but in business u dont bet on surprises!!! .

There are two ways an investor can turnaround and recover the portfolio in next 6 mths to 2 years .

A) Increase the portfolio size by allocating more cash
B) Shuffling of portfolio and not making same mistakes again

For some investors who are down 30-50 % it would be difficult to allocate fresh money but for many with good cash flow should definitely do so as markets have certainly become attractive as lot of stocks may have over corrected.
Some points to take care where one may tend to make mistakes :
1) Averaging

This is the standard mistake one tends to make!. In business one never puts in more money in a losing business or a wrong idea which dint take of as expected but rather tries to shut it to start afresh. So here one needs to decide whether the stock is WORTH IT or one is just buying coz acquisition cost is high. Coz some bad ones may continuing goin down and strong ones may give a quick bounce. Be selective !!! Why not start a business FRESHLY then be bogged down by old mistakes :)

2) Leverage
Normal tendency of a losing investor/trader is to bet more heavily as losses are too big to cover up easily and end up losing watever is left. Never make the same mistake twice. Leverage trading could be highly rewarding or highly dangerous so one needs to tread safely or avoid.

3) Money and Risk Management
Investors never tend to look onto money management and risks involved with their finances and goals from equity investment. One needs to be aware of financial goals , risk apetite , cash flow. FOCUS more on risk then on REWARDS ! 1:3 is preferreed Risk:Reward ratio.

B)

1) Shuffling
This could be a tricky thing to do as dud stocks may also give 50 % bounces and then again die. IT stocks never cameback after 2000 boom only Infy etc did . Will realty come back u never know. Dont make the same mistakes again start shuffling and make a stronger portfolio. Every bounce in a dud stock could be used to shuffle !!

2) Selling and Re-Entering
All manufacturers,retailers,stockist and business-men have a stockout sale to shut business or in a revamp. !! An investor never has a stockout sale !!! ever why SO ! i still dunno.........But in such markets one may need to time a bit exit bad ones on rise and buy fundamentally sound stocks on dips.

This is just a few possible points which could be covered in a quick post and would need lot of INDIVIDUAL investor thought and process as every one has a different apetite/finances/goals .

Call it luck or magic, but technical analysis never fails.

i have been posting a view that 4068 is an important level and it shouldnt break, now see what has happened.

we made a low of 4077 yesterday, so 4068 was saved, and nifty bounces back from there.

Well, even i didnt go long there as things were looking weak, and this is the problem that we put too many thoughts into trading, and sometimes ignore technicals.

so start following my levels strictly, and see ur money grow.

Now for intraday today 4210 is a very important level, if we see a closing above 4210, we will surely see a short term rally,

however if we close below it, we may again see downtrend continue.support exists at 4130-40 levels

Nifty Spot :4103

Inference from the Swing Charts of - 4 day(15 min) Intraday Nifty charts

Which shows that the primary trend of the nifty is getting weaker day by

day. And the falling RSI and the stocastics signals further downtrend is

possible if nifty is not able to move above the recent swing high 4130

and any dip below 4177 will take nifty towards 4000 hardly and movement

above 4130 will take nifty towards 4225 once again.

ICICI Positional Targets :

Bullish Outlook:

1)Looks Bullish above 600 for a target of 608 with stop loss at 593

2)Looks Bullish above 610 with stop near 599 for a target of 623

Bearish Outlook

1)Bearish outlook below 588 for a target of 574 and 560 with stoploss near 600

Recommended to play this game in futures. With Stop loss near

Stock : Punj Lloyd

CMP : Rs 304.85

Here is an intresting Swing Trade from Punj Lloyd which shows the positive movement

3 day 15 min charts shows that stock has further uptrend above the recent swing high

306.85. And the current swing low is 304.85 as show in the below. Also the stock trades

above 20 period EMA and the rising RSI shows signals a bullish call in this stock.

So a good trade can be initiated if the stock crosses above the recent swing high 306.85 for a target of

311 and 315 with stoploss anywhere below the recent swing low 304.85

Nifty :: After breakdown of 4115 Nifty turn down sharply but still hold strong support 4052.. Now for 26th Sep. Watch two strong hurdle for higher level 4202 and 4247.. Up to 4247 momentum seems side way with positive bias. Our strategy for 26th Sep. Buy on deep (S.L 4052) Sell at high (S.L 4247).. Avoid buying at higher level buy only in deep with strictly stop loss.. In one level above 4117 momentum seems up, below 4100 momentum down.. Resistance for up move at 4137/4175/4202/4224/4247/4268.. Supports at 4077/4052/4039/3992…

The Indian market saw selling pressure in the afternoon session and close with red zone .For coming session if nifty trade above 4155 it can test 4193-4220 levels on the lower side 4070-4040 will act support zone.


Read this with a pinch of salt
Daily chart shows a big Head & Shoulder so before you think of buying then wait for
more dips ,Also a big trigger for IT sector would be INFOSYS results.
If we go by HS target would be a fall of about 500 points more in the IT index.
Recent financial turmoil in USA too had hit IT badly as they lost many big clients.
This is my personal view you may or may not follow this :)

Of course some rise may come before fall.

so please also keep this target in your mind.

As we said that there is no strength in the market & market closed on the below level & here we gave the free SMS call that any time market can take U tern & market took recovery from there. Due to the Bailout Bull Run come in the DOW & its hope that Bull Run can come in coming days. Again we are giving the warning here that between the 5-Oct-08 to 9-Oct.-08 please unwind your all long positions because this bull faze will not run more days & once again market will test bottom & it can break also.

Today if Nifty Future goes to cross the level of 4169 then it can go up to the level of 4205, 4263 to 4406 but if Nifty Future go to cross the level of 4126 then it can go below the level of 4110, 4054 to 3960.

Happy & Safe Trading

Daily Target:-

1) Buy NF Above @ 4169 Target 4205-4244 to 4338.

2) Buy BOB Above @ 305 Target 311-316 to 330.

3) Buy COLGATE Above @ 398 Target 402-405 to 415.

4) Buy HDFCBANK Above @ 1304 Target 1325-1346 to 1397.

5) Buy HEROHONDA Above @ 865 Target 882-901 to 946.

6) Buy L&T Above @ 2571 Target 2600-2626 to 2692.

7) Buy ONGC Above @ 1072 Target 1095-1116 to 1170.

8) Buy UNITECH Above @ 122 Target 125-128 to 135.

9) Buy MASTEK Above @ 332 Target 344-356 to 385.

10) Buy M&M Above @ 564 Target 573-585 to 612.

11) Buy Dr.REDDY Above @ 524 Target 533-544 to 568.

12) Sell BHARTI Below @ 789 Target 771-748 to 699.

13) Sell BHEL Below @ 1629 Target 1614-1588 to 1537.

14) Sell CMC Below @ 461 Target 444-424 to 379.

15) Sell HLL Below @ 248 Target 247-244 to 238.