With nuclear deal almost under wraps (we might celebrate it once more with a small bounce!) now we are waiting anxiously for the bailout package the U.S government is planning to implement, that should set the course for the moves ahead. Secondly we have our results season coming up, so another trigger on the way. As regards to the churning in the U.S and the so called injecting of steroids (bailout) I wonder how long will the effects last. I am no economist but just as a simple layman I was just wondering, with the U.S homeowners defaulting on their home loans (mortgages as they are called!) isn’t it a probability the next line of defaults will be the credit card payments!!! So another bailout package will be needed this time to save the credit card companies…… another way at looking this is that with all these bailouts and takeovers the U.S. government might just end being the largest real estate owner of the country and also the owner of many of the financial institutes. Capitalists turning to Socialists????. Anyway let us move on and see what our charts are telling us for the next week.
The Weekly Picture:
The weekly chart below, shows that once again Nifty after a brief penetration of the long term falling trend line, has closed below it. Back again inside the channel we are heading to test the lows (3790/3800) again failing to hold on to these might open the doors to 3550. The MACD histogram is still showing bullish divergence, maybe a new low in price is accompanied by even a shallower low in the histogram; giving us a triple bullish divergence! Wishful thinking anyone?
The Daily Drama:
We had a classic H&S pattern which broke down and price did make an attempt back at the neckline (yellow Line) failed and is headed lower to test the lows. The ADX is beginning to move we have a negative cross of the DI lines. Our now oft repeated levels of 4050/4150 and 4250 present a formidable resistance to any move up, whereas failing of the 3800 support might be a nasty experience. In trading many analysts swear by the closing price rather than highs and lows, the argument is that many traders use different types of styles to draw their charts. Some like line charts others candlesticks, some make do with hiekin ashi candles and yet some swear by point and figure. Therefore this makes the closing price very important, and speaking of closing price I have inlayed on the above chart the line chart of prices from JULY’08 to SEP’08 and what do we see? Voila we have already broken the lows of 18th September on closing basis though the actual low is 3799!!!! Just a point for you to ponder!
Above is the chart sent by my fellow analyst and good friend Shiree Mamgain, his take on NIFTY. As they say a picture is worth a thousand words!!!
Sensex Technical View :
The markets may have got very dicy and volatile but for Sensex technically the analysis do seem a lil simpler out here. We have been consistently making use of the small/big bear rallies from time to time . Currently after 14200 booking partially its been a waiting time to re-enter with cash on hand. 12500 holds the key for now and 14500 on upside to make technical decisions to turn either side. Below 12500 the drop could very well go to 11500-11900. Volatility would remain very high till either side of the market range is broken and needs to be cautiously traded.
Stocks to watchout for :
Not much of trading picks tonight but a briefly sectoral view.
Private Banks :
For last so many months i have beeen highly critical of the private banking sector stocks like ICICI , Kotak etc etc . It was a big avoid then but if they do crack another 10-15 % from the previous lows then i may definitely go in for a stock specific look as the market consensus is changing to gloomy which could provide opportunities but still waiting for a technical reversal coz the sectoral picks can remain sideways also.
Real Estate Stocks :
Alongwith pvt banks i had mentioned on real estate stocks about an avoid as we dont know technically or fundamentally where can they settle on downside. Excesses of a bull run can correct to 90 % from top which was seen in tech boom. Although there might be pockets of opportunities which i may not be aware of. So look for big cos closer to 80-85 % frm highs as per previous history of markets.
PSU banking:
I continue to remain highly positive on this sector as i have been before on BOI , SBI etc in previous dip to 12500. These stocks are quoting at 30 % + higher then July lows. As not many have corrected the focus goes to smaller PSU banks which also have a high dividend yield and good book values. Best picks - Andhra Bank , Allahabad Bank , IOB , Vijaya , Dena etc.
Sugars :
Continue to remain bullish on the sugar stocks in the medium term. Best picks Renuka , Balrampur Chini, Sakthi Sugars , Andhra Sugars. But with a technical bias the charts do suggest high volatility and frequent dips so one should take exposure only on dips. Other sugar stocks may have potential but needs much more specific study. Even Tea stocks look interesting but options are limited to Mcleod Russel , Harrison Malayalam.
Will be updating stock specific and detailed updates as a little tired tonight. Sunday Thoughts may also be posted soon on sub prime or etc .
4110, thats the level where we need to keep eye on for any short term reversal, and that should be the SL for any positional shorts.now for intraday, nifty sustaining above 4007, can go on to hit 4044-4060-4071however if it is unable to trade above 4007, it will get weak again and can fall to 3930 levels for intraday
Stock markets always provide wonderful opportunities for those investors who work hard and carefully analyse the news and emerging trends. Bear markets always provide safe investment opportunities for long term investors but they need to bear extreme pain before earning those rewards. Those who invested in the last bear market (2001-02) earned exceptional returns in the next 5 years. Current bear market will also test investors’ patience before making Bull Run. If you can able to face short term shocks and can look beyond 2009, one can find bright picture. New sectors and stocks will find favour in the next Bull Run but not outdated sectors like IT.
How to pick stock market investment opportunities?
1. Reactions:
A. Over reaction: Bear Sterns went bankrupt and sold all its holdings without thinking about the fundamentals of the stocks just out of necessity. Orchid Chemicals lost 50% of value in single session and sent panic waves among investors. This fall is no way relevant to stock fundamentals. But very few investors utilised this simple opportunity to get 200% returns in 20 days. Stock touched 340 from 113 in just 20 days. But you rarely get such riskless opportunities in stock markets.
B. Irrelevant reaction: Ranbaxy share lost 60% of its value due to FDA allegations and ban. This is a serious concern for the company and its investors due to drastic fall in prescriptions and serious dent to its image. In such testing times, investors generally tend to stay away from that sector due to dip in overall sentiment. Some stocks in that sector sometimes fall even though there is no impact on their sales. Investors should look for such opportunities. Same thing will also happen on positive side also. Had you remembered the boom in real estate stocks before DLF listing? This is all about psychological aspect of stock market investment.
2. Cyclical sectors: Metals, Real Estate, Sugar, Automotives and other commodity based stocks generally move in cycles. If you are on the positive side of cycle, rewards tend to be very high. If you are a late entrant, it will take 3-4 years to recover your investment. I knew many people who invested in SAIL and Tata Steel when they are trading at 9 and 80 respectively.
3. Fear Psychosis: “There would be no stock market in 1940” – Popular perception among Americans after 1929 Great depression. Current credit crisis is the second most severe economic turmoil after 1929 depression. Fear Psychosis will spread among investors in such times and stocks even good ones will make new lows (unbelievable levels) to provide good investment opportunities for courageous patient investors. Do you have guts, patience and vision?
4. Emerging sectors: There will be huge investments in the coming days in sectors like Wind Energy, Solar Energy, Bio-fuels, Water Management, Waste Management, Nuclear Energy, Animation, Power Solutions, Electric Vehicles, Mobile VAS, Micro irrigation, Plastics, Semiconductors and other niche segments.
Ex. Most of the American stocks are trading at 1-year lows while Solar Energy stock “First Solar” is trading near 1-year high. Americans and Chinese are already taking big steps to take leadership position in these sectors. Lack of visionary leaders is our bad luck. Don’t expect quick returns in these stocks as these companies will take 3-5 years to give exceptional returns.
Read this article by Thomas Friedman in New York Times on American economic crisis.
5. Contra stocks: Rakesh Jhunjhunwala invested in BEML when it was trading at Rs 11 when no one was talking about PSU stocks. Some stocks will not be in lime light at certain point of time. Legendary investor Templeton invested in Japanese stocks when they were reeling under severe financial crisis. But these contra investments will give very good returns once they come into limelight which will generally happen. But this strategy is suitable only for patient long term investors.
6. Natural resources: Mines and oil are precious resources whose reserves will continue to decline while demand will continue to rise. Those companies who hold these resources will command huge valuations in the coming days. After 2020, agricultural lands will also command similar valuations due to increase in demand and lack of availability of sufficient cultivable lands.
7. Buy backs, open offers and acquisitions: Companies aggressively announce these offers in bear markets to benefit from low valuations. Investors should not miss such chances as they generally provide safe investment opportunities to get quick returns. Have you invested in Spice Communications and Zandu Pharma?
A. In America, promoters of Microsoft, HP and Nike announced buybacks to increase their stakes and save their stocks from free falls. These are classic bear market opportunities.
B. Yahoo is now trading at $ 18.9 and may fall to $ 12- $ 15 levels due to weak growth and lack of vision from management. But stock has so much intrinsic value and Microsoft is willing to acquire it by paying around $ 35. There lies investment opportunity even though stock is not good basing on fundamentals. So bad stocks also give good returns.
8. Why this stock is falling? This is the most frequent question that is come to your mind in bear markets. Why good stocks like ICSA, Opto Circuits and SREI Infra etc are falling? Why Punj Lloyd touched 190 just 3 months back? In bear markets, any stock will touch any low level. It almost impossible to predict exact lows in these markets as investors tend to move in herds. Instead of getting panic, one should treat them as investment opportunities.
Ex. Will Larsen and Toubro fall to below 2,000 levels? Impossible basing on fundamentals. My answer is “may be” basing on bear market reactions. Any level is possible in bear markets but those lows are not sustainable. That is crucial for long term investors.
9. Rallies: As I said in my previous posts, short term rallies are the characteristic feature of bear markets. You will get so many investment opportunities if you can satisfy with those 10-15% returns. If American Congress accepts bailout package, another short rally is on the cards.
10. Short sell: Out of exuberance, short term rallies will take some stocks to unreasonable levels which provide short selling opportunities. DLF reached 567 in September first week. Any sage investor will buy that stock at such levels means short it.
Conclusion: One can get so many such investment opportunities if one works hard on research and upcoming news. Large caps will lead the rallies in the initial days of bull market but battered mid caps and small caps will give exceptional returns over long term. When will stock markets make Bull Run? It is impossible to predict at this stage of credit crisis. Just accumulate good stocks with 2 year investment horizon.
Investment ideas:
1. Do you think that cash rich Indian Railways will stop spending due to current economic slow down?
2. Do you think that people stop purchasing medicines for their illnesses?
3. Do you think that Indian Government will not encourage agriculture based industries like food processing?
4. Do you think that nuclear deal will immediately provide opportunities to private sector companies?
5. Do you think that falling sugarcane output will have no impact on sugar stocks?
Please share your investment ideas through comments on the blog.
About IT stocks: IT companies are either masking the crisis or underestimating the severity of American credit crisis. They may be saved from crash temporarily due to this bailout package but one will see the real impact on IT stocks and on Indian economy (due to IT job losses) in the next 3-4 months when barrack Obama takes aggressive steps on outsourcing (out of necessity). Niche IT companies will be saved due to their positioning and vision. Big IT companies need to take aggressive cost cutting measures to save their investors but they are still waiting while things are moving from bad to worse.
About PSU stocks: I generally stay away from PSU stocks. I missed investment opportunities in good companies like BHEL and SBI due to this policy. But my faith is vindicated by Gujarat Government by its 30% profit sharing policy. Gujarat Government is planning to expand this policy to Gujarat based private companies like Reliance etc. What will happen if all state Governments opt for similar steps? All Indian companies will need to share 30% of their profit before taxes with Government. Who is advising Narendra Modi (if he is not a mad man) to take such mad decisions? Will they really use it for poverty eradication?
Analysis of portfolios of legends:
Outlook Profit magazine published portfolios of legends like Rakesh Jhunjhunwala, Mankekar and Nemish Shah Etc. I am surprised by their stock selection. If they think that those are the best stocks in the stock market, I may hesitate to call them as legends. There are some very good stock picks like Pantaloon India, CRISIL, Lupin, Ion Exchange and Praj Industries etc. There are so many bad selections in their portfolio. These bad stocks will also give very good returns as they are long term investors (3-5 year duration).
Ex: Rakesh Jhunjhunwala portfolio: He always says that scale and market leadership are important. How can he justify investments in Geojit Financial services, Karur Vysya Bank, Nagarjuna Constructions, Dwarikesh Sugars, Kajaria Ceramics, Mid Day and Viceroy Hotels etc? If Rakesh is thinking that these stocks are the best ones in their sectors (scale and leadership), it is very difficult to understand.
My rating on Rakesh Jhunjhunwala portfolio: 6/10.
This is my frank opinion. There are some serious differences between his words and actions (investments). Please share your opinion, if you have analysed his portfolio.
These legends successfully picked the emerging trends of the last decade but miserably failed to find the next emerging trends like alternate energy etc (except Ion Exchange India). I don’t know their exact stock holdings in various companies. I am commenting according to the portfolios published in the Outlook Profit magazine. Another interesting aspect of their portfolios is their belief in mid and small caps. Why? Large caps generally give safe and reasonable returns but will rarely make you a millionaire. Their way to become crorepati is “pick an emerging company with strong management, buy a large stake and give the management sufficient time”. Are you following the similar strategy?
My request to blog readers: Many investors just blindly follow these legends. You can also make money if you can able to invest with such a long duration. Believe in your research. Believe in your convictions. One thing I learnt from these legends is “believe in your stocks and invest for long term”. If Ashwini Gujral, Rajat Bose, P.N. Vijay and Ambareesh Baliga (Other CNBC and NDTV Profit crap) etc are your gurus, only God will save you.
Note: Special thanks to Shankar Sharma of First Source Solutions for successfully analysing the impact of the American Credit Crisis in an interview for a business magazine (4 months back). I learnt a lot from that interview. Thank you, Sir.
Verdict: Indians stock markets got some oxygen from positive news like bailout package, interest rate cuts by many central banks and passage of nuclear bill by House of Representatives. Outflow of foreign funds will be slowed down at least in short term. If American Congress rejects bailout package (which is an unlikely scenario), what will happen? I don’t want to think about such situation even in my wild dreams.
Latest statistics: 50-80% of American start-ups will be killed by current credit crisis. More than 300 American banks are on the edge of bankruptcy.
Nifty :: An Engulfing bearish candle pattern occurred in weekly chart. It may be last engulfing in down trend..For conformation next weekly candle close above last candle low. All world indices in intraday chart given bullish divergence and that’s why our strategy for 29th Sep. Buy in deep sell at high.. Watch strong support zone 3900 to 3863.. Resistance for up move at 4048/4085/4115/4175.. Momentum turns up only above 4175 and turns strong only above 4303.. Supports at 3929/3900/3888/3863/3840..
The Indian market opened on negative note and saw sharp cut at later session and closed in red zone .For coming session if nifty trade below 3963 it can test 3800 levels and trading above 4022 it can test 4074-4121 levels .
Last week nifty lost 6.12% as global uncertainty and selling from FII closed in red zone .For the coming session if nifty trade below 3953 it can test 3800 and testing third time bottom is not good technical sign it will make new low. If nifty close above 4087 it can test 4120- 4144 levels closing below 3977 it will test 3869-3811 levels. Market will react more on global news
we said many times that there is no strength in market & continuously market went to fall. We got so many mails that India is doing shine & you are giving bearish target. We are continuously giving the warning but again & again Indian investors ignored our advice & today they all got the result. If bailout comes late in America or some problems happen then market will crash in short term only. But if bailout happens then market will give only 2 weeks Bull Run, so when Bull Run comes please unwind your long positions because according to us Nifty Spot will not cross the level of 4774.
On the Monday if Nifty Future crosses the level of 4013 then it can go up to the level of 4081, 4165 to 4304 but if Nifty Future trade below the level of 4013 ten it can go below the level of 3942, 3886 to 3747.
Happy & Safe Trading
Daily Target:-
1) Buy NF Above @ 4013 Target 4081-4165 to 4304.
2) Buy ACC Above @ 615 Target 624-631 to 651.
3) Buy BPCL Above @ 340 Target 345-355 to 375.
4) Buy COLGATE Above @ 407 Target 416-425 to 447.
5) Buy L&T Above @ 2485 target 2544-2611 to 2725.
6) Buy HLL Above @ 254 Target 257-260 to 269.
7) Buy GAIL Above @ 404 Target 413-422 to 444.
8) Buy NTPC Above @ 175 Target 178-182 to 188.
9) Buy ROLTA Above @ 265 target 273-281 to 295.
10) Buy ONGC Above @ 1039 Target 1060-1080 to 1117.
11) Sell MRPL Below @ 51 Target 50-48 to 45.
12) Sell HEROHONDA Below @ 847 Target 842-832 to 813.
13) Sell GUJAMBUJA Below @ 82 Target 81-79 to 75.
14) Sell Dr.REDDY Below @ 514 Target 512-507 to 499.
15) Sell CORPBANK Below @ 271 Target 269-265 to 257.
Note--- If market open green then buy our buying tips and If market open red then sell our sell tips.
Reliance Futures weekly chart shows that in absolute terms Reliance is below its July lows but a wee bit higher up within the Bollinger band. The lower end is at 1859 and if we close there - yes you got it - we're screwed both ways!
Nifty Futures weekly chart shows that we were never able to pop up and close above the 20 period average (yellow line, red spots). Also, this weeks close is a lowest close in 12 weeks and 20 points away from the July close at 3979.Note the relative position of the July close and the close of the last bar - in absolute terms we are almost at the same level (if you neglect the 20 point difference), but in relative terms we are higher up within the Bollinger band. Things can get very bad if in the coming days we close near to the lower band - that would be a new low both in absolute and relative terms. In short, right now we are absolutely screwed, but relatively a bit ok !
Following is the list of stocks having a P/E less than 3.5. For people who don’t know what P/E is about I recommend them to check it out here.
But at the same time it should be remembered that P/E is not only a single factor that should be checked or considered while purchasing a stock, there are other factors invloved too such as the YoY profits of the company, EPS, etc..
1. Ansal Housing Current P/E 2.75
2. Eastern Silk Current P/E 2.79
3. First Leasing Eastern Silk Current P/E 2.80
4. Guj Alkali Current P/E 2.80
5. Deccan Cements Current P/E 2.81
6. FCS Software Current P/E 2.82
7. Decolight Ceram Current P/E 2.82
8. Amar Remedies Current P/E 2.90
9. Jayaswal Neco Current P/E 2.91
10. Asian Granito Current P/E 2.94
11. Bongaigaon Ref Current P/E 2.95
12. Micro Tech Current P/E 2.95
13. Crew B.O.S. Current P/E 2.97
14. Seshasayee Pape Current P/E 2.98
15. Satvahana Ispat Current P/E 3.01
16. JK Cement Current P/E 3.02
17. Impex FerroTech Current P/E 3.03
18. Shree Precoated Current P/E 3.04
19. Videocon Indust Current P/E 3.05
20. MM Forgings Current P/E 3.06
21. IFCI Current P/E 3.07
22. Su-Raj Diamonds Current P/E 3.08
23. SKM Egg Product Current P/E 3.09
24. Murudeshwar Cer Current P/E 3.13
25. India Glycols Current P/E 3.14
26. KRBL Current P/E 3.15
27. Alpa Laboratori Current P/E 3.15
28. Sirpur Paper Current P/E 3.15
29. Dena Bank Current P/E 3.16
30. Ambika Cotton Current P/E 3.20
31. PAE Current P/E 3.22
32. Nagreeka Export Current P/E 3.23
33. Technocraft Ind Current P/E 3.23
34. Vivimed Labs Current P/E 3.24
35. Insecticides In Current P/E 3.24
36. Manugraph Ind Current P/E 3.25
37. Nilkamal Current P/E 3.27
38. NCL Industries Current P/E 3.27
39. Alok Industries Current P/E 3.29
40. Uttam Galva Current P/E 3.29
41. Gallantt Metal Current P/E 3.31
42. JBF Industries Current P/E 3.31
43. Allahabad Bank Current P/E 3.32
44. Kakatiya Cement Current P/E 3.35
43. Zylog Systems Current P/E 3.36
44. GE Shipping Current P/E 3.37
45. Goa Carbon Current P/E 3.40
46. Tips Industries Current P/E 3.45
47. Lloyd Electric Current P/E 3.45
48. OCL India Current P/E 3.46
49. West Coast Current P/E 3.48
50. HDIL Current P/E 3.48
This post is not for short term players.
There is extreme pessimism seen in all players in our market last week.
People are now talking of breaking 3800 and even talking of lower circuit in next couple days.
Now I feel that there is a big chance of substancial rally or bounce in our markets from current levels.
Why??
1) nifty in daily charts shows positive divergence in 5 day rsi and roc charts.
2) Put-call ratio is at 1.00 so further extreme downside is not possible.
3) Open interest in nifty futures is at only 2.8 cr which very safe. For extreme downside to occur it shoul be more then 3.5 cr.
4) FII open interest in index futures is at 4 lacs contracts which is lowest in last so many years( so FII are not positional shorts)
5) Positive divergence is seen in all US market charts so possibility of substancial rally in world markets is very high. (http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987&cmd=show&disp=o)
6) After touching 3799 nifty rose by 5oo points(12%) in just 2 days with very good volumes. And in last 5 days of trading nifty had corrected 65% only with low volumes. Generally correction takes longer time. So it appears that primary trend is turning up.
7) In weekly charts sensex and nifty shows positive divergence.
1. Infosys failed to cross its 50 DMA and as a result hit the level towards Rs 1450 during the week.
2. If 1449 level is breached than stock can head towards 1376-1325-1300 level.
3. Infosys has to overcome resistance level which is at 1588-1675 levels.
4. Long term supports for stocks are visible at Rs 1210-1120 levels.
1. SBI faces strong resistance at the level of Rs 1601.
2. Presently SBI has gone in downtrend and thus can target 1400 level where it enjoys strong support.
3. Trend of the stock is negative as it has breached the levels of its 50-day moving average as well as the medium-term trend line.
4. If 1399 level is broken than State Bank of India can target the levels of Rs 1335-1300-1250 level.
1. Present trend of Tata steel is weak and can thus target the lower level of Rs 441 and if 439 level is broken than it can head for Rs 400-389-369 levels.
2. TISCO enjoys a support with in a band of Rs 441 and Rs 499.
3. TISCO enjoys resistance at 501-541 levels and one can only go long this stock if it starts trading above the level of rs 521 as till than the trend in the stock is weak.
1. As a fresh strategy a trader can hold Reliance till the time the level of 1899 is not broken as charts indicate a short term positive trend in the stock. One can safely go short if 1899 level is broken as in that scenario the stock will target the levels of Rs 1765-1749-1701 levels.
2. However a word of caution for the stock is that medium term trend for stock remains negative and can thus
ICICIBank: Option Straddle & StrangleCMP Rs. 560
(Expected Range in this FnO 490-660)ICICIBank Option StranglePA 540 Rs. 33
PA 580 Rs. 37
Total cost: Rs. 70
ICICIBank Option Straddle
CA 560 Rs. 47
PA 560 Rs. 44
Total Cost of Straddle: Rs. 91
Tata Steel Option Straddle & Strangle
CMP Rs. 462(Expected Range in this FnO: 430 - 520)
Strangle
CA 500 Rs. 13.75
PA 440 Rs. 14.5
Are bad times here to stay in 2008?
3more months to end the year and Global financial crisis seeing no end we have September 30, Tuesday, which is the deadline for hedge fund investors to put in requests to get their money back by year’s end 90day notice period. The redemption requests have been pouring into hedge funds well ahead of the Sept. 30 deadline. More pressure can be seen in the last few days, hedge funds, control nearly $2 trillion in assets and indication are that 10% of w
ithdrawal can be seen.Read more here.... Look Out for Bloody Tuesday
Will the $700billion package save the crisis?
This can be a temporary relief and never a permanent solution many times I get a feeling if U.S has turned into socialist and using good money to buy bad asset to save mismanaged corporate, instead of allowing them to die natural death. I have attached a file which says 1,479 FDIC member banks are at risk of failure with total assets of $2.4 trillion. So we are no way near to solution. , the sixth-largest U.S. bank by assets, hunts for a merger partner – reports. The bank suffered a record $9.11 billion loss in the second quarter.Read more here...Final bailout
Will India face the same problem?
India has a better system of banking and with majority of banks being PSU where Govt hold more than 50% stake we don’t have a problem. India is a better regulated market in terms of Banking and NBFC as RBI norms are strict and regular monitoring and stricter NPA norms are followed, recently also RBI warned KOTAKBANK to reduce equity market exposure as it exceeded the limits prescribed.
Special mention:
Ex-RBI Governor Y.V.Reddy was very smart enough to check asset bubble by hiking interest rate and reducing liquidity into the system and it did effect growth but he was strong to say I would compromise growth to control inflation. And warned Govt that real crude prices were not reflected in inflation so first correct that in response to FM statement to cut interest rate. When Fed was cutting rates he stood his way with higher rate and tighter liquidity.
Recap: Market summary for April 7th 2008-A.K.Prabhakar (for use of ANANDRATHI)
Market always discounts bad & good news at faster pace maybe a layman can be laggard, Inflation worry was there for almost 1years and RBI governor refused to bow down to political pressure to cut interest rate when FM wanted to reduce interest rate to improve growth, the same man (FM) now says we compromise growth for inflation. And the mess which has been created by political bosses for there whims and fancy has impacted us now. Good thing about political stupidity is they can’t face midterm election now and hard fight over inflation will happen. The art of living lies not in eliminating but in growing with troubles, growth doesn’t come without inflation but we need some visionary moves to control inflation and stimulate growth at the same time. If someone were to watch the moves of China they are accumulating oil wealth for long time and the reforms are faster and timely compared with any countries in the world. As Sitaram Yechury pointed out after visiting china, China is putting there hand on left and turning (doing everything) Right’.
Remember: The bigger the boom generated by manipulation of money and credit, the bigger the ultimate bust.
Read more here....Economy in Trouble, No Matter Bailout Outcome
Opinion: Bad times never last, but time is the best cure for any problem maybe by February or March 2009 market can show a bottom and enter a consolidated phase before an up move and I doubt a new high for next 3years but come 2009 good time for stock market starts and wise investment would give best returns.
A.K.Prabhakar
Lehman Brothers Holdings Inc
The 158-year-old firm was founded by brothers Henry, Emanuel and Mayer Lehman, Jewish immigrants to the US from Germany, in 1850. Henry set up a general store in Alabama in 1844 and was later joined by his brothers. In 1850 they set up the merchant bank in New York after having made money in railway bonds. Lehman Bros, which till June 2008 had not reported a quarterly loss even once, had earlier survived many an economic crises, like railroad bankruptcies of the 1900s, the Great Depression in the 1930s, and the collapse of Long-Term Capital Management in the 1990s.
Scrip: - Godavari Power and Ispat Ltd
CMP: - 143
BSE Code: - 532734
52 week H/L: - 376.50 - 141.00
Market cap: - 401.83
Summary -
Initially it produced only sponge Iron , but then over a period of time it diversified into value added products like billets, HB wires and captive power plant run on waste gases emanated from its own kilns. It commenced with an annual production of 105000 tpa of sponge Iron and since then has increased its capacity five fold to become one of the largest producer of sponge Iron in India. Billet and HB wires are produced through its wholly owned subsidiaries.
Company has signed an MOU with chattisgarh government for an investment of 1570 crores for its expansion plans . Company is into manufacturing of sponge iron , steel billets , ferro alloys , captive power generation , wires rods and now about getting approval for mining is going to be a fully integrated manufacturer of steel . The company is all set to get approval for aridongri mine in chattisgarh .A consortium led by GPIL has been allocated four coal blocks at Nakia and Madanpur in Chhattisgarh with 243 million tonnes of total reserves, of which, GPIL’s share is 63 million tonnes . Complany is planning to increase its power capacity 1000 MW
Key Financials: -
A mere maket cap of 401 crores seems much lesser for the company and GPIL seems strongly undervalued . Company clocked a sales revenue of 950 crores resulting in a n eps of 36.50 rs. Managment is targeting at a sales of 1400 crores for FY09 . At the CMP of Rs 143, the stock is trading at 4.39 its FY09 earnings and 2.7x FY10E EPS of Rs 33.84. If company gets nod for mining further EPS of 25 rs can be added to FY 10 earnings .
Further more adding the value of new investments worth 1570 crores and power expansion plans which is about to happen in next four years . Stock has very bright prospects and will outperform the markets in a big way .
WEEKLY REPORT CARD
(29TH SEP TO 3RD OCT 2008)
BY megha investments
Hello friends I know u all are not all right at this week from the start of the week federal reserve has not taken any single step toward rescue plan of $ 700 billion and this is ultimately bed for market and us economy.
As last week told that short-term bottom has been formed but our gut filling and experience suggest that this rally will not be strong and finally bulls lost their command from Monday itself.
Friends I would like to talk on the another interesting topic of stock market-if u find anything wrong or would like to tell us then please do send mail so we can deliver more good results mail us at smsjani@yahoo.com.
There are three types of market –
Bulish market
Bearish market
Sideway or trending market
Most of you including big bull----------- likes only like bull market. Trader make good money in bull market but They think they lost money in bear market but they lost more money in trending market .we personally like both market bull and bear market we are not like ----- or ----- that they are either bull or bear we are both bull and bear we look only to profit we don’t see from where the profit is coming either by shorts or long we need profit.
Friends most people lost their wealth in trending market and they misunderstood that they have lost their wealth in bearish trend. Friendly speaking wealth can be made in bull market(however we don’t agree) and trending market will kill u –so the best strategy for trader is to avoid trading in trending market like current. one day is plus market and second day it become reverse without any big reason.
We have seen mostly that trader trade with overconfidence of technical analyst and they made money in four stock and in fifth stock analyst go wrong and lost their all earnings in current market –is it fault of analyst or trader? We personally be live that fault is of trader as he trades in overconfidence and take high risk sometimes above his thinking and lost entire amount what he has made in last four stock and then he will call and tell to analyst that he has made huge loss due to his analysis.
If u wants to earn more and preserve ur capital and profit and wants to minimize ur loss then I am suggest one mathematical formula –which we are strictly following by this way when u put ur trade u can sleep vary well and earn good money.
Suppose analyst recommends to buy reliance at 2025 and he gives stop loss of 2000 then what generally u do is that u will buy 50,100,200 shares what ever the quantity in ur mind comes or u choose randomly. But we do some calculation as below
We first calculate loss per share if we buy shares at 2025 and stop loss is 2000 then our loss per share will be 25 ok.
Then second think that if this trades goes wrong then what amount I want to loose??????? Some one says 500 then divide 500 by 25 rupees as this is loss per share. The quantity comes 20 shares so u need to buy 20 shares if stop loss get triggered then u will loose only 500 rupees that is what u are ready to afford and u have put some little amount from ur capital or profit so u will have other money to trade .
Suppose u have buy 50 shares and stop loss get triggered then ur loss will be 1250 so that’s the difference. Suppose u have earn 2000 rupees by earning 500-500 in 4 trades and this single trades take 1250 that is 62.5% of ur profit and u will blame analyst but friends look how much percent of risk u have taken from ur profit or capital ????????
Analyst is the person who can suggest the scrip with target and stop loss but will he tell ur risk capacity??????????
No u have to calculate ur risk capacity and then trade if u follow this hard core then believe me ur loss will be vary mini and will make money in market we personally follow this formula while trading or investing so we keep our loss in mind and then trade and invest.
If u wants more clarifications then u can call on 09601394235.
DERAVATIVES ANALYSIS-
Future and options segments put-call ratios is below 1 that is 0.67 that is in highly oversold zone –if rescue plan approve then bears will commit suicide.
Fii were buying 3800 put options and selling 4000-4100-4200 call options that suggest that fii believes that we will test 3800 first not 4200 .
NIFTY FUTURE-
In the last week report we have given first resistance at 4336 and what happen from 4325 it just crashed to 4073 which was our last support if u have short nifty at 4300 and cover at 4073 then u would have earn 227 per nifty and in one lot u could have made 11350 at free of cost what else u wants in life?????????????????????????????????????
Friends two most resistance at 4073-4130 above that it has strong resistance at 4250 as at this levels there is trend-line and short term DEMA if it close above then it can fire to 4378.
While support at 3812 and 3775 from this levels again nifty can bounce –otherwise head and shoulder pattern target is intact at 3670.
On the weekly chart we expect index will be in range any where between 3812 to 4157.
If bulls want to take control then they need to keep nifty fu above 4157 as long as they can keep the index above 4157 they will win and if bears wants to keep their grip then they need to keep index below 3812 if in intra day index goes below 3812 and close above then bears them self will try to cover their shorts and will try to build up long.
SENSEX-two resistance at 13632 and 14511
While support at 12514 and their after head and shoulders support at 11875.
On the weekly charts we expect index will be in range any where between 12495 to 13662.
If bulls wants to take control then they need to keep index above 13662 as long as they can keep the index above 13662 they will win if bears wants to keep the control then they need to keep index below 12495.
CONTERIAN PORTFOLIO –ONLY FOR 3 YEARS INVESTMENTS FRAME.
CONTERIAN PORTFOLIO
Rising inflation has put pressure on three sectors which are highly sensitive realty, auto, and banking stock –we have carried out fundamental and technically analysis and recommending stock which are out of flavors of investor and hence attract good business, long term valuation, with good management.
We believe that rising inflation picture will come off in four five month period and after that this sector will again attract to investor so batter for us that buy in decline for long term .
WEALTH CREATION MANTRA-invest when all are selling and exit when all are buying.
OUR PORTFOLIO PICK
SCRIP NAME TARGET
AUTO SECTOR
Tata motors 927
Force motors 753
Escorts 132
Hi-tech gears 138
Clutch auto 103
Rico auto 61
REALTY SECTOR
Ivr prime 360
Ansal infra 300
Dlf 945
Unitech 475
Sobha 720
Hdil 811
BANKING AND FINANCE
Sbi 2109
Pnb 604
Canarabank 278
Oriental bank 251
Icici 1090
Andhra 106
Allahbad bank 110
Idbi 147
Karnatak bank 225
Fedral bank 296
Cholamandlam 293
Diwan housing 186
This investment is for 3 years.
We suggest deploy 25 % in 6-7% decline in index.
Investment pattern-
High Risk investor -auto 10%
-realty 50%
-banking 40%
Low risk investor -auto 10%
-realty 30%
-banking 60%
| Below 12934 it may touch 12822,12676… Above 13316 it may touch 13431,13548,13719.. | ||||||
| Below 3925 it may touch 3856,3814…Above 4070 it may touch 4109,4183,4236…. | ||||||
| BSE Index Prediction for Week (29.09.08 To 03.10.08) :- | ||||||
| Index | Closing Price | Support | Stoploss | Target 1 | Target 2 | Target 3 |
| BSE | 13102.18 | 12934 | 12822 | 13316 | 13431 | 13548 |
| Nifty Future's Prediction for Week (29.09.08 To 03.10.08):- | ||||||
| Index | Closing Price | Support | Stoploss | Target 1 | Target 2 | Target 3 |
| Nifty | 3998.15 | 3925 | 3856 | 4070 | 4109 | 4183 |
| Nifty Future's Hot Scripts for Week (29.09.08 To 03.10.08) :- | ||||||
| Sr.No. | Company Name | Closing Price | Support | Stoploss | Target 1 | Target 2 |
| 1 | PFC | 122.85 | 120 | 117 | 129 | 136 |
| 2 | Gail | 403.50 | 395 | 390 | 411 | 419 |
| 3 | ITC | 191.85 | 189 | 186 | 194 | 198 |
| 4 | ACC | 599.65 | 592 | 585 | 609 | 621 |
| 5 | Lupin | 712.55 | 704 | 697 | 722 | 734 |
| Weekly Trading's Hot Scripts for Week (29.09.08 To 03.10.08) :- | ||||||
| Sr.No. | Company Name | Closing Price | Support | Stoploss | Target 1 | Target 2 |
| 1 | Ind.Hotel | 69.55 | 68 | 66 | 73 | 77 |
| 2 | S.Kumar | 53.45 | 52 | 50 | 58 | 63 |
| 3 | R Power | 161.20 | 158 | 156 | 167 | 175 |
| 4 | Union Bank | 144.55 | 142 | 140 | 149 | 155 |
| 5 | Bank Of India | 277.75 | 274 | 270 | 287 | 294 |
| For Delivery Based Investment Hot Midcaps/Smallcaps for Week (29.09.08 To 03.10.08) :- | ||||||
| Sr.No. | Company Name | BSE Code | Closing Price | Stoploss | Target 1 | Target 2 |
| 1 | Harrison | 500467 | 91.50 | 85.00 | 101 | 110 |
| 2 | Ganesh Forging | 532643 | 21.20 | 19.00 | 25 | 29 |
| 3 | Sita Shree Food | 532961 | 13.65 | 12.00 | 16 | 18 |
| 4 | SPIC | 590080 | 22.35 | 20.00 | 24 | 26 |
| 5 | Nexxot Info | 532045 | 35.75 | 33.00 | 38 | 40 |
| 6 | Emami | 531162 | 284.50 | 273.00 | 290 | 296 |
| 7 | ABL Bio | 526955 | 79.40 | 75.00 | 84 | 88 |
| 8 | Aptech | 532475 | 148.70 | 140.00 | 156 | 162 |
| 9 | Surya Pharma | 532516 | 80.35 | 76.00 | 86 | 90 |
| 10 | Shri Bajarang | 526981 | 31.90 | 29.00 | 34 | 38 |
| 11 | Glenmark | 532296 | 570.40 | 558.00 | 581 | 592 |
| 12 | Cambridge | 532616 | 44.60 | 40.00 | 47 | 51 |
| 13 | XL Tele | 532788 | 173.00 | 164.00 | 180 | 187 |
| 14 | Guj NRE | 512579 | 58.95 | 54.00 | 64 | 67 |
| 15 | Hotel Leela | 500193 | 29.00 | 27.00 | 32 | 35 |
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