Finally Sensex breaks below the 12300-12500 level and is well set towards the zone of 11200/11500/11900. Sensex is in the panic selling zone and should soon see support coming around the lower end of the channel at 11200 -11500 zone . The levels are important on closing basis for near term. Although it is very difficult to spot an exact short term bottom in current conditions but technically would expect it to be between 11200-11900 from where markets could bounce back in a bear rally which can be to the extent of 20-25% from lows technically. This is a technical view only and doesnt consider other factors !
Even if technically one expects a fall to 9500-9700 Sensex needs a bear rally to an extent of 20 % from lows. The exact levels for the bear rally can be discussed once we can confirm a bottom in the current zone.
Market strategy :
Since 16k-17k broke down on Sensex the view was consistent to exit and wait for 14k-12.5k zones for investment. Again after the accumulation the view was to exit at 15k + .
Yet again the view has been consistent to buy in stock specific in small lots from 13k-11.2k. Although this would be easy for people who have been following the views strictly and for others the pain in markets could get unbearable as of now.
This is a time only for investors who have patience and do pick up good quality stocks with due research done. As it happens in euphoria stocks can stay at highly overvalued levels for quite some time similarly in pessimism and panics lot of stocks can stay much lower then fair value. So best way to go is buy in small lots and go staggered as its very difficult to spot an exact bottom in panics. 11200-12200 is a good zone to buy stock specific and look to book them partially on profits of 15-25 % to keep a good cash level . One should not commit more then 50 % at 11900-13k and add only at 11200-11500 if it comes or wait . For people those who are stuck can commit fresh money at 11500 or roundabouts only with a view to exit on 25 % gains and lock that money out as part of discipline and consider it fresh money !!! .
For traders this may not be the best time as volatility will be very high and one needs to play with strict stops and agility.
Dalal Street magazine published a useful article on India’s fastest growing Companies. It picked 25 Companies in each of 3 categories (large caps, mid caps and small caps) basing on their sales growth over the past 5 years. These companies constantly reported increase in sales from FY03 to FY08. But many of these companies (especially real estate players) may not maintain same sales growth in FY09. It is not ethical to write about all these companies as the issue is still on stands. But I am listing some of my favourite companies (along with rank) for reference. Please do your own research before investing in them.
India’s fastest growing Companies:
A. Large Companies (sales of more than Rs 2,500 crore):
1. Videocon Industries: Dhoots are making strategic moves. Company paid higher advanced tax in September. When will this sleeping giant wake up in stock markets?
2. Bharti Airtel: Consistent performance but don't expect fireworks.
8. Sesa Goa: Slow down in China is a bad news over short term.
9. Thermax: Good performer.
15. HDFC Bank
20. NMDC Limited
B. Medium Companies (Sales of Rs 600 crore- 2,500 crore): Many of these companies are operating in niche space and strategically diversifying into emerging sectors.
5. ICSA India Limited: Steep correction due to FII selling.
9. Shriram EPC Limited: very good results.
12. Electrotherm: Largest electric vehicle maker.
13. Rohit Ferro-tech:
23. Subhash Projects and Management: Good long term play.
C. Small Companies (Sales less than Rs 600 crore): Many of these small caps have the ability to become mid caps and large caps over the next 3-5 years. Don’t give too much importance to recent price correction. These shares are strictly meant for patient long term investors.
14. MIC Electronics
15. Tanla Solutions
20. Geodesic Information
21. Bartronics India
22. OnMobile Global
Note: These companies were selected by the magazine basing on their sales growth over the past 5 years. But past performance is not a guarantee for future performance. Rising costs, global meltdown and real estate crisis may affect the performance of some of the companies in the list. But it provides good insights over the performance of some of the best Indian companies.
Request to readers: Some readers are mailing me with ordinary requests like “what is stock market?” and innocent questions like “how to invest in stock markets?” etc. It is difficult to answer to these vague questions through blog or mail.
Significant news:
1. RBI cut CRR by 50 basis points to increase liquidity in the system. Although RBI stated it as a temporary measure, it is an aggressive timely measure by Reserve Bank of India. Interest rate sensitive stocks will react positively to this news.
2. SEBI removed restrictions on P-notes. This will have significant impact on the FII investments. Indian markets may react positively to these liquidity and sentiment boosting decisions. These steps may take BSE Sensex to above 13,000 levels if global conditions will not affect Indian markets. But global economic situation is gradually deteriorating from bad to worse.
Must read: Wonderful article on legendary acts of Warren Buffett and J.P. Morgan during extreme financial crisis. Buffett will be remembered forever for his daring acts like Morgan.
Financial note: Derivatives were invented as hedging instruments but many traders are using them as investment vehicles especially by investment banks which led to their downfall. According to some rumors, most of the hedge funds are also in trouble. If that is true, we will see big shocks in global stock markets. Global banks are trying hard to overcome this crisis by infusing liquidity into system (unlike in 1929). Will they succeed?
Image courtesy: Bloomberg.
Worrying sign: Credit crisis is gradually spreading to European markets. Biggest banks of Belgium and Germany were rescued by Governments. You will hear more bankruptcy news from England and Spain banks in the coming days. Unless all major economies and central banks take aggressive coordinated measures, this credit crisis will take the economies of United States and Europe into deep depression. If China will decide to sell its foreign reserves, American economy will go into depression within 1 week of its selloff. That’s the severity of this crisis. You may never experience this range of economic crisis in your life time. After the current turmoil, some positive reforms will happen in the global economy which augur well for long term financial growth.
Effect on India: Indian IT companies will be severely tested in the coming days. According to current situation, Europe will go into deep crisis within 1-2 months. Bailout measures by American and European Governments are not yielding desired results. So diversification by export companies will not help them in these times due to global crisis.
Advice to long term investors: If you are a long term investor, current crisis will test your patience levels. Please do not take any panic decisions. Things will return to normal after the current turmoil. You will get exceptional returns if you can able to invest in stock markets for 24-30 months.
Nifty :: Once again an extreme bearish day .. Huge sell of in downward momentum.. Now for 7th Oct. Forget about international market, Forgets about news.. Just watch chipper & hard hitter stock as value buying for short term to mid term prospective.. Watch support 3554 below it next strong support 3480 our mid term long bearish channel bottom. Below it next support 3416 and strong support zone 3320 to 3230 and after it finial and strong last bottom support 3192/3054.. Resistance for up move 3672/3710/3815/3886.. Please avoid selling at lower level or at support level, all daily and intraday indicator are in highly oversold zone..
U.S economy problems creating global stock market crash
It was a scary crash in indian market yesterday and even today the global markets are very bearish and moreover
The Dow Jones industrial fell 369.88 points to 9,955.5.After trading as low as 9,525 intraday and on track for its worst-ever point decline, the Dow clawed back to close at 9,955.50, its first close below 10,000 since 2004.The sell-off came despite the $700 billion U.S. government bailout package and this huge economic slowdown in U.S has resulted in global stock market melt down.Be carefull in indian stock market as for today, nifty has great support now at 3540 and if this is not broken, it will move up to test its first resistance at 3625 and above this it will move towards 3685-3710 and If nifty breaks all important support of 3540, then one more strong support exisits at 3465 which will not be broken for sure. So, a very important and interesting day of trading today.Can india de-couple from world market today !!
Stock watch for the day:
Here is something interesting - Nifty (top) is just above its March - April 2007 lows, while Sensex (bottom) is below ! Next support level for the Sensex is around 11300; while it is 3300 for the Nifty.
India’s fastest growing Companies:
A. Large Companies (sales of more than Rs 2,500 crore):
1. Videocon Industries: Dhoots are making strategic moves. Company paid higher advanced tax in September. When will this sleeping giant wake up in stock markets?
2. Bharti Airtel: Consistent performance but don't expect fireworks.
8. Sesa Goa: Slow down in China is a bad news over short term.
9. Thermax: Good performer.
15. HDFC Bank
20. NMDC Limited
B. Medium Companies (Sales of Rs 600 crore- 2,500 crore): Many of these companies are operating in niche space and strategically diversifying into emerging sectors.
5. ICSA India Limited: Steep correction due to FII selling.
9. Shriram EPC Limited: very good results.
12. Electrotherm: Largest electric vehicle maker.
13. Rohit Ferro-tech:
23. Subhash Projects and Management: Good long term play.
C. Small Companies (Sales less than Rs 600 crore): Many of these small caps have the ability to become mid caps and large caps over the next 3-5 years. Don’t give too much importance to recent price correction. These shares are strictly meant for patient long term investors.
14. MIC Electronics
15. Tanla Solutions
20. Geodesic Information
21. Bartronics India
22. OnMobile Global
Note: These companies were selected by the magazine basing on their sales growth over the past 5 years. But past performance is not a guarantee for future performance. Rising costs, global meltdown and real estate crisis may affect the performance of some of the companies in the list. But it provides good insights over the performance of some of the best Indian companies.
Request to readers: Some readers are mailing me with ordinary requests like “what is stock market?” and innocent questions like “how to invest in stock markets?” etc. It is difficult to answer to these vague questions through blog or mail.
Significant news:
1. RBI cut CRR by 50 basis points to increase liquidity in the system. Although RBI stated it as a temporary measure, it is an aggressive timely measure by Reserve Bank of India. Interest rate sensitive stocks will react positively to this news.
2. SEBI removed restrictions on P-notes. This will have significant impact on the FII investments. Indian markets may react positively to these liquidity and sentiment boosting decisions. These steps may take BSE Sensex to above 13,000 levels if global conditions will not affect Indian markets. But global economic situation is gradually deteriorating from bad to worse.
Must read: Wonderful article on legendary acts of Warren Buffett and J.P. Morgan during extreme financial crisis. Buffett will be remembered forever for his daring acts like Morgan.
Financial note: Derivatives were invented as hedging instruments but many traders are using them as investment vehicles especially by investment banks which led to their downfall. According to some rumors, most of the hedge funds are also in trouble. If that is true, we will see big shocks in global stock markets. Global banks are trying hard to overcome this crisis by infusing liquidity into system (unlike in 1929). Will they succeed?
Image courtesy: Bloomberg.
Worrying sign: Credit crisis is gradually spreading to European markets. Biggest banks of Belgium and Germany were rescued by Governments. You will hear more bankruptcy news from England and Spain banks in the coming days. Unless all major economies and central banks take aggressive coordinated measures, this credit crisis will take the economies of United States and Europe into deep depression. If China will decide to sell its foreign reserves, American economy will go into depression within 1 week of its selloff. That’s the severity of this crisis. You may never experience this range of economic crisis in your life time. After the current turmoil, some positive reforms will happen in the global economy which augur well for long term financial growth.
Effect on India: Indian IT companies will be severely tested in the coming days. According to current situation, Europe will go into deep crisis within 1-2 months. Bailout measures by American and European Governments are not yielding desired results. So diversification by export companies will not help them in these times due to global crisis.
Advice to long term investors: If you are a long term investor, current crisis will test your patience levels. Please do not take any panic decisions. Things will return to normal after the current turmoil. You will get exceptional returns if you can able to invest in stock markets for 24-30 months.
Nifty :: Once again an extreme bearish day .. Huge sell of in downward momentum.. Now for 7th Oct. Forget about international market, Forgets about news.. Just watch chipper & hard hitter stock as value buying for short term to mid term prospective.. Watch support 3554 below it next strong support 3480 our mid term long bearish channel bottom. Below it next support 3416 and strong support zone 3320 to 3230 and after it finial and strong last bottom support 3192/3054.. Resistance for up move 3672/3710/3815/3886.. Please avoid selling at lower level or at support level, all daily and intraday indicator are in highly oversold zone..
U.S economy problems creating global stock market crash
It was a scary crash in indian market yesterday and even today the global markets are very bearish and moreover
The Dow Jones industrial fell 369.88 points to 9,955.5.After trading as low as 9,525 intraday and on track for its worst-ever point decline, the Dow clawed back to close at 9,955.50, its first close below 10,000 since 2004.The sell-off came despite the $700 billion U.S. government bailout package and this huge economic slowdown in U.S has resulted in global stock market melt down.Be carefull in indian stock market as for today, nifty has great support now at 3540 and if this is not broken, it will move up to test its first resistance at 3625 and above this it will move towards 3685-3710 and If nifty breaks all important support of 3540, then one more strong support exisits at 3465 which will not be broken for sure. So, a very important and interesting day of trading today.Can india de-couple from world market today !!
Stock watch for the day:
Here is something interesting - Nifty (top) is just above its March - April 2007 lows, while Sensex (bottom) is below ! Next support level for the Sensex is around 11300; while it is 3300 for the Nifty. 
Aha !
NIFTY HOURLY CHART
chart taken from http://www.vfmdirect.com/
chart by kamlesh langote ( famous technical analyst)
NIFTY HOURLY CHART
chart taken from http://www.vfmdirect.com/chart by kamlesh langote ( famous technical analyst)
chart taken from http://www.stockcharts.com/
chart by coldaro ( famous tech. analyst )
***Technicals
Nifty is in terminal phase of downtrend and is in process of intermediate bottom formation which is likely to form around 3550-3600.
***Derivatives (October 6)
-Nifty (October) future premium increased to 23 points and around 10 lakh shares were added in open interest with increase in the cost of carry, indicating new long position at lower levels.
-Nifty call option add 45 lakh shares in open interest, whereas put option shed 8 lakh shares in open interest. Thus open interest put-call ratio decreased to 0.79.
-Implied volatility has increased by 500-600 points which indicate volatility in the coming days.
***Fund flow (October 1)
~FIIs net in Index fut. + 178 cr
~FIIs net in Stock Fut. + 300 cr
~FIIs in Cash Market - 284 cr
~Mut Funds in Cash Market +148 cr
***total fund flow + 342 cr today & nifty was up by 29 points.
***Fund flow (October 3)
~FIIs net in Index fut. – 308 cr
~FIIs net in Stock Fut. – 90 cr
~FIIs in Cash Market - 1046 cr
~Mut Funds in Cash Market - 343 cr
***total fund flow – 1787 cr today & nifty was down by 132 points.
-Nifty (October) future premium increased to 23 points and around 10 lakh shares were added in open interest with increase in the cost of carry, indicating new long position at lower levels.
-Nifty call option add 45 lakh shares in open interest, whereas put option shed 8 lakh shares in open interest. Thus open interest put-call ratio decreased to 0.79.
-Implied volatility has increased by 500-600 points which indicate volatility in the coming days.
***Fund flow (October 1)
~FIIs net in Index fut. + 178 cr
~FIIs net in Stock Fut. + 300 cr
~FIIs in Cash Market - 284 cr
~Mut Funds in Cash Market +148 cr
***total fund flow + 342 cr today & nifty was up by 29 points.
***Fund flow (October 3)
~FIIs net in Index fut. – 308 cr
~FIIs net in Stock Fut. – 90 cr
~FIIs in Cash Market - 1046 cr
~Mut Funds in Cash Market - 343 cr
***total fund flow – 1787 cr today & nifty was down by 132 points.
*** So far net fund flow of – 1294 cr in October series. (Nifty is also down in October series).
***Past fund flow
-8071 cr in June series (-520), closed at 4315.
+6474 cr in July series (+18), closed at 4333.
-6641 cr in August series (-119), closed at 4214.
-6903 cr in September series (-104), closed at 4110.
*******so – 15141 cr from May closing of 4835, -7070 cr from June closing of 4315.
-8071 cr in June series (-520), closed at 4315.
+6474 cr in July series (+18), closed at 4333.
-6641 cr in August series (-119), closed at 4214.
-6903 cr in September series (-104), closed at 4110.
*******so – 15141 cr from May closing of 4835, -7070 cr from June closing of 4315.
Happy trading and investing.
Seen above is the weekly chart of the Nifty showing the movement in the last two years. The portion of the chart from Mar 2007 to May 2008 has been marked with a bearish head and shoulders pattern with the neckline as shown by the green dashed line. The target for this head and shoulders pattern is 2600. It seems that the Nifty today has confirmed another, and larger, head and shoulders pattern formed between June 2007 and today. The neckline for this pattern has been shown as the solid green line. The target for this new pattern is half of the last pattern which roughly works out close to 1300 levels on the Nifty. Though, nothing is ever certain with the markets, I can say with reasonable certainty, and accuracy, that this target would not be achieved. And I sincerely hope, for the good of the nation and so many investors, that the markets do not prove me wrong here. Shown in the bottom portion of the chart is the Relative Strength Index (RSI), which continues on its way down and is not even showing a divergence, which might give us some glimmer of hope.
Some immediate support levels for the Nifty are at 3554 (minor), 3130 (reasonable) and 2600 (strong). The Nifty may go on to achieve one of these levels or can find support somewhere in between. Let us hope that this support level comes as soon as possible. But, if things do not change very soon, I’m afraid to say that we’re going to have a lousy Diwali.
It’s the scenario of a global meltdown today. It’s like a ship, much bigger than Titanic, which is as big as the whole world, and it is going under. Everything seems to be sinking. Let’s have a quick look at the world markets. The Nifty closed with a loss of 215 points for the day while the BSE Sensex tanked 724 points. Asian markets were down quite a bit today (Monday) with the Japanese Nikkei shaving off 4.25%, Hang Seng 4.97%, Chinese markets losing 5.23%, Singapore Straits 5.6% and Jakarta leading the pack with a loss of 10.03%. The situation in the European markets was no better with the London FTSE losing 5.77%, German DAX losing 7.07% while the French CAC lost 9.04%. As far as America is concerned, at the time of writing, Dow Jones was trading 559 points in the red (5.41%), the Nasdaq was losing 139 points (7.13%) while the S&P500 had lost 71 points or 6.43%. On the commodities front, Crude was losing 4.92% today, copper 7.62%, most agricultural commodities losing 6-7% while Gold being the ‘safe haven’ for investors was up 4.13%.
As far as the technical analysis of our charts is concerned, there seems to be no hope for the Nifty, even though there was some good news for the Indian markets. The 40% cap enforced by SEBI in Oct 2007 on Assets Under Custody through Participatory Notes (P-Notes) has now been done away with. So, now there is no restriction on P-Notes. Moreover, the RBI has slashed the CRR by 50 basis points. Both these decisions have been taken with a view to increase increase liquidity in the markets. But one wonders how much will this help when the Nifty has broken the major support level of 3800 and is even below the next support of 3640.
As far as the technical analysis of our charts is concerned, there seems to be no hope for the Nifty, even though there was some good news for the Indian markets. The 40% cap enforced by SEBI in Oct 2007 on Assets Under Custody through Participatory Notes (P-Notes) has now been done away with. So, now there is no restriction on P-Notes. Moreover, the RBI has slashed the CRR by 50 basis points. Both these decisions have been taken with a view to increase increase liquidity in the markets. But one wonders how much will this help when the Nifty has broken the major support level of 3800 and is even below the next support of 3640.
Seen above is the weekly chart of the Nifty showing the movement in the last two years. The portion of the chart from Mar 2007 to May 2008 has been marked with a bearish head and shoulders pattern with the neckline as shown by the green dashed line. The target for this head and shoulders pattern is 2600. It seems that the Nifty today has confirmed another, and larger, head and shoulders pattern formed between June 2007 and today. The neckline for this pattern has been shown as the solid green line. The target for this new pattern is half of the last pattern which roughly works out close to 1300 levels on the Nifty. Though, nothing is ever certain with the markets, I can say with reasonable certainty, and accuracy, that this target would not be achieved. And I sincerely hope, for the good of the nation and so many investors, that the markets do not prove me wrong here. Shown in the bottom portion of the chart is the Relative Strength Index (RSI), which continues on its way down and is not even showing a divergence, which might give us some glimmer of hope.Some immediate support levels for the Nifty are at 3554 (minor), 3130 (reasonable) and 2600 (strong). The Nifty may go on to achieve one of these levels or can find support somewhere in between. Let us hope that this support level comes as soon as possible. But, if things do not change very soon, I’m afraid to say that we’re going to have a lousy Diwali.
Nifty strategy
Sell one Nifty Oct 4000 CE @ 128-130 and sell one Oct 3800 PE
@ 162-164. LBEP: 3510. UBEP: 4290. Time Frame: 10-12 Days
ICICI Bank: ICICI Bank has observed intense selling pressure in recent
times due to rumours regarding the bank’s exposure in the credit market.
However, the stock is expected to settle near the current levels.
Sell 540 call option @ 28-30 and sell 460 put option @ 18-20;
stop loss (cumulative premium): 55; target: 15-17; timeframe:
10-12 days
DLF: Most of the real state players have faced the heat from weak
sentiments. These stocks have lost more than any other sector. DLF
is trading at its life-low levels. The stock is due for a technical bounceback
from current levels. However, selling pressure in the stock may
be witnessed at higher levels.
Sell 380 call option @ 12-14 and sell 300 put option @ 10-12; stop loss
(cumulative premium): 27; target: 8-10; timeframe: 10-12 days
BHEL: The stock is set to be among the major benefi cieries from
the nuke deal as only the formalities are left once the deal is signed.
The stock may observe fresh accumulation from current levels. Much
downside in the stock is not expected. At the same time, fresh selling
may be observed at higher levels of the stock.
Sell 1650 call option @ 38-40 and sell 1500 put option @ 42-44;
stop loss (cumulative premium): 95; target: 30-35; timeframe:
10-12 days
NTPC: NTPC is also one of the key benefi ciaries from the nuclear
deal and fresh contracts may pour in for the company. The stock is
fi nding great support at 165 levels.
Sell 180 call option @ 5.00-5.50 and sell 165 put option @ 4.00-
4.50; stop loss (cumulative premium): 12; target: 5; timeframe:
10-12 days
Pair strategy
Buy one lot of Tata Motors Oct Fut @ 328-330 and sell one lot
M&M Oct Fut @ 518-520; timeframe: 15-17 days.
Hybrid strategy
Buy one lot of ICICI Bank Oct Fut @ 510-512; buy one lot ICICI
Bank 500 put options @ 28-30 and sell one lot ICICI Bank 540
call option @ 24-26; BEP: 513; timeframe: 15-17 days
Sell one Nifty Oct 4000 CE @ 128-130 and sell one Oct 3800 PE
@ 162-164. LBEP: 3510. UBEP: 4290. Time Frame: 10-12 Days
ICICI Bank: ICICI Bank has observed intense selling pressure in recent
times due to rumours regarding the bank’s exposure in the credit market.
However, the stock is expected to settle near the current levels.
Sell 540 call option @ 28-30 and sell 460 put option @ 18-20;
stop loss (cumulative premium): 55; target: 15-17; timeframe:
10-12 days
DLF: Most of the real state players have faced the heat from weak
sentiments. These stocks have lost more than any other sector. DLF
is trading at its life-low levels. The stock is due for a technical bounceback
from current levels. However, selling pressure in the stock may
be witnessed at higher levels.
Sell 380 call option @ 12-14 and sell 300 put option @ 10-12; stop loss
(cumulative premium): 27; target: 8-10; timeframe: 10-12 days
BHEL: The stock is set to be among the major benefi cieries from
the nuke deal as only the formalities are left once the deal is signed.
The stock may observe fresh accumulation from current levels. Much
downside in the stock is not expected. At the same time, fresh selling
may be observed at higher levels of the stock.
Sell 1650 call option @ 38-40 and sell 1500 put option @ 42-44;
stop loss (cumulative premium): 95; target: 30-35; timeframe:
10-12 days
NTPC: NTPC is also one of the key benefi ciaries from the nuclear
deal and fresh contracts may pour in for the company. The stock is
fi nding great support at 165 levels.
Sell 180 call option @ 5.00-5.50 and sell 165 put option @ 4.00-
4.50; stop loss (cumulative premium): 12; target: 5; timeframe:
10-12 days
Pair strategy
Buy one lot of Tata Motors Oct Fut @ 328-330 and sell one lot
M&M Oct Fut @ 518-520; timeframe: 15-17 days.
Hybrid strategy
Buy one lot of ICICI Bank Oct Fut @ 510-512; buy one lot ICICI
Bank 500 put options @ 28-30 and sell one lot ICICI Bank 540
call option @ 24-26; BEP: 513; timeframe: 15-17 days
0740hrs 07th Sep: Well the US closed in red as expected - but in the late afternoon there was a bounce (recovery) that was strong but the losses during the day were so that I could not really wash them out and US still remained well into the red. Dow was 3.58% in red, Nasdaq -4.34% and S&P down 3.85%. Asia had opened very weak but the pulse is showing signs of recovery - however weak it ma seem. Strait Times has already shown a green tick and Nikkei is trying its best to follow.
06Sep 08: Crude below 90 dollars!! Like you and me care about it - so many people are saying it that I just don't want to repeat it - but have too. We are falling - as if you did not know - but if you read my blog a few days back - I had written that if we break the 3800 mark then there is no support till 3600. Now if we fall and break 3600 there is no support till 3200 on nifty - it can turn out to be a long and ugly fall. Thank GOD Almighty that I am not a broker. I might have gone many times under with my attitude to take bold risks. But now the problem is - How do I protect what I have? There is no putting brakes to this trend and with each passing day my portfolio dies anywhere from 5 - 10%. This Diwali we will celebrate Our Diwala. Mind you every evening I stare eagerly at my screen so that iCharts update the days candles and I stargaze. The problem now-a-days is that I still do wait for the charts to be updated with nothing but fear in my heart and eyes.
Well as always before I come to what was there for us on the markets let us see how the others fared. Well Asia opened weak and closed weaker. Hang Seng was down 4.97% and Nikkei down 4.25% Strait Times down 5.61%. Europe opened red and then went to dogs. FTSE down 2.92% (don't get impressed) Dax down 4.92% (worst is yet to come) Cac down 6.11% and mind you the markets have not closed still - so there is a bright chance that they close lower. US has opened weak but not too weak (cannot call 3% down very weak now-a-days - can we?) - however it is looking down. Dow down 2.56%, Nasdaq down 3.31% and S&P 2.97% in red. just for your information - Dow has plunged below 10,000 - the lowest level since 2004. The main reason is that the realisation is setting in that the 700Billion $ that are part of the rescue package does not mean that the flood gates are opened to let the waters to the dying - meaning that there will be a bureaucratic route to gaining access to the cash meant for disbursement. Along with that is the fact that there is a cascading effect of Dominoes that has already been set into motion and Europe is following - Asia might follow.
Still interested in Candles? Let me start by telling you - there is no fundamentals or technical s' that will work in this environment. Buy into others fear they said - and I see everyone running away. Read ahead on your own risk. The candle was a truly long and black one. It has voilated the Bollinger band and the bollinger bands continue widening - so no recovery in sight as far as the Bollinger bands go. The 5 EMA is trailing far below the 20 EMA. Volumes were not too much though - infact a shade lower than average. MACD Divergence Histogram is laughing at us. The red line is below the blue line nad the gap widening like - there is no tomorrow. On the Mass Index we have crossed the critical band - the line has just pierced it through. TRIX is looking down and the last Knight that was fighting the trend - Slow Stochastic has laid down its arms - red line crossing and going below the blue line. The Slow Stochastics place has been taken by the RSI now - that faces down and has gone into the oversold zone. That is the only hope for a small bounce back now. Other than that no hopes what-so-ever left in candles now.
Remember I wrote that if we break 3800 on Nifty then the next support is at 3600? well we are now at 3600 - if we break that ? then all the way to 3200 we have no speed breakers - be careful - but then I am hoping like hell that the 3600 support will hold for some time.
Okay this part I have separated by a huge margin - this is where I am writing what I feel. SO take it with a bucket of salt - we have a recovery around the corner - in all the probability it will be lead by some countries coming together to ward off this recession.
For the more Technically inclined - the Pivots are as under for Nifty: -
R3 4060
R2 3907
R1 3754
Pivot 3668
S1 3515
S2 3429
S3 3276
Projected high range 3711 to 3831
Projected low range 3810 to 3690
Fib Projected High 3885
Fib Projected Low 3516
It seems that most of the ingredients are here for a good relief rally. Fear is through the roof. The fear based indicators such as VIX are spiking higher. The impending doom of USA financial markets is being broadcast on every channel, and every Analyst on the street is debating how we got here and who is responsible. And has anyone noticed that the financials as a whole are not making lower lows inspite of the fact that the news couldn't be any worse.
If you see the above 5 yearly chart of dowjones its trading on that cluster support band which was formed in 2004-2005.
Ideally, It may have another plunge followed by a swift rally reversal to trap the bears, but there are no guarantees that the market doesn't crash either. Maybe we are on the brink of financial armageddon. The truth is we won't know until it's in the rear view mirror, so the best we can do is wait patiently to pounce on the rebound.
06Sep 08: Crude below 90 dollars!! Like you and me care about it - so many people are saying it that I just don't want to repeat it - but have too. We are falling - as if you did not know - but if you read my blog a few days back - I had written that if we break the 3800 mark then there is no support till 3600. Now if we fall and break 3600 there is no support till 3200 on nifty - it can turn out to be a long and ugly fall. Thank GOD Almighty that I am not a broker. I might have gone many times under with my attitude to take bold risks. But now the problem is - How do I protect what I have? There is no putting brakes to this trend and with each passing day my portfolio dies anywhere from 5 - 10%. This Diwali we will celebrate Our Diwala. Mind you every evening I stare eagerly at my screen so that iCharts update the days candles and I stargaze. The problem now-a-days is that I still do wait for the charts to be updated with nothing but fear in my heart and eyes.
Well as always before I come to what was there for us on the markets let us see how the others fared. Well Asia opened weak and closed weaker. Hang Seng was down 4.97% and Nikkei down 4.25% Strait Times down 5.61%. Europe opened red and then went to dogs. FTSE down 2.92% (don't get impressed) Dax down 4.92% (worst is yet to come) Cac down 6.11% and mind you the markets have not closed still - so there is a bright chance that they close lower. US has opened weak but not too weak (cannot call 3% down very weak now-a-days - can we?) - however it is looking down. Dow down 2.56%, Nasdaq down 3.31% and S&P 2.97% in red. just for your information - Dow has plunged below 10,000 - the lowest level since 2004. The main reason is that the realisation is setting in that the 700Billion $ that are part of the rescue package does not mean that the flood gates are opened to let the waters to the dying - meaning that there will be a bureaucratic route to gaining access to the cash meant for disbursement. Along with that is the fact that there is a cascading effect of Dominoes that has already been set into motion and Europe is following - Asia might follow.
Still interested in Candles? Let me start by telling you - there is no fundamentals or technical s' that will work in this environment. Buy into others fear they said - and I see everyone running away. Read ahead on your own risk. The candle was a truly long and black one. It has voilated the Bollinger band and the bollinger bands continue widening - so no recovery in sight as far as the Bollinger bands go. The 5 EMA is trailing far below the 20 EMA. Volumes were not too much though - infact a shade lower than average. MACD Divergence Histogram is laughing at us. The red line is below the blue line nad the gap widening like - there is no tomorrow. On the Mass Index we have crossed the critical band - the line has just pierced it through. TRIX is looking down and the last Knight that was fighting the trend - Slow Stochastic has laid down its arms - red line crossing and going below the blue line. The Slow Stochastics place has been taken by the RSI now - that faces down and has gone into the oversold zone. That is the only hope for a small bounce back now. Other than that no hopes what-so-ever left in candles now.
Remember I wrote that if we break 3800 on Nifty then the next support is at 3600? well we are now at 3600 - if we break that ? then all the way to 3200 we have no speed breakers - be careful - but then I am hoping like hell that the 3600 support will hold for some time.
Okay this part I have separated by a huge margin - this is where I am writing what I feel. SO take it with a bucket of salt - we have a recovery around the corner - in all the probability it will be lead by some countries coming together to ward off this recession.
For the more Technically inclined - the Pivots are as under for Nifty: -
R3 4060
R2 3907
R1 3754
Pivot 3668
S1 3515
S2 3429
S3 3276
Projected high range 3711 to 3831
Projected low range 3810 to 3690
Fib Projected High 3885
Fib Projected Low 3516
It seems that most of the ingredients are here for a good relief rally. Fear is through the roof. The fear based indicators such as VIX are spiking higher. The impending doom of USA financial markets is being broadcast on every channel, and every Analyst on the street is debating how we got here and who is responsible. And has anyone noticed that the financials as a whole are not making lower lows inspite of the fact that the news couldn't be any worse.
If you see the above 5 yearly chart of dowjones its trading on that cluster support band which was formed in 2004-2005.
Ideally, It may have another plunge followed by a swift rally reversal to trap the bears, but there are no guarantees that the market doesn't crash either. Maybe we are on the brink of financial armageddon. The truth is we won't know until it's in the rear view mirror, so the best we can do is wait patiently to pounce on the rebound.
Morning Update:- (This space will be updated in the morning based on world mkt cues):
1.U.S.Markets:- Fell intra by 8%, but bounced off their lows to close 3.6% down.
2.Asian markets :- Mostly off their lows (at 8.00 A.M)& Sgx Nifty is + 20 points.
3. Nifty is expected to trade down to up for the day.Larger trend remains down.
*********************************************************************************
If Nifty has to keep the bullish scenario, the rally must commence in the region of 3500-3550 zone. Failure to find support at these levels will open the more bearish scenario leading to more severe falls.
Blood bath again today, every market in the world capitulised on financial fears..where is the base..we should be touching base at least for the time being some where around these levels in zone of 3650-3600-3550-3500..( have posted charts also for this few days back)many scrips are available at mouth watering prices and people in cash would have definitely bought for a trading bounce.. Some world order will be surely there and the retracements also will be fast & furious as is typical of the Bear markets. The above chart shows the channel we are following , support at app.3550 and the resistance on reversal at 3800-4050. Hope this helps..( do not sell off in panic)Trade accordingly...cheers
We are in a bear market, with prices falling rapidly. Yet, we must remember that stock prices will never become zero. There is intrinsic value in many stocks. Many of these companies create value, earn money, grow. Unfortunately, there is a disconnect between stock market prices and business values. A business can prosper while the market can languish. Also, each new bull market brings out a new set of favorites.
It is possible that the markets may stop falling rapidly. The next decline may be slower. World over, markets can go into a trading range that may last for many years. History tells us that bear markets do not vanish in a minute.
In 1985 a bull market started in India, after the first Rajiv Gandhi - V P Singh budget cut income tax to 50% (from 66%). Euphoria took over the market. After one year, the market topped out in 1986. The bear move that started in 1986 bottomed out in 1988. The 1988 - 1992 bull market saw the sensex go up from 400 to 4500, a gain of almost 1000% in five years.
Now comes the interesting part. This extraordinary bull market peaked out in 1992. The market then went into a trading range for 10 years, finally emerging in 2004 to make new highs.
The 2003 - 2008 bull market saw the Sensex go up from 2800 in 2003 to 21200 in 2008, a gain of 657% in four and half years.
After such stunning bull moves, the market needs rest. The excesses of the bull market have to be exorcised.
As the market will bottom out, I am looking at a new bull market based on these themes discussed below. This is a rough idea, it will probably change many times.
1. Greed Kills.
Capitalism turns into killing fields when Greed overcomes human nature. This happens when financial managers are given control over the country. Productive efforts are ignored by financial wizards who only understand the language of money.
The last few years saw this greed in full flow. The wheel is likely to turn full circle. Businesses are being nationalized in America and Europe. The process of privatisation will virtually end. The reverse (nationalisation) will begin.
Suggestion: Avoid companies where greed may overcome the management. Avoid private sector financial services companies, private sector banks. Invest in public sector banks, semi public sector financial institutions (like IDBI ).
2. Technology changes the nature of business.
I feel that there will be a big shakeout in brokerages. The business of broking as we know it will vanish. As an example, the NSE has introduced software which allows retail clients to directly log into the NSE Servers and trade. Soon enough, middle level full services brokers will become redundant. Large broker bankers (ICICI, HDFC etc..) or small boutique brokerages will survive.
Do not invest in brokerage equities.
There will be companies where technology will bring benefits. These will be manufacturing companies. For the past few years, services (mainly financial services) have led the market. Now, technologically drivern manufacturers may lead. This is all for the better, since the manufacturers actually add value.
The underlying theme is: which companies take advantage of technology ? Two beaten down metal stocks, Tata Steel & Sterlite come to mind. So does Maruti. There will be many more.
3. Natural Resources
Natural resources are in short supply. Companies that own such resources should prosper, no matter what the short term outlook may be. Examples: ONGC, Cairn, Neyvelli, Sesa Goa, GMDC.
4. Public Sector is IN.
One advantage of the public sector is that it cannot be nationalised. (sorry about that!). A sea change has taken place in the structure of these businesses. They are probably better managed than most private sector units
1.U.S.Markets:- Fell intra by 8%, but bounced off their lows to close 3.6% down.
2.Asian markets :- Mostly off their lows (at 8.00 A.M)& Sgx Nifty is + 20 points.
3. Nifty is expected to trade down to up for the day.Larger trend remains down.
*********************************************************************************
If Nifty has to keep the bullish scenario, the rally must commence in the region of 3500-3550 zone. Failure to find support at these levels will open the more bearish scenario leading to more severe falls.
Blood bath again today, every market in the world capitulised on financial fears..where is the base..we should be touching base at least for the time being some where around these levels in zone of 3650-3600-3550-3500..( have posted charts also for this few days back)many scrips are available at mouth watering prices and people in cash would have definitely bought for a trading bounce.. Some world order will be surely there and the retracements also will be fast & furious as is typical of the Bear markets. The above chart shows the channel we are following , support at app.3550 and the resistance on reversal at 3800-4050. Hope this helps..( do not sell off in panic)Trade accordingly...cheersWe are in a bear market, with prices falling rapidly. Yet, we must remember that stock prices will never become zero. There is intrinsic value in many stocks. Many of these companies create value, earn money, grow. Unfortunately, there is a disconnect between stock market prices and business values. A business can prosper while the market can languish. Also, each new bull market brings out a new set of favorites.
It is possible that the markets may stop falling rapidly. The next decline may be slower. World over, markets can go into a trading range that may last for many years. History tells us that bear markets do not vanish in a minute.
In 1985 a bull market started in India, after the first Rajiv Gandhi - V P Singh budget cut income tax to 50% (from 66%). Euphoria took over the market. After one year, the market topped out in 1986. The bear move that started in 1986 bottomed out in 1988. The 1988 - 1992 bull market saw the sensex go up from 400 to 4500, a gain of almost 1000% in five years.
Now comes the interesting part. This extraordinary bull market peaked out in 1992. The market then went into a trading range for 10 years, finally emerging in 2004 to make new highs.
The 2003 - 2008 bull market saw the Sensex go up from 2800 in 2003 to 21200 in 2008, a gain of 657% in four and half years.
After such stunning bull moves, the market needs rest. The excesses of the bull market have to be exorcised.
As the market will bottom out, I am looking at a new bull market based on these themes discussed below. This is a rough idea, it will probably change many times.
1. Greed Kills.
Capitalism turns into killing fields when Greed overcomes human nature. This happens when financial managers are given control over the country. Productive efforts are ignored by financial wizards who only understand the language of money.
The last few years saw this greed in full flow. The wheel is likely to turn full circle. Businesses are being nationalized in America and Europe. The process of privatisation will virtually end. The reverse (nationalisation) will begin.
Suggestion: Avoid companies where greed may overcome the management. Avoid private sector financial services companies, private sector banks. Invest in public sector banks, semi public sector financial institutions (like IDBI ).
2. Technology changes the nature of business.
I feel that there will be a big shakeout in brokerages. The business of broking as we know it will vanish. As an example, the NSE has introduced software which allows retail clients to directly log into the NSE Servers and trade. Soon enough, middle level full services brokers will become redundant. Large broker bankers (ICICI, HDFC etc..) or small boutique brokerages will survive.
Do not invest in brokerage equities.
There will be companies where technology will bring benefits. These will be manufacturing companies. For the past few years, services (mainly financial services) have led the market. Now, technologically drivern manufacturers may lead. This is all for the better, since the manufacturers actually add value.
The underlying theme is: which companies take advantage of technology ? Two beaten down metal stocks, Tata Steel & Sterlite come to mind. So does Maruti. There will be many more.
3. Natural Resources
Natural resources are in short supply. Companies that own such resources should prosper, no matter what the short term outlook may be. Examples: ONGC, Cairn, Neyvelli, Sesa Goa, GMDC.
4. Public Sector is IN.
One advantage of the public sector is that it cannot be nationalised. (sorry about that!). A sea change has taken place in the structure of these businesses. They are probably better managed than most private sector units
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