In the short term we can term this to be a bottom as a recovery of 10 % from lows is not usual and is generally a sign of panic bottom. In the last few weeks we have seen that bounces have not lasted for more then 3-5 sessions so we could expect stability to set in once this pattern of panic is broken. In the long term chart 8400-8800 is important on monthly closing ( implies 20-25 sessions rather then calendar dates as per me ) . So trading bias should be on long side on dips to 8k with a stop of 7600 and a possible bounce to 9500/10500 , also shorting is better avoidable at 8-9k as risk-reward is highly unfavourable. Will see stock specific updates later tom if possible.
Resistances on upside are at 9500-9700 followed by that the most important level is 10750. On fibonacci retracements 9500/10500 are 23.6 /38.2 % zones.
Although as discussed 7600 is a support but not a strong one but the next one below 8800, but if markets have to turnaround this is the best possible place technically. According to a rough guess in my sms today is 7200-7800 and 2100-2250 which is a personal view. Also the market consensus is now going towards 6k and 2k then can markets possibly surprise ??? is the question.
Many of the investors /experts / analysts suddenly looking at 6k and 2k as good possibilities in the same manner as 10k which can be lot of greed or fear either ways but technically going to 6k would dent the charts and maybe the economy in such a manner that it would be very difficult to recover in coming months . As per my view if one is bullish in the long run buying at sub 10k is more better as 6k is much more scarier for the long term picture so personally i would be buyer at 8k then at 6k :P ! ...
Well folks, the decline/crash run much more in price levels than what I had been expecting. I will be honest - 2600 in Nifty was the worst possible level I was looking for...Market is a great humbler is it not? Broke 2600 with ease and went down to test 2250 area. Could be testing the multiyear flag breakout here - Chart below.
Let me be clear here...I am down on my cash holdings but I will keep adding on dips...I expect I will be much better off a few months from now...I booked a good deal of my puts yesterday...Thank God for Puts...Was able to recover much of my losses from the cash holdings...
My view going forward - Keep buying em big drops in the market..
See below charts also. First the long term chart I posted some time back. I admit we went much more than I thought we would but we are at an important area. Looks like we are testing the multiyear flag breakout area. If we fail this area, we can go to around 1950 on Nifty...Maybe around 6000 area on Sensex...BUT pls note this is the worst case..We need to be brave here and keep buying all the dips...No one can catch the exact bottom...But we can get close as possible.
Now the Nifty weekly chart...Comments on the chart.
Regd EW counts not going to make any statements out there...But sentiment is supportive of a major major bottom forming right here. But I am not going to worry about that. There is huge huge value out there...Dig for em and buy em...Dont be too nervous. A good example of a good stock is INFOSYS...Market down 25% from where I bought but INFY is UP 3% from my buy point...Thats just amazing and also a screaming BUY. Others I like right here are Educomp, KSOIL and NTPC..As always usual disclaimers apply and please do due diligence before following advice here...
Please note I had to say that since I hate to be the cause for ppl losing money if any....But having said that, I am confident on whats stated above. :) BUT expect retests of the bottom and maybe slightly lower going forward....Will be good areas to add aggressively to longs.
I remember at 6000 Nifty, ppl were calling and asking me about shares, demat accounts, IPOs and what not...I told them now is not the time...Now if I ask them to buy, they will look at me as if I am totally nuts...
STOCK BELOW BOOK VALUE
MTNL - 58.55
Ship. Corp. - 114
Syndicate Bank - 48.60
Allahabad Bank - 45
Andhra Bank - 38.10
Chennai Petroleum - 125
J&K Bank - 382
Nirma - 89
Bank of Mah - 24
GNFC - 50
Bongaigaon Ref. - 34.35
Guj Inds Power - 40
Varun Ship. Co. - 41.35
GSFC - 70
Graphite India - 34.90
Deepak Fert - 48
JK Cements Ltd - 50
TN Newsprint - 61
Tata Coffee - 150
Sasken Comm Tech - 69
West Coast Paper - 32
Zensar Technologies - 83.25
CEAT - 38
Mangalam Cement - 44
Spanco Telesys - 31
Dated: October 27, 2008
SENSEX (8509)
Sensex appears to be coming to an end of its (abc) correction as per fibonacci retracements. It has strong support on the downside at 7600 and 7200. While, Any move from today's low above 9850-9900 will confirm that it has bottomed out today.
Since early September 2008, Sensex has 4 pending gaps to be filled.
These times are best for investers to buy and even for traders with a medium term target as the risk reward ratios are now all in favour of BUYS. Sensex with all probability should cover the above marked 4 gaps within the next 4-5 months.
The EW counts are different in various charts as the interpretations are many & possible but the directions are the same.
Though the hourly has given a buy, daily buy signal is still far away.With holidays ahead, traders must keep safety of capital in their mind. However, investors can continue to pick stocks on every dips and book after 10 - 20% rallies as we are not going to have any runaway sustained bull move. Individual scrips, which are beaten down because of Oct. settlement concerns will offer quick returns.
We recommend to pare exposure in Housing Development and Infrastructure Ltd. (HDIL) as the company is under severe
pressure due to the slowdown in real estate values and high cost of funds. The scrip currently ruling in the range of Rs.150
is expected slip back to Rs.123.
TDR Prices under pressure
Revenue from Transferable Development Rights (TDR) of HDIL’s Mumbai Airport slum project is a major contributor to
the profitability of the company. However, TDR prices are under severe pressure due to excess supply and it has already
come down to Rs.1800 or lower /sq.ft as against the expected price range of Rs.2100 for FY 09.
The company’s Mumbai Airport project has injected an additional supply of 2 million sqft TDR in the current year while
the demand is slowing down due to many reasons. HDIL plans to develop 50million sqft of TDR over the next five years
and the price pressure of TDR would be a drag on its profitability.
We estimate that the TDR revenue would account for 13% and 15% of the revenue stream of the company in FY 09 and
FY10 respectively against the street expectation of 33% and 42%.
Short-term debt is another concern
HDIL has debt obligation of Rs.3820 crore and a major part of it is short term. The company has to repay Rs.1400 crore
in the current year and another 1000 crore in FY10. Debt repayment capacity of the company would be under major strain
because of the shrinkage in revenue. Even refinancing would be a difficult option as the cost of fund is high and this may
exert more pressure on margins.
Property value may come down further
Property values are expected to come down by another 10% in the next two year as against the earlier expectation of a 5%
dip. For the current year, the EPS is projected at 38.33, which is expected to edge up a little to Rs.39.14 in FY10 and to
Rs. 63.23 in FY11. Earnings projections for FY11 include revenue from Andheri - Versova project, on which the
litigation has been resolved.
The stock is expected trade lower than its net asset value (new NAV estimate is INR162 and the Mumbai
Airport Phase 2 option value is Rs.89/share) because of the low earning expectations in the current difficult scenario.
A better option in the real estate space is Indiabulls Real Estate, its current market price is lower than the gross cash
per share of Rs.141.
pressure due to the slowdown in real estate values and high cost of funds. The scrip currently ruling in the range of Rs.150
is expected slip back to Rs.123.
TDR Prices under pressure
Revenue from Transferable Development Rights (TDR) of HDIL’s Mumbai Airport slum project is a major contributor to
the profitability of the company. However, TDR prices are under severe pressure due to excess supply and it has already
come down to Rs.1800 or lower /sq.ft as against the expected price range of Rs.2100 for FY 09.
The company’s Mumbai Airport project has injected an additional supply of 2 million sqft TDR in the current year while
the demand is slowing down due to many reasons. HDIL plans to develop 50million sqft of TDR over the next five years
and the price pressure of TDR would be a drag on its profitability.
We estimate that the TDR revenue would account for 13% and 15% of the revenue stream of the company in FY 09 and
FY10 respectively against the street expectation of 33% and 42%.
Short-term debt is another concern
HDIL has debt obligation of Rs.3820 crore and a major part of it is short term. The company has to repay Rs.1400 crore
in the current year and another 1000 crore in FY10. Debt repayment capacity of the company would be under major strain
because of the shrinkage in revenue. Even refinancing would be a difficult option as the cost of fund is high and this may
exert more pressure on margins.
Property value may come down further
Property values are expected to come down by another 10% in the next two year as against the earlier expectation of a 5%
dip. For the current year, the EPS is projected at 38.33, which is expected to edge up a little to Rs.39.14 in FY10 and to
Rs. 63.23 in FY11. Earnings projections for FY11 include revenue from Andheri - Versova project, on which the
litigation has been resolved.
The stock is expected trade lower than its net asset value (new NAV estimate is INR162 and the Mumbai
Airport Phase 2 option value is Rs.89/share) because of the low earning expectations in the current difficult scenario.
A better option in the real estate space is Indiabulls Real Estate, its current market price is lower than the gross cash
per share of Rs.141.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alert Criteria: Stocks (Any Indian Exchange); Price at least 5.00; Classic Patterns; Bearish; Daily Events; Pattern Duration at least 25 days. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
No comments:
Post a Comment