Stock markets made a strong rally on low volumes due to stimulus packages and rate cut rumours. Analysts like Ambarish Baliga of Karvy etc are once again giving “buying advice” as if nothing negative is happening in the economic space. I am fed up with all these statements and giving my views on most common investment questions. All these bullish views will be evaporated once Q3 results will start coming out.
If you are a trader or experienced investor, use these opportunities to make money. But new investors should not fell in these traps laid out by brokers like Karvy. If you believe in Karvy analysts, go ahead and invest at current levels. I know many investors are in dilemma due to different views by different analysts. Why is it happening? Simply no one in the world knew what will happen in the next 6 months. Credit card crisis already started in USA. Microsoft will lay off 10,000-15,000 employees in January to protect margins. We have to see what will happen to banks like Citi.
Broker’s statement: Markets already priced in all the negatives in the economy at current levels (10,000).
My statement: Stock Markets already included all the positives like stimulus packages, rate cuts and oil price etc at current levels.
My opinion on Stock Market related queries:
1. I am a long term investor with 2-3 year horizon. Can I buy at current levels?
Answer: Current valuations are attractive if you think on long term basis. But why should we invest when same sound stocks are surely going to be available at 20-30% below current levels? Why can’t we wait for 1-2 months to invest in your favourite stocks at cheap valuations?
2. What are your favourite sectors:
Infrastructure and PSU banks. Select Pharma and emerging stocks.
Infrastructure: This is the next bullish theme. But why should we buy at current levels when you know about downside. But Infrastructure is the next theme. No doubt about it.
PSU banks: We know Bank of India, PNB and SBI etc are wonderful stocks at attractive values. But elections, falling in deposits are rising NPAs are concern.
3. Karvy stock broking: Large caps are ideal for investment at current levels – Ambarish Baliga on NDTV Profit on January 2nd.
My opinion: This is the most foolish statement I heard in New Year. Karvy is the brokerage house that gave buy call on JSW steel in November when everyone in the world is apprehensive about the commodities. I am more bearish on large caps than mid and small caps. Those small caps already corrected by 80-90% and recovered by 20-30% in the recent rally.
Large caps and target levels in the next 3-4 months:
A. Reliance Industries: 800-900. CMP: 1250.
I don’t know why investors are still holding this stock.
B. Bharti Airtel: 550-600. CMP: 720.
Sound fundamentals. But high 3G entry costs and number portability along falling ARPUs will dent margins.
C. Hero Honda: 650-700. CMP: 812.
Safe stock in auto space. But fall is inevitable due to decrease in demand.
D. ICICI Bank: 320-340. CMP: 465.
I don’t why investors are still holding this stock.
E. Larsen and Toubro: 680-700. CMP: 822.
My favorite stock. But no one will be spared in the upcoming crash.
F. Reliance Infrastructure: 470-500. CMP: 612.
Stock rose despite falling ratings.
G. SBI: 1150-1200. CMP: 1316.
Best stock in banking space. But no one will be spared in the panic situation.
H. Infosys: 800-900. CMP: 1150.
Best stock in IT space with sound management. But, I don’t know why one look at IT as investment space. Same is applicable to TCS and Wipro.
I. Tata Steel: 160-170. CMP: 230.
J. DLF: 180-200. CMP: 292.
H. Unitech: 25-30. CMP: 45.
Note: I will become a fool if my predictions will fail. But that is my investment style. I always believe in my research and gut feeling. I don’t care about what others are talking on media. Are you thinking me an egoist? Fundamentals will alone will save you but not short term rallies. These rallies will lure us to take bad investment decisions by testing our patience.
4. What will happen to Satyam Computers?:
I wrote that Satyam stock will give 50-70% returns in the next 10 days. But it gave only 30% returns in 7 days due to cancellation of board meeting. Now company is in unpredictable stage. Ramalinga Raju is using his political connections to protect his status (why politicians are supporting him? You know). Ethically, he has no right to stay on Satyam board. But anything will happen in India.
Raju pledged his entire Satyam stake with institutions to fund Maytas Infra and Maytas Properties. Now he tried to divert Satyam cash reserves to indirectly pay those loans. He pledged his shares without even telling to his board. Where is the transparency? Why is still holding Satyam post? Does he have any moral right to stay on board?
What will happen to Satyam share?
This is the doubt on investors mind. There are 3 likely scenarios.
A. If Raju resigns and new board will take-up:
Stock will move to 210-230 levels before falling to 170-180 levels due to weak fundamentals in IT space.
B. If Raju stays on board:
1. If board come out with significant decisions, Stock will move to 200-210 levels before falling 160-170 levels due to weak fundamentals.
2. If nothing significant will happen, Stock will fall to 110-120 levels in the next 2-3 months.
5. About emerging companies and sectors:
They are sound companies with strong themes. But niche stocks are generally funded by FIIs. But they will stay away from emerging markets for some more time. So there will not be any significant rallies in these stocks. But serious long term investors can buy them when markets crashed in the coming months.
6. What will happen in 2009?
There is no trend setting positive triggers until April, 2009. Stimulus packages and rate cuts will show signs by that time. Election results are another significant factor. There will be no significant positive coming from earnings aspect in the next 2 quarter results.
7. Where are you investing?
I am not making any routine investments. I am doing opportunistic basing short term investments as I did recently on Satyam. Is it bad to get 20-30% returns for month? You will continuously get such investment opportunities to make good money unless you lose all the profits by becoming greedy. I am glad if I spot even a single such opportunity per month. I will follow such investment style as long as this bear market exists.
My request to IKF investors: Please do not treat buying IKF Technologies as investment advice. I just take this as an experiment investment. That is my small contribution (encouragement) to the gutsy entrepreneurs. They are making right moves in the VOIP and bio-fuel space. But it is very risky to invest in such stocks when economic environment is so bad. Readers should treat such investments as donations. If the company succeeds in their plans, treat your earnings as God’s gift. This is my sincere request to all the readers who are betting big on IKF Technologies.
IFK earnings and targets: CMP: 3.
Current turnover: Rs 30 crore.
2010 target revenue: Rs 300 crore.
Will they succeed? I am praying God.
Note: I will give answers to the valid investor’s queries. Please ask your questions through comments in the blogs. I will try to answer them to the best of my knowledge. Questions should be comprehensive. Please do not call/mail me with stock/portfolio related queries. I am not responsible for your investment decisions.
If you are a trader or experienced investor, use these opportunities to make money. But new investors should not fell in these traps laid out by brokers like Karvy. If you believe in Karvy analysts, go ahead and invest at current levels. I know many investors are in dilemma due to different views by different analysts. Why is it happening? Simply no one in the world knew what will happen in the next 6 months. Credit card crisis already started in USA. Microsoft will lay off 10,000-15,000 employees in January to protect margins. We have to see what will happen to banks like Citi.
Broker’s statement: Markets already priced in all the negatives in the economy at current levels (10,000).
My statement: Stock Markets already included all the positives like stimulus packages, rate cuts and oil price etc at current levels.
My opinion on Stock Market related queries:
1. I am a long term investor with 2-3 year horizon. Can I buy at current levels?
Answer: Current valuations are attractive if you think on long term basis. But why should we invest when same sound stocks are surely going to be available at 20-30% below current levels? Why can’t we wait for 1-2 months to invest in your favourite stocks at cheap valuations?
2. What are your favourite sectors:
Infrastructure and PSU banks. Select Pharma and emerging stocks.
Infrastructure: This is the next bullish theme. But why should we buy at current levels when you know about downside. But Infrastructure is the next theme. No doubt about it.
PSU banks: We know Bank of India, PNB and SBI etc are wonderful stocks at attractive values. But elections, falling in deposits are rising NPAs are concern.
3. Karvy stock broking: Large caps are ideal for investment at current levels – Ambarish Baliga on NDTV Profit on January 2nd.
My opinion: This is the most foolish statement I heard in New Year. Karvy is the brokerage house that gave buy call on JSW steel in November when everyone in the world is apprehensive about the commodities. I am more bearish on large caps than mid and small caps. Those small caps already corrected by 80-90% and recovered by 20-30% in the recent rally.
Large caps and target levels in the next 3-4 months:
A. Reliance Industries: 800-900. CMP: 1250.
I don’t know why investors are still holding this stock.
B. Bharti Airtel: 550-600. CMP: 720.
Sound fundamentals. But high 3G entry costs and number portability along falling ARPUs will dent margins.
C. Hero Honda: 650-700. CMP: 812.
Safe stock in auto space. But fall is inevitable due to decrease in demand.
D. ICICI Bank: 320-340. CMP: 465.
I don’t why investors are still holding this stock.
E. Larsen and Toubro: 680-700. CMP: 822.
My favorite stock. But no one will be spared in the upcoming crash.
F. Reliance Infrastructure: 470-500. CMP: 612.
Stock rose despite falling ratings.
G. SBI: 1150-1200. CMP: 1316.
Best stock in banking space. But no one will be spared in the panic situation.
H. Infosys: 800-900. CMP: 1150.
Best stock in IT space with sound management. But, I don’t know why one look at IT as investment space. Same is applicable to TCS and Wipro.
I. Tata Steel: 160-170. CMP: 230.
J. DLF: 180-200. CMP: 292.
H. Unitech: 25-30. CMP: 45.
Note: I will become a fool if my predictions will fail. But that is my investment style. I always believe in my research and gut feeling. I don’t care about what others are talking on media. Are you thinking me an egoist? Fundamentals will alone will save you but not short term rallies. These rallies will lure us to take bad investment decisions by testing our patience.
4. What will happen to Satyam Computers?:
I wrote that Satyam stock will give 50-70% returns in the next 10 days. But it gave only 30% returns in 7 days due to cancellation of board meeting. Now company is in unpredictable stage. Ramalinga Raju is using his political connections to protect his status (why politicians are supporting him? You know). Ethically, he has no right to stay on Satyam board. But anything will happen in India.
Raju pledged his entire Satyam stake with institutions to fund Maytas Infra and Maytas Properties. Now he tried to divert Satyam cash reserves to indirectly pay those loans. He pledged his shares without even telling to his board. Where is the transparency? Why is still holding Satyam post? Does he have any moral right to stay on board?
What will happen to Satyam share?
This is the doubt on investors mind. There are 3 likely scenarios.
A. If Raju resigns and new board will take-up:
Stock will move to 210-230 levels before falling to 170-180 levels due to weak fundamentals in IT space.
B. If Raju stays on board:
1. If board come out with significant decisions, Stock will move to 200-210 levels before falling 160-170 levels due to weak fundamentals.
2. If nothing significant will happen, Stock will fall to 110-120 levels in the next 2-3 months.
5. About emerging companies and sectors:
They are sound companies with strong themes. But niche stocks are generally funded by FIIs. But they will stay away from emerging markets for some more time. So there will not be any significant rallies in these stocks. But serious long term investors can buy them when markets crashed in the coming months.
6. What will happen in 2009?
There is no trend setting positive triggers until April, 2009. Stimulus packages and rate cuts will show signs by that time. Election results are another significant factor. There will be no significant positive coming from earnings aspect in the next 2 quarter results.
7. Where are you investing?
I am not making any routine investments. I am doing opportunistic basing short term investments as I did recently on Satyam. Is it bad to get 20-30% returns for month? You will continuously get such investment opportunities to make good money unless you lose all the profits by becoming greedy. I am glad if I spot even a single such opportunity per month. I will follow such investment style as long as this bear market exists.
My request to IKF investors: Please do not treat buying IKF Technologies as investment advice. I just take this as an experiment investment. That is my small contribution (encouragement) to the gutsy entrepreneurs. They are making right moves in the VOIP and bio-fuel space. But it is very risky to invest in such stocks when economic environment is so bad. Readers should treat such investments as donations. If the company succeeds in their plans, treat your earnings as God’s gift. This is my sincere request to all the readers who are betting big on IKF Technologies.
IFK earnings and targets: CMP: 3.
Current turnover: Rs 30 crore.
2010 target revenue: Rs 300 crore.
Will they succeed? I am praying God.
Note: I will give answers to the valid investor’s queries. Please ask your questions through comments in the blogs. I will try to answer them to the best of my knowledge. Questions should be comprehensive. Please do not call/mail me with stock/portfolio related queries. I am not responsible for your investment decisions.
Main setup I am watching now...Chart is same as posted before...Watch next 2 days closely...Short with tight stops or hedged with calls looks like a good risk-reward play..
Market did not go down as far as 2650 but still the direction of this fractal remains the same as outlined in earlier posts...But we are very close to invalidating this...So a close watch looks to be prudent.
Sensex Technical View :
As we have seen in the previous chart posted that the resistance for Sensex comes to around 10050 /10400. The earlier channel line and short term trendline comes in this band. A move beyond 10400 on sustained closing for a week would be a breakout in near term.
Such a move needs to be supported by very heavy volumes which is still not the case and over the next 6-8 sessions alongwith an upmove one will need to keep a watch on change in volumes to confirm a breakout otherwise it could be a whipsaw also.
The long bias remains till 9500 is maintained on closing basis. Continue to trade stock specific with trailing stops.
Stocks to watchout for :
Review : Ranbaxy moved up to 250 + , Balrampur , GMR infra slowly inching up. PFC sideways. Of the high rise picks Triveni , Suzlon , Sintex and Central Bank all moved up 5-10 % or in short term giving trading opportunities.
SATYAM !!!!!!!!!!!!!!!!!!!!! 120 to 184 ...
The view was clearly mentioned that the stock is a good risk -reward bet at 140-110. The calculation was simple at sub 140 the amount of cash on books = mkt cap !!!. which implied a 2bn dollar company for free . This clearly was an opportunity for 20-50 % reward which has been proved and the risks involved were also looked into.
Suddenly all the news channels, analysts who were speaking of the worst to happen with the stock are blasting possibilities !!! ... Our target of 50 % is over and advise is to book 70 % of holding at 175 odd levels. Rest is bonus gains.
Hope readers used the view.
ABB
The stock has not given much of a bounce back since October lows and the range has been 400-480. A sustained move beyond 482 could tgt 505-535 in short term.
ICICI Bank
Seems a small cup and handle pattern in daily charts. Resistance around 480-490. Sustaining abov 480 should target 515+ levels. The volumes are low so a confirmation of breakout would need increasing volumes.
Larsen and Toubro resistance around 845. Colgate 415 . IDBI 72. IDFC 72 are levels above which the stocks could turn positive in short term.
Speculative picks for short term Risk 5 % tgt 15 % :
FSL , NIIT , Arvind Mills.
As we have seen in the previous chart posted that the resistance for Sensex comes to around 10050 /10400. The earlier channel line and short term trendline comes in this band. A move beyond 10400 on sustained closing for a week would be a breakout in near term.
Such a move needs to be supported by very heavy volumes which is still not the case and over the next 6-8 sessions alongwith an upmove one will need to keep a watch on change in volumes to confirm a breakout otherwise it could be a whipsaw also.
The long bias remains till 9500 is maintained on closing basis. Continue to trade stock specific with trailing stops.
Stocks to watchout for :
Review : Ranbaxy moved up to 250 + , Balrampur , GMR infra slowly inching up. PFC sideways. Of the high rise picks Triveni , Suzlon , Sintex and Central Bank all moved up 5-10 % or in short term giving trading opportunities.
SATYAM !!!!!!!!!!!!!!!!!!!!! 120 to 184 ...
The view was clearly mentioned that the stock is a good risk -reward bet at 140-110. The calculation was simple at sub 140 the amount of cash on books = mkt cap !!!. which implied a 2bn dollar company for free . This clearly was an opportunity for 20-50 % reward which has been proved and the risks involved were also looked into.
Suddenly all the news channels, analysts who were speaking of the worst to happen with the stock are blasting possibilities !!! ... Our target of 50 % is over and advise is to book 70 % of holding at 175 odd levels. Rest is bonus gains.
Hope readers used the view.
ABB
The stock has not given much of a bounce back since October lows and the range has been 400-480. A sustained move beyond 482 could tgt 505-535 in short term.
ICICI Bank
Seems a small cup and handle pattern in daily charts. Resistance around 480-490. Sustaining abov 480 should target 515+ levels. The volumes are low so a confirmation of breakout would need increasing volumes.
Larsen and Toubro resistance around 845. Colgate 415 . IDBI 72. IDFC 72 are levels above which the stocks could turn positive in short term.
Speculative picks for short term Risk 5 % tgt 15 % :
FSL , NIIT , Arvind Mills.
Market Observations and Thoughts :
In the last few weeks i have been bored of discussions about how good or bad the Oct-Dec quarter results would be. Apart from the divergent views on how bad or good the results would be. Also the prediction of whether the worst in results is yet to be seen in Dec-March quarter etc.
One of the major concerns discussed is about inventory losses , guidance , interest implications, debt and etc etc. I am too inexperienced or qualified to be talking on the above but have a different way to look at things.
The most important thing i would be looking in for signals is not the company results but shareholding patterns. Some of the important points to note would be increase in promoter holding , FII holding , MF holding , strategic investors or whether there has been a decrease in the same.
There is an old saying which says markets look two quarters ahead and the fundamental consensus is Oct -March period is going to be the worst ( how much no one knows ). But the above points would indicate whether the promoters , FIIs, MFs and others ( i.e money ) believe the company would pass through this phase or not.
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