ICICI Bank | 364 | 362 | 392-422 | NA | BUY | |
| 2 | SBI | 1041 | 1037 | 1061-1091-1141 | NA | BUY |
| 3 | Union Bank | 144 | 143 | 152-159 | NA | BUY |
| 4 | NTPC | 180 | 178 | 183-186 | NA | BUY |
| 5 | BombayDyeing | 144 | 143 | 149-155 | … | BUY |
| 6 | RELIANCE | 1156 | 1151 | 1187-1203 |
| BUY |
| 7 | SATYAM | 39 | 37 | 43-47 | NA | BUY For Deliavery if close above 47 |
| 8 | Asian Paint | 920 | 914 | 940-959 | … | BUY |
| 9 | GodrejCP | 131 | 130 | 136-140 | … | BUY |
| 10 | Tata Motors | 135 | 133 | 140-145 | … | BUY |
| 11 | IOC | 433 | 432 | 437-441 | … | BUY ABOVE 434 |
| 12 | IDBI | 53 | 52 | 57-60 | … | BUY |
| 13 | PTC | 65 | 64 | 66-67 | … | BUY |
| 14 | Unichem Lab | 161 | 160 | 164-167 | … | BUY |
Nifty :: All Intraday chart made an upward divergence and Daily chart hold above strong support level 2636/2646..Avid shorting near strong support zone.. Now for 27th Watch strong support 2646/2636.. As far as stay above 2636 our strategy for 27th Jan buy on deep (S.L 2595) Sell at high ..Watch Imp resistance 2700 above it next strong resistance at 2786/2847.. Support at 2646/2636/2595.. Resistance 2700/2730/2745/2786/2832 /2847..
---nifty level is of jan fut.---reliance levels are of feb fut.
---all other levels are cash levels.
---in ACC stoploss is 493.7
l BHARTIAIRTEL below 607 SL 619 Target 597-589
Sell M&M below 262 SL 276 Target 256-247
Sell POWERGRID below 85 SL 89 Target 83-81-80
Buy ICICIBANK above 370 SL 358 Target 376-388
Buy RANBAXY above 189 SL 179 Target 195-201
Buy RELINFRA above 495 SL 474 Target 509-519
I am sure that so many people around the country like me are eagerly looking for some signs of revival after one drop to another in the markets. Well before I rant about the markets .. I really had a good big break off the markets for three good days. Saw the ‘SlumDog Millionaire”, had my Unit officer come over for the week end and went to Trimbakeshwar. Did not spend a moment on the TV or the computer and it did turn out to be a big break and a wonderful experience. The Slumdog turned out to be a good movie that kept me to the edge of my seats and I – Personally really liked it. A glimpse of India that we want to wish away without contributing in any right way. Ahhh! food for thought – what did you do for the country today? Threw rubbish on the road? Went to a Old age home? Or were just too busy thinking money!
Sorry for the ranting of a Fauji – Let’s start! There is definitely a disgustion of the present tidings in the markets. Bad gets worse every day, one black candle leads to another and so it goes on and on. I will try to put forward what I feel has happened over the past few days. Firstly, the markets have dropped - (as if there was someone who did not know that).
It made black candles for four continuous days. The majority of the sell off has come from the FIIs selling and the volumes have been low. The volumes on Friday on Nifty were 103% of 50 day average – but before that we were nowhere near the averages. So by my mind the sell off or the drop that we have seen for last few days has perhaps more to do because of lack of buying than the selling pressure alone. On an average day when we have FIIs sell off 400 Cr worth and DIIs buy 200 Cr worth the markets stand still – making a doji or the like. So what I mean to say that this selling or buying is really just few disinterested people perhaps trading and making bets on an otherwise dead market. If in these volumes it is easy to drop the markets a few hundred points – then it is as easy to make the markets climb a few hundred points. What exactly should the markets be waiting for now? There is hardly any event of worthwhile nature that one should look forward too – politically or something like the nation going off to war. If my reading is correct then the results are beating expectations. Or let me put it across this way that in most of the cases the companies are beating or atleast meeting expectations. So if we say that the markets discount the future then this is not too bad a scenario. Now what does the market feel will happen in the coming future. Most commentators say that the worst seems to be over – for India atleast and that we will eventually swing up – a bit slower than expected but – recover definitely as the inflation will ease further and the demand will pick up and all the efforts of the world govt would now slowly and definitely show positive results. If you look at the chart I posted above – I had posted this chart and a few days back and explained that one scenario is that we break the support the markets are getting at the moment and go up – or go down to visit the long term support/trend line at sub 2000 levels on nifty. I am now sure – seeing the market behaviour for last few days that the will to drop the markets to sub 2000 levels is missing at the moment – tomorrow if we have some other inputs then we will see them in new light but as of now we should recover to higher levels starting tomorrow perhaps. Another reasoning for this theory of mine is that we just do not have the kind of momentum taking the markets down like we has – say in oct or nov last year.
The indications on the charts continue to be bad and will take some time before there is an improvement. If you notice carefully you will observe that the candles are no longer trailing the lower Bollinger bands really – so that is a small mercy to start with. 5 EMA is below 20 EMA and that is below 50 EMA. So frankly this tells us to remain on short side only – but then they are trailing indicators. Once again observe carefully as the DI- on ADX has looked down the ADX line has raised its head above the 20 marker and may eventually support a rally for whatever it is worth. MACD is bad but once again observe that the negative divergence is really not the kind we saw earlier. It is negative nonetheless. RSI is bad and negative – goes without saying really. Slow Stochastic red line is oversold and blue is likely to join it there within a day or so if the selloff is there. TRIX ofcourse is negative.
The world markets were indecisive on Monday really as a lot of exchanges in Asia were closed – and Nikkei fell. Monday however has turned out to be good for FTSE, DAX and CAC that ended 3.86%, 3.54% and 3.73% up respectively. The Pfizer-Wyeth acquisition and the surprise jump in sales of existing homes is the reason being quoted as the US too is trading in green (a rare sight indeed in these days). It is little past the mid session there in US but all the indices are holding on to 1% and above gains. I hope that they remain and close green.
It is late night so will update the market behaviour when I get time tomorrow – but have a look at the pivot data for tomorrow.
For tomorrow let us see the Pivot levels…
R3 2869 against 2807 on Friday
R2 2805
R1 2741
Pivot 2701 against 2712 on Friday
S1 2637
S2 2597
S3 2533 against 2618 on Friday
Projected High Range 2721 to 2773
Projected Low Range 2756 to 2704
Fib Projected High 2793
Fib Projected Low 2632
BUY NF ABOVE 2730 SL 2650 TARGET 2777/2840
SELL NF BELOW 2730 SL 2777 TARGET 2650/2550
STOCKS GAME-
BUY SATYAM ABOVE 40 SL 35 TARGET 45/50
BUY SYNDICATE BANK ABOVE 61 SL 59 TARGET 63/65
BUY DISH TV ABOVE 19 SL 18 TARGET 20/21
BUY FINANTECH ABOVE 470 SL 460 TARGET 480/490
BUY CIPLA ABOVE 186 SL 183 TARGET 189/193
BUY GTLINFRA ABOVE 31 SL 30 TARGET 32/33
BUY HINDALCO ABOVE 44 SL 42 TARGET 46/48
BUY EDUCOMP ABOVE 1760 SL 1680 TARGET 1840/1920
BUY ICICIBANK ABOVE 360 SL 340 TARGET 380/400
BUY RAJESH EXPORT ABOVE 24 SL 23 TARGET 25/26
BUY RANBAXY ABOVE 190 SL 180 TARGET 200/210
BUY RELIANCE ABOVE 1200 SL 1180 TARGET 1220/1240
SELL REC BELOW 74 SL 76 TARGET 72/70
SELL PETRONET BELOW 33 SL 35 TARGET 31/29
SELL BHEL BELOW 1320 SL 1335 TARGET 1305/1290
SELL GRASIM BELOW 1130 SL 1150 TARGET 1110/1090
SELL HINDPETRO BELOW 270 SL 280 TARGET 260/250
cks to watchout for :
Many large banks like SBI , AXIS , Kotak have come close to oct lows and can give a minor pullback move. Whereas PSU banks like BOI , BOB and PNB which were holding up well till now are seeing selling pressure.
AXIS Bank has come close to october low zone of 360-375 and could see a bounce from that range. Buy as closer to the range with a stop below 358 for a small 5-8 % pop. Even Kotak near
BHEL if sustains below 1300-1320 could head towards 1260/1210 in short term.
CESC below 220 can be a short trade for a tgt 210-195 stop of 229. Its a low traded stock so wait for an increase in volumes to go ahead.
Larsen and Toubro has closed below 660 and would be best avoided by investors as targets could be lower. With a lot of news flow volatility would increase too.
The Nifty was at around 6357 level in first week of Jan-08 and fell from the top to touch a low of 4468 level in the middle of March-08. A fall of nearly 1890 points from the top is nearly 30% of the registered high. Then the market took some oscillation till it reaches 5298 in the first week of May with 830 points rise is exactly 50% of the fall.The Nifty again fell from 5298 level to 4392 level to wipe out all the gains made earlier but took some support at the earlier lows that could propel Nifty to bounce in 5-6 trading days to touch a high of 4680 level which is again 30% rise.
The relentless steep fall from the 4680 level to 3848 by first week of July made a knock blow. The Nifty meltdown could wipe out the dreams of Bulls as it was earlier thought as a “BULL market correction”. The fall is again 30% from the top of 5298 level to 3848 level. The Nifty took support from this disastrous level to touch a high of 4215 but fell to 3926 level formed as a double bottom. The Nifty gained some strength to touch a high of 4650 level in the middle of August-08. This rise is exactly 505 of the second fall that triggered from 5298.
The third leg of the fall from the top took when the Nifty touched a high of 4650 level to touch a bottom of 3799 but again bounced as if the support existed at 3800 level to touch a level of 4303 level in 3 days but collapsed to a bottom level at 3199 level, bounced to 3650 in 3 days and continued the fall as extended leg to touch the lowest point till date at 2252 in the last week of October. This carnage in the Indian stock markets can be collaborated to a massacre and this relentless fall from the top to bottom is correlates to 63-65 % fall.
The beauty of the recent rise from 2252 to 3147 level is finding a place as a bounce back of the fall from 4650 then there is one more steep correction……………………..………..then the top for this possible correction be at 3147 level. If the same logic will drag the Nifty to 1940-60 level ??????????????????????
Review
Nifty has closed to second weekly lows (2678.55), since the October low weekly closing (2584). Nifty has lost all its retraced points from previous week low of 2702 and closing around 2828 levels and even closed lower than that – making lower low and lower high for past 3 week. Now for this bear rally to weaken, it has to close above 2965. Now it may target the October low closing levels 2584 and even target 2362, if this ongoing bear rally sustains and gets strengths.
Outlook
On weekly charts, Nifty is indicating immediate resistance at 2766 and 2848 but on the lower side Nifty may find minor support around 2655 and 2600 levels on closing basis. Nifty may attempt some bounce back in this week – since January settlement ends this week but before that it may test 2610 levels and then attempt bounce back.
Support and Resistance for the week
Support 2655-2585-2525
Resistance 2766-2848-2904.
Follow up
1) The first strategy indicating minor profit if initiated @ 173 ( both call and put) , now trading at 155 – one can hold and exit on any bounce back of Nifty above 2700, with stop loss of 2610 on closing basis.
2) The second strategy would have yielded good profit, if imitated and one can hold with stop loss of 2766 on closing basis and book profits around 2610 levels.
Strategy for the week
Nifty
For this week, reinitiate shorts on every attempt of bounce back of Nifty with stop loss of 2860 on closing basis.
Satyam and L&T: what are the options?
Frankly, I (Bulls) was never interested in the proceedings of Satyam and Maytas after the scam. I lost interest in Satyam as the scrip caught wild fancy of the speculators and Satyam turned out to be a "Trader's delight". But, now since L&T has upped its stake in Satyam, I am more willing to write a paragraph or two on Satyam and L&T.
L&T has surprisingly (though not shockingly) upped its stake int Satyam very recently from 4% to 12%. Surprising it was – because this had to happen sooner or later if L&T had to acquire strategic interest in Satyam. But what is surprising is the TIMING of buying shares which is shocking.
Shocking it was - because there is still quite a bit of lack of clarity on the part of Satyam issues. Accounting statement is still not prepared by Auditors based on actual facts. There is uncertainty as to what will be the next step of its majority of the clients. Quite a many contracts of Satyam are up for renewal in next few months. Let us accept the fact that some of the Satyam's businesses ought to be lost, but the dilemma is how much of it will be spared as such?
Option 1:
As of now, as Mr Krishna said, it is all about speculation. Another likely probability in the mind of L&T may be that it may acquire weight in dealing with Satyam issue once its stake is higher in Satyam even before dealing with the regulators on it. Larsen and Toubro may hike stake to 15%.
Option 2:
One another possibility can be that the management may be thinking to up its stake right now when the valuations are going on cheap, on the back of uncertainty and panic amongst investors. So that later on their average can come down once the probable 'open offer' is made to investors to accumulate higher stake in Satyam.
Option 3:
Larsen and Toubro may have decided to play a short to medium term investment game attached with multiple probabilities. One such probability is that they may have decided to buy some stake (below 15%) at current cheap valuations and wait-n-watch as the game is played out over a period of 2-3 months. If they find a fair deal to go ahead with Satyam acquisition they can always hold the incremental bought stake in Satyam. Even if they find the deal unfair for them for a majority take over; sooner or later, someone else will come and suck up the company. At such times, the share prices may move up on the back of stake buying from some other company and L&T may divest its current stake bought at higher levels.
Option 4:
Probability of Satyam going bankrupt or insolvent is low as of now. Every effort will be made by the concerned regulators and new board members that the company sails through after some initial obvious hiccups. It won’t come as a surprise even if 50-60% of its business operations are severed off in times to come. But, even in that case, it would still be a take-over target for some company or other. Law-suits will be part-n-parcel of the game for Satyam issue now. It is to be seen whether the concerned entities take the route of decoupling the liabilities of Satyam and hiving off its other businesses. But, as of now, the likelihood of the company going insolvent is low, based on current circumstances.
L&T and Satyam:
It remains to be seen to what extent does the bet of L&T can come true towards Satyam. Larsen and Toubro has tried to play a speculative game (from what can be assumed as of now) in which they have bought stake at throw away prices, in the process averaging their earlier stake of 4% which was bought at higher levels (the cost of acquisition of which I speculate to be around Rs.150-170 per share).
In the process they've also become the biggest stake holder in Satyam as of now & acquire weightage to that extent on the concerned entities who would take related decisions about Satyam from here. L&T also has presence in IT sector through its subsidiary L&T Infotech and Satyam acquisition may fit strategic in L&T InfoTech’s business.
So, L&T's bet is currently quite a bit of speculation as of now as it has acted on acquiring further stake before any material clarity on various aspects like Satyam books of Accounts, future prospects of contracts with clients, employees future, other counter-bidders for Satyam business, liabilities arising out of law-suits from various entities, etc.
Technical views on L&T:
Technical charts depicts that L&T has a strong support around Rs.690/- which was not breached on closing basis till a week ago. But, on the back of likely MTM losses on Satyam stake, now the stock has breached Rs.690/- levels on a weekly closing basis. This ensures that L&T floats in a completely new range on the down side which may be around Rs.550-720. Fundamentally, L&T is a very sound and diversified company. But its technical charts depict contrary views for the stock. So, going by Technicals respective traders can wait-n-watch as to what is the next fall out for L&T.
What next for Satyam and L&T:
Currently, Satyam is a news-based speculative counter and will make wild swings depending on news flow. It may go up one fine day on news of good prospective acquirer and on the very next day it may go down if some negative news like contract cancellation, new accounting in discrepancy is revealed. On the other side, L&T is a more stable stock as of now, less dependent on news flows. But, the stock has taken a hit from its stake in Satyam. But, one thing that can’t be ruled out absolutely is that even L&T can slowly become news-based fluctuating stock as newer-n-newer revelations come out of Satyam; now that L&T holds substantial stake of 12% in Satyam.
The Indian market opened on lower note on weak global cues and close in red zone. For coming session 2630-2590 will act as support zone on the upside 2740- 2780 will act as resistances zone .Nifty is heading near lower end channel 2590-2520 and market are on oversold zone we can see some pullback.
kidly read the graf ...imp notice to all--------DO NOT SHORT NIFTY NEAR 2640 -2670 SPOT LEVEL..........nifty will take up up turn now............positional call....buy nifty on 27th jan 09 with 2599 as stoploss.......tgt 2770---2800--2830 spot level.........Market may remain in downtrend with huge Volatility
Sensex lost 649.25 points or 6.96% to 8674.35 and Nifty lost 149.90 points or 5.30% to 2678.55 in the week ended 23/1/2009. Obama fever not worked for all the world markets. Globally all stock markets declined on the worry of declining GDP and increasing bank’s NPA. RBI quarterly review of the monetary policy on 27-1-2009 & results from index pivotal will be dictate trend. Volatility may rise, in truncated week, as F&O contracts for January 2009 series expire in this week.
After declining for 10 consecutive weeks, inflation, based on wholesale prices, rose by 0.36 percentage points to 5.6% for the week-ended 10 January 2009, from 5.24% for 3 January 2009. The PM’s economic advisory panel member Mr Saumitra Chaudhuri expects inflation to come down to 3 to 4% by the end of this fiscal.
On the flip side, the Prime Minister’s Economic Advisory Council on Friday, 22 January 2009 lowered India’s growth forecast for the current fiscal to 7.1%, against its earlier prediction of 7.7%, on account of the impact of the global meltdown.
ONGC, Bhel, Maruti Suzuki India, Mahindra & Mahindra, Cairn India, BPCL, Titan, Mundra Port, Tata Power, HPCL, Gail India, Century Textiles, NMDC, Nalco, will declare their December 2008 quarterly results in the forthcoming week.
Use Stop loss strictly in your every trade, because market is heavily volatile with narrow trading range.
| INDEX | THIS WEEK CLOSE | PREVIOUS WEEK CLOSE 16-1-09 | PERCENTAGE CHANGE (%) |
| SENSEX | 8674.35 | 9323.59 | -6.96 |
| NIFTY | 2878.55 | 2828.45 | -5.30 |
NIFTY FUTURE
NIFTY FUT. (2655)
This week is closing of JAN-09 future and option, so, you may see heavy volatility in nifty, keep strict stop loss in every trade. Nifty is having strong resistance of 2720. If close above this level for at least 2 times then u may see 2789-2868-2900 and if close below 2650 then sell nifty for the target of 2565-2498.
BPCL(366.60)
Sell this stock if close below 361 for target of 651-337. Keep stop loss of 373.
AMBUJACEM(66.10)
On chart this stock showing bearish trend, so sell below 64 for target of 61-57. Keep Stop Loss of 68.
CAIRN(152)
buy above 157 for target of 162-167. Keep stop loss of 148.
FEDERAL BANK(140.50)
On chart this stock made double bottom, so buy above 145 with stop loss of 135. Target is 151-156.
Results Today :
SAIL / RECL / GLENMARK PHARMA / GAMMON INFRA / GODREJ INDS / ABG SHIPYARD / NAGA CONST / EIL / SUN TV / CORP BANK / INDIA CEM / EDUCOMP / CENTURY TEXTILE
NIFTY (2678.55)
Support : 2635 / 2595 / 2535 / 2505
Resistance : 2720 / 2745 / 2810 / 2840
SENSEX (8674.35)
Support : 8580 / 8455-90 / 8190
Resistance : 8815-40 / 8950 / 9255
NIFTY FUTURE (2655.3)
Support : 2620 / 2590
Resistance : 2700 / 2745
MKT COMMENTS
NIFTY FUT OI (both series) up with decreasing volumes indicating rollover of short positions to next series.
We expect possibility of pull back from lower levels. Avoid going short at lower levels.
Positional Risky Traders:
JAN NIFTY FUT : Buy @ 2620,Sl 2570,Tgt 2770/2875.Hold Till 29/09
JAN NIFTY 2800 CALL : Buy TARGET 190/95,Hold Till 29/01/2009
On Tuesday,Opening is Flat to Down,
Stay Short Below 2690,Sl Above 2710,Tgt 2675-2645-2595-2570,
Sustain Above 2710,Buy with Sl Below 2690,Tgt 2745-2760-2800
Buy BOMBAYDYIENG Above 145/147
Buy TATAMOTORS,Tgt 140-145-150,Sl 125
TATAPOWER (709) Buy with Sloss Below 690,Tgt 720/25.
Buy CIPLA Above 185,Tgt 195-205-220,Sl 180
Buy ASIANPAINT Above 920,Tgt 940-965-975,Sl 915
Buy PUNJLOYD Above 93,Tgt 96/98/100,SL 90
Buy HCL TECH Above 105,Tgt 110-115-120,SL 100
BUY BPCL@360/65,Tgt 400+,Sl 350,[TIME FRAME 3-7 DAYS]
Sell CENTURY TEXT Below 160/57,Tgt 155/145,Sl 165
Sell BAJAJAUTO Below 455,Tgt 445-435-405,Sl 460
Sell BOB Below 230,Tgt 225-215-20,Sl 240
Sell BIOCON Below 110,Tgt 105-100-95,Sl 115
Sell GRASIM Below 1135,Tgt 1095-1055-1040,Sl 1150
BANK INDIA
Buy Abv 233,Sl 229,Tgt 242
Sell Blw 229,Sl 233,Tgt 220
RELIANCE
Buy Above 1165,Sl 1155,Tgt 1180-1200
Sell Below 1145,Sl 1155,Tgt 1130-1115
HIND PETRO
Buy Above 276,Sl 273,Tgt 280-285
Sell Below 270,Sl 273,Tgt 265-260
JAN FUTURES
POWERGRID : 84.45
Buy POWERGRID Jan Future @ 84/85,Sl 80,Tgt 86.8/87.5/89.9/90.7(Lot Size 1925)
LNT ( 640.85) :
Sell @ 655,Sl 670,Tgt 635/25/15
Or
Buy @ 605/15,Sl 600,Tgt 630/40
SBI (1042) : Sell @ 1070/60,Sl 1085,Tgt 1040/25/15 / Position Short Hold with Sl 1095
TISCO : (166.35) : Sell @ 175/173,Sl 180,Tgt 165/60/55
Sell DIVIS LABS @ 925/23,Sl 940,Tgt 920/915/910/ 900/890/ 880/875/860/855 (Lot Size 155)
CRUDE
Buy Above : 48.5 / 50.56 / 52.7 / 54.75
Sell Below : 45.92 / 44.4 / 43.7 / 43.3 / 40.13 / 38 / 30.2 / Below OverSold Level
GOLD ; Buy GOLD Above 892.50$,Tgt 903.8$/915.7$,Sl 883$
Buy Above: 903.8 / 908.6 / 915.7 / 928 / 933.1 / Above OverBought Level.
Sell Below : 883.3 / 873.1 / 864.7 / 852.7 /851 / 841.4
SATYAM STRATAGY : BUY SATYAM ABOVE 41 SL 31 TGT 46,51,59. IF CROSS 59 THAN IT ZOOM TO KISS 97 TO 106 ZONE. L&T MAY INCREASE THEIR STAKE 4%+
Crude Oil since Dec 2008 is not able to cross & sustain above 50$, which is the major resistance.
Government now has just 40 days left to announce stimulus package. RBI may not cut interest rates in the policy review.
Rumors of the day:
1. Another farm loan waiver is on the cards.
2. Cabinet Minister demanded money from Raju family to bail them out in Satyam scam. Who is he? Original article from Telugu newspaper.
Q3 results of Indian Companies:
1. PTC India: Excellent results. Company reported 300% increase in income and 400% increase in profit. Power trading Solutions Company has 50% market share in the Indian market. But Company is already commanding high valuations. If the Company can continue this kind of growth, then valuation is not a problem.
CMP: 65; P/E: 16
2. State Bank of India (SBI): Bumper results but Maytas issue may pose problems in future. Good long term bet.
3. ICICI Bank: Bad results and will continue to face troubles due to rise in NPAs and fall in deposits. Bond income provided sugar coat but what about business prospects. But ICICI results are slightly above the expectations.
4. NTPC: Company announced good results and may provide shelter option for Mutual funds in this depressed environment.
5. Hindustan Unilever: Fall in net profit but in line with estimates.
6. Divis Labs: Poor results. Stock will see new lows.
CMP: 930
7. Punj Lloyd: Company announced good results but consolidated results are bad– 227 crore loss Vs 92 crore profit.
CMP: 92
1year high-low: 480-91
8. Crompton Greaves: Decent results with 18% increase in sales and 25% increase in net profit but results indicated tough business environment.
10. Torrent power: Positive surprise. FT also announced good results.
Note: Hyderabad based Tanla Solutions and Divis Labs are in good sectors and announced good results till last quarter. But both companies suddenly announced bad results in this quarter. What is wrong? Tanla may show Forex losses but what about Divis?
Bad and worst results: There are so many Companies that are announcing bad to worst results. It is waste to write about them.
Important dates:
1. January 27: RBI- third quarterly review of monetary policy.
2. February 16th: Interim Budget by Pranab Mukherjee.
Statistics of the day:
1. IMF is expected to cut 2009 global growth forecast to 1-1.5%. 50% fall from November, 2008 forecast. My expectation is world will see flat growth in 2009.
2. Petrol price cut – Rs 5 while it is Rs 1 for diesel.
3. Gold in now trading at an all time high price of 14,375 per 10 gram.
4. 70 lakh Americans are expected to receive unemployment benefits by the end of 2009.
5. 25 banks collapsed in 2008 while 3 banks are already collapsed in 2009.
Recession news:
1. Shocking demand: First lay off foreigners and then only Americans – Republican Senator to Microsoft. Extraordinary times- extraordinary demands. Really tough times!
2. Obama’s suit maker, Hartmarx Corporation, filed for bankruptcy. President failed to save his suit maker.
3. Job losses: RBS will lay off 30,000 jobs. Tata Steel lay off 5000 jobs at Corus.
4. Japan: Toyota Motors will cut production by 20% in 2009.
About Stock Market bottom:
It is always difficult to predict about Stock market moments. I can’t say the exact timing of bottom but Stock markets will bottom out around 6,000. That is my gut feeling unless dramatic improvements occur in the economy. We have to see whether economic fundamentals will deteriorate further or not. But Barack Obama’s massive stimulus package and RBI decisions will delay the inevitable stock market crash.
Stock Markets will always give importance to future growth prospects. If markets think that economic situation will improve in the next 3 months, they start to rise from today. Do you think that great Companies like Google, Microsoft, IBM and Bank of America will announce massive lay offs if they believe that economic situation will improve in short term?
Note: I never believe in the domestic consumption and De-coupling theories. Exports based sectors and associated real estate boom are responsible for false slogans like “Shining India” etc. When these sectors are in big trouble, we are heading for big trouble and drastic slow down. We are living in a global economy and will be definitely influenced by recession in USA, UK, Japan, Canada, Singapore, Hong Kong and European Union. These are the economies which registered 4-8% GDP growth rates in 2004.
I am expecting some recovery in February due to Obama package. I generally believe in value and growth investments. But I am now doing opportunistic based investments only. If I find an opportunity, I will invest and exit immediately with 10-20% returns. If I failed to find any opportunity, I will sit on cash even for 1-2 months. I decided not to take unnecessary risks in this once in a lifetime economic crisis.
India GDP growth rate chart:
India registered 9% growth in 2007-08 and expected to register 6.5% GDP growth rate in 2008-09. Sudden rise from 7 to 9% growth rate is responsible for 21,000 levels of Sensex and steep fall of GDP from 9% to 6.5% is the reason behind steep fall of Sensex to 8,000 levels. Now India is expected to register below 6% GDP growth rate in 2009-10, what about Sensex? I am expecting below 7,000 levels. Closely follow economy and take investment decisions.
India GDP growth rate was just 4% in 2002-03 and suddenly rose to 8.6% in 2003-04. Sensex moved from 3,200 levels in April, 2003 to 6,500 levels in February, 2004. That is the effect of GDP growth rate on Stock markets. When growth fell from 8.6% to 6.9% in the next financial year, BSE Sensex fell from 6,000 levels to 4,500 levels in May, 2004.
Future growth rates are very important. India is expected to register 5-5.5% GDP growth rates in the next financial year from 6-7% GDP growth rates in 2008-09. Unless these GDP growth rate projections improve, it is difficult for market to sustain bear market rallies.
Economy wise, India is now in 2004-2005. What was the Sensex level in 2005? Sensex was at 8,000 levels in September, 2005, 7,000 in July, 2005 and at 6,000 in November, 2004. When growth opportunities are good, Stock markets will quickly move upwards and exact opposite will happen when growth is bad. Many analysts are expecting 2-3% growth in GDP in the next 2 quarters.
Statement of the day: "India is not in recession." - Home Minister Chidambaram.
Economy wise, USA is now in 1980 and expected to touch 1970 levels, what was the level of Dow Jones in 1980?
Who expected below 100 levels for Satyam and Punj Lloyd? Who expected below 200 levels for Tata Motors and Tata Steel? Then who can expect below 600 levels for Larsen and Toubro? Who can expect below 900 levels for Reliance? I am not interested in these levels or bear market rallies. I will make regular long term investments only when I get a reasonable picture about economy.
Advice to Long term investors:
What is meant by long term investment? Does it mean that buying at any price and wait for 3-4 years? Think twice. Give importance to Value; Give importance to Growth; Give importance to Price; these values are much more important statistics than Investment duration. We are not big investors like Rakesh Jhunjhunwala who can bear 600 crore losses with a simple smile and invest for long term.
Domestic events that will influence Stock markets:
RBI decision on interest rates, Government stimulus packages, SEBI investigation on accounting, pledged shares disclosures and new scams. Inflation is a non-issue but international events will definitely influence FII capital flows.
Good articles:
1. Best stock market performers in the last 1 year.
2. Excellent article on bank bailouts.
3. Why technology Companies are sitting on billions of cash?
4. 2009 is bad year for IT Professionals.
Download: Mint analysis on Quarterly earnings of Indian Companies.
How to invest in stocks? (In simple terms)
1. I am an ICICI Bank customer but I don’t invest in ICICI Bank stock. My father has Andhra Bank account but I never try to even know its stock price. I recommend SBI.
2. I am a HP petrol user but I don’t invest in HP Stock. I recommend RPL (if necessary)
3. I am an Idea subscriber but I don’t invest in Idea Cellular stock. I recommend Bharti Airtel.
4. My 2-wheeler is a Bajaj one but I recommend Hero Honda for investment.
5. NDTV is my favorite news channel but I hate NDTV stock.
Investment lessons:
1. No sentiments- Be ruthless- Be practical – Be rational – Be confident- Work hard on research- No one can stop you making money.
2. Believe in your gut feeling - Believe in your knowledge - Believe in your research - Believe in your experience - stay away from crowd - look for opportunities - Be responsible for your decisions.
Frankly give answers:
1. Had you exited SBI stock when farm loan waiver news broke out after Budget?
2. Had you exited Satyam stock when scam news came out?
3. Had you exited Ranbaxy stock when FDA ban news came out?
4. Had you exited Real Estate stocks when so much bad news came out in mid-2008?
5. Had you exited Tata Motors when “JLR buy” news broke out?
Whether you hold them or not, ask yourself hypothetically these questions. If your answer is “No”, you need to learn so much about Stock Market investments. All the above are trend setting negative news about those stocks which will have long term impact on the Companies. If you are still hesitant to take action means you don’t have enough knowledge to understand business news and their impact on the stock.
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