Chart : Sensex EOD
Chart 1 : Sensex EOD : A Close View
Another day of trading in a narrow range for markets. After Gap up opening markets hanged out there for couple of hours & stock specific moves are better or remain sideways.
Nifty Close 2803
Supports : 2790 / 2750 / 2725
Resistance : 2825 / 2855 / 2880
We remain with the same views which we expressed yesterday for Trend Reversal Levels for Markets till then stay with Stock specific news or rumor based moves.
PROVISIONAL FUND FLOW FIGURES IN RUPEES CRORES FOR 04 FEB 2009
Fii -27
Dii +284
Fii ( Derivatives ) +638 (net)
Index Futures +310
Index Options +153
Stock Futures +127
Stock Options +48
The Indian market opened with higher note and traded on positive zone for initial part of the session .For coming session below 2750 it can test 2720-2690 levels on the other side 2830-2870 will act as resistances zone .Market are trading in narrow range to side waysThere is a pattern in the daily candle chart of the last 3 days...2 doji after a long bear candle(Bullish if followed by a big bull candle).
Hourly range narrows down to 2780 - 2830..
Last supporting daily average is 2777 (10DMA) & ing averages are many from 2812 -2847.
Heart says "UP" but the mind is "Blank".
Nifty :: Uncertainty at higher level made high wave and inverted hammer bullish candle pattern with shooting star bearish pattern . Required breakout or breakdown any side (Breakout level 2885 & Breakdown level 2660).. As per our weekly post as far as stay above 2660 momentum is up but facing strong resistance near multiple top.. For 5th Feb watch support 2783 and resistance 2815.. Below 2783 momentum seems down, above 2815 momentum up.. Our strategy above 2815 buy on deep and below 2783 sell at high.. Resistance for up move at 2820/2852/2880/2885.. Supports 2783/2750/2716/2700/2692..
MARKET TRADING IN RANGE AND WILL CONTINUE TO DO SO BEFORE FINDING EITHER SIDE BREAKOUT
BULLS:: PROTECT 2710 AND CROSS 2854 WILL SEE GOOD UPSIDE
BEARS:: BREAK 2710 AND WILL SEE TEST 2660 BELOW THAT GOOD FALL .
Sell INFOSYS below 1270 SL 1288 Target 1251-1240
Sell ACC below 523 SL 541 Target 511-505
Sell Grasim below 1270 SL 1291 Target 1254-1236
Sell HEROHONDA below 876 SL 884 Target 869-862-856
Buy AURBINDOPHARMA above 148 SL 442 Target 153-157-161
Daily Market Outlook:
Nifty: (2803) The market is stuck in a range and till there is a clear breakdown or breakout the direction will not be clear, Nifty range is 2750-2850, if it breaks 2750 then 2650-2600 is possible and on the upside above 2850 the rally could go to 3000-3100.
We advised to taking fresh long position till breakout occurs in nifty with level of 2850 or below 2740. Nifty Range is 2680-2870 and if nifty breaks then range are 3100-3150 is possible but we are not sure that these levels will sustain long.
Nifty support at 2705 and Resistance at 2840-2900
BSE Sensex: (9202) Our analysis Says,that be cautious about new bottom on the lower side also possible in Sensex 7200 and in nifty 1850-2000.The Support for the Sensex is 9030-8940 and the Resistance to the up move is at 9410
MKT COMMENTS
NIFTY FUT OI flat with 25% decreasing volumes indicating forming of shorts for STBT.
We expect NIFTY FUT to trade volatile.
NIFTY (2803.05)
Support : 2775 / 2745 / 2705
Resistance : 2810 / 2840-45 / 2865-70 / 2900 / 2955
SENSEX (9201.85)
Support : 9130 / 9060 / 9030 / 8940
Resistance : 9235 / 9305 / 9410
NIFTY FUT (2781.35)
Support : 2750 / 2720 / 2660
Resistance : 2795 / 2825 / 2830 / 2865
BANK NIFTY (4231.95)
Support : 4170 / 4110
Resistance : 4260 / 4320 / 4410
On Thursday, Opening is Flat to Positive,
Stay Short Below 2800,Sl Above 2820,Tgt 2775-2745-2715,
Sustain Above 2820,Buy with Sl Below 2800,Tgt 2840-2855-2870.
Buy MARUTI,Sl 580,Tgt 610-25
Buy INFOSYS Above 1275,Tgt 1300-1320+++,Sl 1250
Buy Punnjlloyd Above 88
Buy ACC Above 530,Tgt 540-545-560,Sl 525
Buy BHEL Above 1360,Tgt 1370-1385-1390,Sl 1345
Buy STER Above 280,Tgt 290-300-305,Sl 275
Sell TCS Below 500,Tgt 490-480-460,Sl 510
Sell SBI Below 1095,Tgt 1080-1065-1025,Sl 1105
Sell NTPC Below @ 175,Tgt 173-170-165,Sl 180
Sell IBREAL Below 91,Tgt 86-83,Sl 95
Sell CENTURY TEXT Below 160
FEB FUTURES
Buy BINDALAGRO (13.25),Tgt 13.6/14.5/15.4 , Sl 11.25
Buy HOTELLEELA @18/18.2,Sl 17.8,Tgt 18.5/18.65/18.9/19.1/19.5/20.8 (Lot Size 3750)
SBI (1097) : Buy Above 1080,Tgt 1100/1110,Sl 1065
TISCO (179.15) : Buy @ 174/76,Tgt 180/185,Sl 170
STERLITE (279) : Buy @ 274/77,Tgt 285/290,Sl 265
Sell Aban @ 435-30,Tgt 425/420/415/410/410/405/400/395,Sl 445 (Lot Size 50)
COMMODITY
GOLD (APRIL): On intraday basis, Spot Gold prices have immediate support at $892/$882 whereas resistance is seen at $912/$924. Spot Silver prices shall find support at $12.10/$11.75 whereas resistance is seen at $12.60/$12.90.
MCX April Gold has Support at 13865/13740 whereas Resistance is seen at 14050/14175 levels.
Advised to Sell Gold when it breaks down below 14080 for target 14000/13950
Gold edged lower, extending the previous two session's losses, as the dollar firmed a touch and a brighter tone to equities took the heat out of safe haven buying. The euro eased to 1.2862 ahead of the ECB's rate decision on Thursday, when it is widely expected to take a break in its rate cutting cycle though it may take action again in March. The dollar barely changed against a basket of currencies on Wednesday before jobs data in the United States and interest rate decisions by central banks in Europe. Investors awaited the U.S. ADP employment report for January, due later , as a pointer ahead of Friday's key jobs data, which could offer direction to the dollar and set the tone for precious metals as the two move in opposite directions.
Technical Trend
Support : 14025 / 13890 / 13815
Pivot : 14100
Resistance : 14235 / 14305 / 14445
SILVER (March): MCX March Silver shall find support at 19380/19250 whereas resistance is seen at 19755/19980 levels.
Technical Trend
Support : 19645 / 19425 / 19300
Pivot : 19770
Resistance : 19985 / 20115 / 20330
COPPER (FEB): U.S. copper futures hurdled back above $1.50 a lb on Tuesday as a weaker dollar and an unexpected jump in pending home sales in December drove the bullish sentiment. Copper for March delivery jumped 8 cents to close at $1.5150 a lb on COMEX. The index of U.S. pending home re-sales climbed 6.3 percent in December, the first jump since August. China, the world’s biggest copper user, started investing a second part of a 4 trillion yuan ($586 billion) stimulus plan and that China's economy could start to recover in the first half of the year fueled the buying. The US Senate was due to begin a series of votes on a near-$900 billion stimulus plan in tax cuts and new spending that President Barack Obama says will help fight the worst economic crisis since the Great Depression. Though, Copper LME stocks resumed their uptrend after a rare decline yesterday, rising by 4,100 tones to touch a new high since November 2003 at 495,300 tones.
Technical Trend
Support : 164.15 / 161.45 / 159.65
Pivot : 165.90
Resistance : 168.55 / 170.35 / 173.05
CRUDE (FEB): Crude Oil remained steady above $40 a barrel, supported by the possibility that OPEC may deepen supply cuts in an attempt to boost prices. OPEC will discuss a further supply cut of about 1 million barrels per day when it meets on March 15, if oil prices remain low, an OPEC source told Reuters on Tuesday. Further Nigeria’s senior oil workers' union has threatened an indefinite strike starting next Monday unless the government takes urgent steps to improve security. Crude inventories are expected up by 2.8 million barrels in U.S. crude stocks, a 1.3 million barrel drawdown in distillate stocks and a 600,000 barrel build in gasoline supply.
Advised to Sell when it breaks down below 2020 for target 1980/???
Technical Trend
Support : 1990.35 / 1951.65 / 1922.35
Pivot : 2019.65
Resistance : 2058.35 / 2087.65 / 2126.35
NICKEL (Feb):Technical Trend
Support : 564.45 / 553.15 / 544.85
Pivot : 572.75
Resistance : 584.05 / 592.35 / 603.65
LEAD (FEB): Trading range 55 to 60, wait for either side break out, thereafter it will show real power.
Technical Trend
Support : 56.95 / 55.15 / 54.05
Pivot : 58.05
Resistance : 59.8 / 60.9 / 62.65
ZINC (Feb) Zinc was again active, closing at $1,160, up $47, as investment buying overshadowed another rise in stocks. Inventories gained 1,225 tones to 346,500 tones, a new high since February 2006.
Technical Trend
Support : 56.25 / 55.25 / 54.45
Pivot : 57.15
Resistance : 58.15 / 58.95 / 60
Star gazing is what I am doing now a days. That is exactly what anyone can when the markets run on their own like an earthworm without a head. The markets have moved on to the phase where in they are trying to find bad news in otherwise perfectly safe havens of investing 
Asia ended mixed with Nikkei up 2.73%, Hangseng up 2.25% and STI down 0.2%. Meanwhile we had a particularly good day in Europe. The Europe opened flat but sensing a green US went on to close higher – FTSE was up 1.54%, DAX up 2.69% and CAC up 2.90%. The US did not disappoint on opening – opening flat with green bias but by the time it closed the results and host of other factors took it down to close at the lowest points of the day. Dow was down 1.51%, Nasdaq down 0.08% and S&P down 0.75%. Today morning the Asia has opened in red but shows chances of going green. maybe a bit too early to say.
Our markets had nothing to show in particular. Still trailing in the middle of Bollinger bands trying to figure out where we have to go. The Bollinger bands are contracting a bit. The volumes were not good. ADX still bullish. MACD still absolutely flat. RSI trying to look up and Slow Stochastic – red below the blue line and neither oversold nor overbought. So there is no direction that is visible from the charts.
Yesterday the markets moved as always in a narrow directionless mode. opened below the R1 and then took support and kept trading above the R1 to finally break it with force – but pivot provided enough strength to make the market close in green.
Let us see the Pivot data…
R3 2904 against 2910 yesterday
R2 2870
R1 2836
Pivot 2808 against 2788 yesterday
S1 2774
S2 2746
S3 2712 against 2667 yesterday.
Projected High Range 2822 to 2853
Projected Low Range 2830 to 2799
Fib Projected High 2858
Fib Projected Low 2763
The upper levels are more or less at the same place but the lower levels have moved up. May continue to have a green closing.
Qualification: MBA (Finance)
Current Job: Equity Analyst.
Positive Economical aspects:
The world is in the midst of the worst economic and financial crisis since the great depression. All we hear daily are bouts of bad news. In such a scenario Dr. Marc Faber rightly pointed out that “The future of Pessimism has never been so bright”.
However, through this article I would like to talk about the more positive things which should happen for Asia and India in the long run. For sure no one can predict how long the current crisis will last and how long will it affect us. But there are certain indicators which help us in understanding that the best of times for us is yet to come.
To start off lets look at a very interesting data on how the per capita income of different countries has been in the last 250 years. I personally believe that everything gets balanced out in the long run and that’s why understanding the implications of this data is important. The chart shows the Per Capita GDP (In 1960- US Dollars).
Chart Source: Paul Bairoch, Victoires et déboires
What is interesting to note is that while for most developed countries the per capita GDP rose by 21 times in the last 250 years, for the least developed countries it just went up 2.5 times. Now, what I intend to explain through this is that the trend has now reversed for good (everything gets balanced out in the long run). It will be these less developed countries along with the somewhat developed countries which will lead the next run for the global economy.
To strengthen my argument, I am presenting the second chart which shows how the share of G7 countries (USA, UK, Japan, Italy, Germany, Canada and France) GDP has fallen as compared to the global GDP over the years.
Graph source: Presentation (usfunds.com)
The data presented in the graph is till 2005. From this it’s very clear that there is a gradual shift of wealth and power to Asia. The emerging markets now hold 70% of the global foreign exchange reserves.
Another big growth driver for Asia and other emerging markets is that there is still very low level of urbanization in this region. Domestic growth in Asia will be fuelled by urbanization. To put things into perspective I would like to present the following numbers. In China the urbanization is around 40%, in India it is around 30%, in Latin America it is around 70% while in the western world it is anywhere between 95-99%.
So as urbanization increases in Asia there will be huge demand for various goods and services, fuelling domestic consumption. Another important thing to consider is that US has a population of 300 million as compared to 3.6 billion people in Asia. You can imagine yourself what this number can do for Asia if 300 million people can make US such a big economy.
Now I would like to shift my focus only to India and try to explain why I feel that the best of times is yet to come for our country. I would like to do this again through some charts as these would make thing clearer.
One of the greatest advantages for India is its demographics. India is house to the highest percentage of young population in the world and will be so even during 2020. What this means is there would be a huge number of people in the working population class. This in turn would lead to higher income for households which in turn will fuel consumption.
Source: Family Budget Study
Also, even by 2020, 44% of the Indian population would be under 25 years of age. This itself is greater than the population of USA.
The next chart shows at what pace urbanization would happen in India. It’s a very important factor as when people move to bigger towns and cities their lifestyle also changes. This increases the need for things like all consumer goods and also many luxury goods.
Source: Family Budget Study
So from current levels of 30% of urbanization increases to 42% in the next 20 years then it effectively means that more then 120 million people would move to towns and city. This is where the huge potential lies for growth for the country and also for the corporate.
One also needs to see how the purchasing power of households will change in the next few years. This will determine to what extent consumption will get a boost. The diagram below will throw more light on that.
Source: NACER (National Council of Agricultural and Economic Research)
Clearly from the chart it is evident that a huge number of households will be in the middle-class category by 2013. An approx of 124 million households can drive consumption and GDP at a rapid pace for sure.
Well these are just few numbers which talk about what is yet to come for India. Economist see India positioned where China was some 10-15 years back (at the beginning of a long high growth period). So while there is gloom and doom everywhere now there are good times that would come and who can make this good time even better is the young population of India.
So we need to face this downturn bravely. We need to create jobs instead of looking for jobs. We need to think out of the box and for sure we don’t need to avoid the stock markets. Instead we should make our Indian markets more mature. If even 30-40% of Indians start investing in stock markets then it would not be driven just by FII’s. We will have control of our stock markets.
A Concluding note on when to buy in the markets:
I have been following this blog for very long as its one of the few blogs or websites where whatever is written makes lot of sense. I find many people asking Dr. Krishna when the best time to enter the markets for long term is. Dr. Krishna’s thoughts are always supreme.
Best time to enter Stock Markets:
I would like to put forward my thought on when to enter and exit the markets on the lines of Peter Lynch thinking.
So basically it’s all about talking and observing people around you who invest in the markets. In the current scenario you will find people saying after some time that the stock markets are the worst thing, stock markets are only for losing money, stock markets is gambling and so on and so forth.
My advice is that when the whole world around you is sure that the stock markets will never recover and is the worst thing in the world then its time to invest. It is during this time that you will find the best stocks for long term at cheapest rates. I can assure you that the markets will not recover very soon this time and that will frustrate everyone. But it’s a golden investing opportunity.
We are all lucky to be in a country like India because I personally feel that in the next 25-50 years it will be an economic superpower. So make use of this crisis to grab the best opportunities and make use of the opportunities around to become a job creator (entrepreneur).
Guest Blogger: Faisal Khan, Kolkata.
Thank you for sharing your positive views on Stock Markets. Your views are in accordance with the legendary investor Rakesh Jhunjhunwala. This post is a must read one for serious long term investors.
Time pass: Interesting Video on Stock Market crash:
German musician Johannes Kreidler created an “interesting satirical video” on Stock Market crash. You can see the collapse of stock prices of Lehman Brothers and other American stock prices from their 2007 highs in this video.
Popout
Recession news:
1. USA: 5,22,000 Americans lost jobs in January, 2009. USA lost 26 lakh jobs in 2008 (highest since 1945). Obama administration is recommending salary caps and bonus restrictions to the executives of Wall Street companies who are receiving funds from stimulus package. Time Warner reported Rs 80,000 crore losses in this quarter.
2. India: Over 5,00,000 jobs are lost between October to December 2008.
3. Japan: Panasonic announced first loss in 6 years and announced 15,000 lay offs. Panasonic is expected to announce Rs 21,000 crore losses in this year.
Statement of the day:
1. Barack Obama: "Some more banks will fail before economic recovery".
2. Fitch Ratings: US credit card delinquencies hit a record high in January, and further deterioration is likely as the economy slows down and unemployment rises
Revised target: NASSCOM revised Software services export growth target to 16-17%. Next year is the most painful one for IT sector as many big companies have just delayed their IT budget spending. As Premji said, there is a clear uncertainty in the business environment.
Good articles:
1. Is the worst over for Satyam Computers?
2. Positive story on Reliance Industries.
Traditionally, Primary markets (IPO) and Secondary markets prospects go hand in hand. The health of primary market stands in direct co-relation to the prospects of the secondary markets. It is through primary markets that the corporate world takes entry on the stock market bourses in order to access funds from the public in general, with a view to boost its scale of operations through expansions.
It all started around February 2008, with the gloomy secondary market conditions aided by panic margin calls during the early part of the correction and constant flow of grim news from the global markets then, that the primary market sentiment took an equal beating from those cues.
Reliance Power: Power Off from IPO’s:
The primary market has been witnessing dearth of Public issues on the back of a general slump in the global and domestic markets. Since Feb 2008, the primary markets witnessed a dampening of mood with a big disappointment in the mega-IPO of Reliance Power from ADAG Group, until when the pinch of secondary market meltdown was already felt and experienced by investors. All investors had their eye glued to Reliance Power IPO to improve market conditions in India, when global markets had just starting to feel the pinch of sub prime crisis in US, which was still in a nascent stage.
But, the mega-IPO failed to cheer up the investors and in fact, turned out to be a dampener with the listing going in to discount zone. The last hope of investors was drained down the water with failure of what was touted as one of the biggest IPO in India. This led to a sudden drying up of corporate attempts to raise funds from the public.
More so, many public issues which attempted to raise funds after Reliance Power IPO like Wochardt, Emmar MGF among others had to be devolved or postponed on the back of excessive pessimism on the part of investors. Another aspect of this fall out of devolvement of above mentioned IPO’s were setting up of high valuations for offerings by the management and lead managers for the public issue.
Structural Change:
Since than primary markets witnessed a structural change of sorts wherein only good quality paper offered at reasonable valuations were lapped up by the investors. Other issues which lacked fundamentals or were expensively valued, had to bear the wrath of the investors. Listing gains no longer remained a certainty as witnessed before in the bull phase. Investors went on to evaluate every IPO much as they would do for buying a stock from the secondary market. New businesses that had reasonably valued alternatives were no longer able to command huge premiums.
IPO Season 2009:
IPO season for calendar year 2009 commenced as late as February with IPO of Gemini Engi-Fab Limited, an engineering company involved primarily in to fabrication business. The issue was slated to open on 3rd February. The Rs.44-crore issue was slated to open on Tuesday and close on Friday. Unfortunately, as per latest news, the issue got cancelled due to some unknown reasons. As per some unconfirmed reports, poor response by big Qualified Institutional Buyers (QIB) is anticipated behind the withdrawal of the issue. This back tracking of the first IPO of 2009 comes as a big jolt for the IPO season 2009.
New IPO: Edserv Softsystems Limited
Issue Period: Feb 05 to Feb 09
Price Range: Rs.55 to Rs.60
Minimum Market Lot: 100 equity shares
Registrar: Karvy Computershare Private Limited.
Issue Size: Approximately Rs.24 crore
Recommendation: Avoid
Grade: Average Fundamentals
Rating: 4/10
Grey Market Premium (in percentage terms): 12-18%
Chances of winning Allotment: Strong
Sector: IT sector (education related)
Sector Overview: (Online Education)
Integrated education is slowly emerging as the de factor standard. The system combines classroom and e-learning products and services to create an effective learning experience. This model provides various advantages as it allows tying learning solutions to business objectives. The concept of technology-based blended learning environments has made collaborative learning a reality today.
Company Summary:
Edserv Softsystems Limited is a seven year old IT solutions company, incorporated in 2001, with an objective of providing integrated learning and placement solutions, customized software solutions, and placement consulting to clients in the field of IT and non-IT verticals that include Healthcare, Banking, Financial Services, Manufacturing, Retail sectors among others.
Recommendation:
Edserv stands to be a very small player in the online education space as compared to its competitors like Educomp, Everonn, etc. Also, if the uncertainties, as reported below, continue going in the future; the stock price may become very volatile and sharply fluctuating.
Some sharp uncertainties can be spotted out in the past results of the company, especially during the period of last 4 years. The company’s net profit before tax and extraordinary items has jumped from Rs.1.31 lacs in the year ended March 2007 to Rs.264.28 lacs during the year ended March 2008 which is surprising and confusing both.
Also, the company has witnessed an up tick in sales during the six months period of April to September 2008 at Rs.434.34 lacs in comparison to Rs.395.33 lacs for the twelve months ended March 2008. But, even on reporting of the sanguine sales figures for the above period, the net profit figures for the same period has, surprisingly, shown a decline from Rs.303.64 lacs to Rs.220.97 lacs. Investors would like to have clarity on the reasons of such uncertain and sharp deviation from steady trend in results.
Though, prospects of the sector that the company operates in seems bright and booming, we recommend investors to ‘Avoid’ this IPO for long-term investment purpose, unless there is certainty and stability in the company’s reporting of its accounting numbers. Uncertainty in results may lead to sharp fluctuations in its stock price in future.
However, high risk investors can take part in the issue subscription to play for short-term listing gains. There is no assurance on the prospects of listing gains which also seems uncertain and a bit risky, looking at the current market conditions. So, low to medium risk investors should stay away from this offering, with long-term prospects more in favor of bigger companies from e-learning space like Educomp Solutions.
BUY NF ABOVE 2777 SL 2730 TARGET 2840/2880
SELL NF BELOW 2777 SL 2840 TARGET 2730/2650
STOCKS GAME-
BUY BICON ABOVE 101 SL 99 TARGET 103/105
BUY BRFL ABOVE 105 SL 102 TARGET 108/111
BUY BALLARPUR ABOVE 15 SL 14 TARGET 16/17
BUY DCB ABOVE 19 SL 18 TARGET 20/21
BUY IFCI ABOVE 19 SL 18 TARGET 20/21
BUY GVKPIL ABOVE 19 SL 18 TARGET 20/21
BUY GUJALKAKI ABOVE 66 SL 65 TARGET 68/70
BUY JPASSOCIATE ABOVE 70 SL 67 TARGET 73/76
BUY RCOM ABOVE 165 SL 160 TARGET 170/175
BUY TVSMOTOR ABOVE 19 SL 18 TARGET 20/21
SELL BAJAJ AUTO BELOW 450 SL 460 TARGET 440/430
SELL BALARAMCHINI BELOW 58 SL 60 TARGET 56/54
SELL HEROHONDA BELOW 875 SL 885 TARGET 865/855
SELL RECLTD BELOW 86 SL 88 TARGET 84/82
SELL RELIANCE BELOW 1300 SL 1320 TARGET 1280/1260
Sensex Time Analysis:
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