Stocks Trading Tips Tricks Techniques

Engulfing bear

2011-12-30T04:36:00.000-08:00

The Nifty has closed in the negative today and is now
expected to trade lower till 4530. A key support in the
immediate run is around 4580 and resistance will be
faced at 4660.

The Nifty ended in the negative with a loss of 22 points
while the Sensex lost 89 points in today’s trading. Of
the 30 stocks of the Sensex, Reliance Industries and
Tata Steel are expected to move down going forward.
The Nifty has given a negative close on the yearly chart
with an engulfing bear pattern, which is a bearish sign
going forward. The Nifty has been sliding down in the
last few trading sessions, closing below the crucial level
of 4693, which is a bearish sign for the market in the
short term. On the daily chart the index had taken
resistance around its 20 day moving average (DMA)
and has now started the next leg down. The Nifty had
bounced last week in an A-B-C corrective pattern and
has started the next leg down with a target of 4480 in
the short term. Overall on the daily chart the Nifty has
completed wave A and wave B, and the next leg on the
down side as wave C has started.

On the daily chart the Nifty is trading below its 20 DMA
and 40 DMA ie 4774 and 4838 respectively. The
momentum indicator has given a negative crossover
and is trading below the zero line on the daily chart.
On the hourly chart, the Nifty is trading below its 20
hour moving average (HMA) and 40 HMA ie 4676 and
4691 respectively, which are its crucial levels in the
immediate run. The hourly momentum indicators have
given a negative crossover and are trading below the
zero line. The market breadth was negative with 715
advances to 757 declines on the NSE.

Resistance @ 20 DMA

2011-10-10T00:12:00.000-07:00

The Nifty has closed in the negative today after a sharp
bounce yesterday; it is now expected to slip down till
4700 in the short term. A key support in the short term
would be around 4900 while resistance will be faced at
5035.

The Nifty ended in the negative with a loss of 72 points
while the Sensex dropped 244 points in today’s trading.
Of the 30 stocks of the Sensex, Kotak Mahindra Bank
and Hindalco Industries are expected to fall further
going forward.

The Nifty has taken resistance around its 20 day moving
average (DMA) ie 5006 and has closed in the negative,
which is a bearish sign for the market. The Nifty has
bounced to retrace the previous correction from 5168
to 4758 and has also taken resistance at the 61.8%
retracement level. The Nifty has retested the previous
swing low of 4720. If it sustains below the same then
the next leg down will confirm for a target of 4350.
On the daily chart the Nifty is trading below its 20 DMA
and 40 DMA ie 5014 and 5075 respectively. On the daily
chart the momentum indicator has given a negative
crossover and is trading below the zero line. On the
hourly chart, the Nifty is trading around its 20 hour
moving average (HMA) and 40 HMA ie 4961 and 4958
respectively, which are its crucial levels in the
immediate run. The hourly momentum indicators have
given a negative crossover and are trading above the
zero line. The market breadth was negative with 505
advances to 954 declines on the NSE.

Nifty index surged higher

2010-09-08T01:39:00.000-07:00

The Nifty index surged higher on Monday.

We think this face of advancement will be substantial, as it is a third wave within a larger fifth wave.

Ultimate targets in the area of 6000 to 6300 are not unreasonable.

The trend in Indian equities is firmly higher.

Nifty get support at 5,330

2010-07-31T23:28:00.000-07:00

The markets moved in an extremely tight range for the third straight week. The Nifty made a lower high of 5,466 and found support at 5,349. The index ended the week with a loss of 82 points at 5,367.
The Sensex moved in a range of 355 points. The index touched a high of 18,194 and then slipped to a low of 17,839. The Sensex finally settled with a loss of 263 points at 17,868.
For the last three weeks, it seems that the Nifty is facing resistance as it approaches the 5,500 mark. At the same time, the index has been able to seek support around 5,350. Next week, the index may seek support around 5,330. However, a breakout in either direction, that is, above 5,500 or below 5,330, could trigger the next move.
In August, the Nifty is likely to move in a broad range of 300 points. On the upside, the index is likely to advance towards 5465-5495-5525. On the downside, the index may decline to 5270-5240-5210.

Weekly momentum turns positive

2010-06-21T22:33:00.000-07:00

The Nifty has achieved the conservative target of the
inverted head-and-shoulder pattern quite smoothly. Now,
on the upside there is a resistance at the previous high of
5400. Hence the Nifty needs to clear that obstacle to go
higher. On the lower side, the hourly averages are good
short-term supports. Now, above 5330 the Nifty is likely
to make a new high, ie above 5400, to achieve the
aggressive target of the inverted head-and-shoulder
pattern that is at 5500. The interesting point to note is
that the weekly KST has come into buy mode which is quite
positive for the medium-term bulls too. Hence, we maintain
our short-term bias up.

Markets in the new Resistance Zone

2010-04-10T20:56:00.000-07:00

The markets, as expected, crossed the 18,000-mark during the week, all due to a solid start. Despite Thursday’s weakness, the markets were able to extend gains for the ninth straight week.

The Sensex touched a high of 18,048 in the middle of the week. Thereafter, it corrected and ended with a gain of 241 points at 17,933. In the process, the index gained 12.7 per cent (2,017 points) at 17,933.

Going by the current trend, it seems the markets are likely to start the week on a positive note, however, the second half of the week could see selling pressure. The nine-week rally may end this week, if the index is unable to sustain above 18,050.

The momentum indicators on the weekly charts are indicating tiredness, and we may see net losses, albeit marginal, next week. The index is likely to face considerable resistance around 18,075, above which it may spurt up to 18,150. On the downside, the index is likely to find support around 17,790-17,700. A break of 17,700 could trigger significant selling during the week.

The NSE Nifty moved in a range of 109 points, it touched a high of 5,400 and a low of 5,290. The Nifty finally settled with a gain of 71 points at 5,362.

The Nifty is likely to face considerable resistance around 5,432, which is the higher end of the Bollinger band on the weekly charts. The daily chart indicates resistance around 5,407. Bulls should continue to have the upper hand, as long as the index sustains above 5,400. On the negative front, selling pressure may intensify when the index slips below 5,320.

Weekly gains in Nifty continues

2010-04-02T21:12:00.000-07:00

On April 01, 2010 Nifty closed in green today, preventing a negative weekly
close—thereby keeping hopes alive for the bulls and testing
the patience of bears. The daily momentum continues to be
in a sell mode, whereas the hourly momentum has come into a
buy mode but trading below the zero reference line, thus
falling short of confirming that the trend has again reversed
on the upside. The market breadth has improved over the last
couple of days but the volumes continue to be low even after
the breakout from the high of the bearish engulfing candlestick
pattern formed on the monthly charts on the Sensex—this is
not a good sign. Nifty formed a hammer candlestick pattern in
Q3 and Doji star candlestick pattern in Q4 almost gaining
nothing in the six months. Nifty has formed a 5 wave declining
pattern on hourly charts in the fall since Tuesday and has
retraced almost 61.8% of its fall from 5330 to 5235. Going ahead,
the high of 5330 remains a crucial resistance and 5266 a crucial
support for if the index breaches 5266, it will slide sharply. So,
keep an eye on these two levels i.e. 5330 and 5266—the next
trend deciders. We continue to maintain our short-term bias
down with the reversal above 5330.

Nifty on hourly chart is trading above its 20 hourly moving
average (HMA) and 40HMA pegged at 5277 and 5276
respectively, which are now its short-term supports. The
hourly momentum indicator KST has turned into buy mode
and now trading below the zero reference line.

Nifty on daily chart is trading above its 20 daily moving average
(DMA) and 40 daily exponential moving average (DEMA) placed
at 5196 and 5028 respectively, which are now its short-term
supports. The momentum indicator (KST) has given a negative
crossover and trading above the zero line. The market breadth
was positive with 1,099 advances and 253 declines on the NSE
and 2,212 advances and 608 declines on the BSE.

The Nifty and Sensex were up by 41 points and 165 points
respectively.

Nifty Close to bearish engulfing

2010-03-27T20:48:00.000-07:00

After giving a breakout from the triangular pattern, Nifty on Mar 26, 2010 continues to trade on upside surpassing the resistance of 5270 and just shy of 5310—the previous swing high made in January when it had formed a monthly bearish engulfing pattern. The index is trading in an upward parallel channel and above 5310. The next target is 5470—the upper end of the parallel
channel. On the lower side, 5260 and 5210 are good short-term supports. The daily KST continues to be in a sell mode, but the hourly KST has come into buy mode making the bulls comfortable. Nifty has given its seventh consecutive positive weekly close in a row, which depicts the strength of bulls. With this, we continue to maintain our short- and medium-term bias up.

Nifty on the hourly chart is trading above its 20 hourly moving average (HMA) and 40HMA placed at 5240 and 5234 respectively, which are now its short-term supports. The hourly momentum indicator KST has turned into buy mode and is now trading near the zero reference line.

Nifty on the daily chart is trading above its 20 daily moving average (DMA) and 40 daily exponential moving average (DEMA) pegged at 5136 and 5082 respectively, which are now its short-term supports. The momentum indicator (KST) has given a negative crossover and is trading above the zero line. The market breadth was negative with 572 advances and 772 declines on the NSE and 1,200 advances and 1,651 declines on the BSE.

The Nifty and the Sensex added 22 and 86 points to its kitty respectively.

Nifty has posted a positive weekly close

2010-02-11T20:09:00.000-08:00

On Feb 11, 2010 Nifty has posted a positive weekly close, which clearly signals that this is a pullback of the fall from 5310 to 4675, which was a five-wave decline. From here, Nifty may test its 20 daily moving average (DMA), which is near 38.2% retracement level and this is also our short-term target. So, on a short-term basis the trend is up for the pullback, till 4748 holds and on the medium term the trend remains down. On the daily charts, the momentum indicator is in buy whereas on the weekly charts the indicator is in sell. This shows that the index is just retracing its fall, which again will be followed by an impulsive down-move. The strong resistance on the upside is at the 20 weekly exponential moving average (WEMA), hence the pullback can stretch to the maximum till the 20 WEMA.

On the daily chart, Nifty is trading below its 20 DMA and 40 daily exponential moving average (DEMA) pegged at 4941 and 4980 respectively, which are the near-term resistance. The momentum indicator (KST) has given a positive crossover and is trading below the zero line. The market breadth was positive with 799 advances and 492 declines on the NSE and 1,617 advances and 1,194 declines on the BSE.

On the hourly chart, Nifty is trading above its 20 hourly moving average (HMA) and 40 HMA placed at 4795 and 4775 respectively, which are now the short-term supports. The momentum indicator (KST) has given positive crossover and is trading above the zero line.

Nifty and Sensex were 70 and 230 points up respectively.

Irrational recovery in Nifty

2010-02-09T22:28:00.000-08:00

On Feb 09, 2010 Nifty opened flat and was trading negative one hour into the trade. However it recovered thereafter to make higher highs and higher lows on the hourly chart. The index has been holding on to its 20DMA pegged at 4655 and has bounced back from there--a bullish sign in the short term. On the daily chart, the NSE benchmark has fallen in a 5 - wave pattern from 5302 to 4675 and expected to retrace around 50% i.e. 5010 levels of the fall. The index had formed an outside bar and has given a breakout on the upside, which is a bullish sign for the market. So, until 4675 is intact the index should retrace the fall and take resistance at 20 DMA.

The index is currently trading below its 20 DMA and 40 DMA placed at 4986 and 4999
respectively, which are crucial resistance levels going forward. The momentum indicator (KST) is on the verge of giving a positive crossover and trading below the zero line.

On the hourly chart, Nifty is trading above its 20 hourly moving average (HMA) pegged at 4747, which is a crucial support in the immediate run. The momentum indicator (KST) has given a positive crossover and trading around the zero line. The market breadth was positive with 707 advances and 587 declines on the NSE.

Both the indices ended higher—Nifty 32 points and the Sensex 106 points up.

Market Now Making Base Before Starting the New Phase of Bull Run

2010-01-30T20:52:00.000-08:00

The markets ended lower for the second straight week as rate hike fears, global cues and futures & options expiry weighed on the sentiment. The Sensex fell below 16,000 for a brief while and touched a low of 15,982. It eventually ended with a loss of 502 points at 16,358.

Sensex has broken the 16,100 support during the week, the trend becomes negative for the next next month as well. The index will have to overcome the 17,470 level to change its quarterly trend. One needs to closely watch the 15,380 level, as a breach of this level may change the long-term trend into negative. In the short term, the 16,900-17,100 range is likely to prove a major hurdle for the Sensex.

Next week, the Sensex is likely to face resistance around 16,700-16,805-16,915. On the downside, the index is likely to find support around 16,015-15,910-15,800.

The NSE Nifty moved in a range of 270 points, from a high of 5,036, the index dropped to a low of 4,766, and finally settled with a loss of 154 points at 4,882.

Momentum indicators such as the Moving Average Convergence Divergence and the Stochastic slow are in the oversold zone, while the 9-day Relative Strength Index and the Directional Index are indicating a pullback in the short term.

The Nifty long-term support is at 4,615, which is its 200-day Daily Moving Average. The Fibonacci retracement of 2009 indicates support at 4,180. Next week, the index may find support at 4,825-4,750-4,715, while it may face resistance around 4,985-5,015-5,050.

In the Monthly charts the MACD indicater for Nifty and Sensex are below 0 line. Now next month i.e. in Febuary 2010 the Market will consolidate and by the second week of March 2010 the market will start its next course of Bull Run just as it started in 2003.

Trendline broken Resistance at hourly averages

2010-01-26T03:08:00.000-08:00

Today on Jan 22, 2010 Nifty has finally breached the major trend line support, where it had stopped yesterday after breaking out from wedge pattern. It took support at the low from where it started its final rally, which is also the close of the previous hammer candlestick pattern. Hence, 4943 was a crucial support which market did hold. Now, going ahead, 5170 remains a very strong resistance in the medium term and 5130 a strong resistance in the short term. Nifty has also posted a negative weekly close with strong volumes on futures and options front--one of the indicators that the index has begun its next move down.

In nutshell, the bounce if any will not be sustainable and hence should be used for going short. On the daily chart, Nifty is trading below its 20 daily moving average (DMA) and 40 daily exponential moving average (DEMA) i.e. 5211 and 5134 respectively, which are resistances in the near term. The momentum indicator (KST) has given negative crossover and is below the zero line. The market breadth was badly negative with 313 advances and 1,021 declines on the NSE and 842 advances and 2,043 declines on the BSE.

On the hourly chart, Nifty is trading below its 20 hourly moving average (HMA) and 40HMA i.e. 5214 and 5221 respectively, which are now the resistances in the short term. The momentum indicator (KST) has given positive crossover but is trading below the zero line.

Bulls stage fierce recovery to 5050 levels

2009-11-20T21:16:00.000-08:00

Today, Nifty staged a strong bounce-back from its intraday
low, giving a close above the psychologically important
5050, which is 78.6% retracement of the previous fall.
However, to gain more strength, it needs to close above
5080. On lower side, 4920 was held as good support in
the short term. Going forward too, till this level is held
we may see good amount of buying. Nifty posted a weekly
positive close; Toast to the bulls. The index also closed
above 5050 giving further conviction for the up-move—
Cheers to the bulls. But, till the swing high is not surpassed
we maintain our bias down, as today’s move is anticipated
just as retracement of this fall.
On daily chart, Nifty is trading above its 20 daily moving
average (DMA) and 40 DMA at 4914 and 4894 respectively,
which are now supports in the near term. The momentum
indicator (KST) has given positive crossover and is close
to the zero line. The market breadth was positive with
736 advances and 544 declines on the NSE and 1,519
advances and 1,321 declines on the BSE.
On hourly chart, Nifty is trading above its 20 hourly moving
average (HMA) and 40 HMA at 5001 and 5027 respectively,
which are now supports in the short term. The momentum
indicator (KST) has given positive crossover and is trading
close to the zero line.
Nifty and Sensex ended in green gaining 63 and 236 points
each. Of the 30 stocks of Sensex, Hindalco Industries (up
3.47%) and ACC (up 4.55%) were the top gainers, while
Bharti Airtel (down 1.40 %) and Reliance Infrastructure
(down 0.62%) were the top losers.

Resistance at 5050 held and Rising wedge broken

2009-11-19T20:04:00.000-08:00

Nifty finally could not sustain above 5050 despite several
attempts by the bulls and the bears were successful in
dragging it below 5000. The downturn has resumed exactly
from 78.6% retracement of the fall from 5182 to 4538,
which signals that the pullback of the fall is almost over.
This will be confirmed once we get a weekly negative
close. The index was moving up with an absolute negative
divergence between prices and volumes, with prices and
oscillators giving an early sign of weakening momentum
and limited upside. However, on the lower side 16370 on
Sensex and 4860 on Nifty are crucial supports.
On daily chart, Nifty is trading above its 20 daily moving
average (DMA) and 40DMA at 4890 and 4964 respectively,
which are now the supports in the near term. Momentum
indicator KST has given positive crossover and is close to
the zero line. The market breadth was negative with 386
advances and 877 declines on NSE and 1,131 advances
and 1,740 declines on BSE.
On hourly chart, Nifty is trading above its 20 hourly moving
average (HMA) and 40 HMA at 5040 and 5021 respectively,
which are now the resistances in the short term.
Momentum indicator KST has given negative crossover
and is trading below the zero line.
Nifty and Sensex ended in red losing 66 and 213 points
respectively. Of the 30 stocks of Sensex, ACC (up 0.41%)
and HDFC (up 0.44%) were the top gainers while Hindalco
Industries (down 3.46 %) and Reliance Infra (down 3.90%)
were the top losers.

Rising wedge- bearish pattern

2009-11-19T00:11:00.000-08:00

Nifty is managing to stay above 5050, but struggling to
move higher on account of weakening momentum on
hourly charts. There’s been a continuous negative
divergence between the index price and momentum, so
the only thing which can lead to higher moves is
maintaining the averages on hourly as well as daily charts.
The volumes too are drying at higher levels. So, in short
term Nifty above 5050 can go up to 5150, which is also
our short-term target. Nifty is forming a rising wedge
pattern which favours bears. In nutshell, there is a crucial
support at 5030 and 4940 on the lower side, and till those
are maintained we may see some buying at lower levels.
On the daily chart, Nifty is trading above its 20 daily
moving average (DMA) and 40 DMA at 4894 and 4901
respectively, which are now the supports in the near term.
The momentum indicator (KST) has given positive
crossover and is close to the zero line. The market breadth
was positive with 720 advances and 555 declines on NSE
and 1,635 advances and 1,273 declines on BSE.
On hourly chart, Nifty is trading above its 20 hourly moving
average (HMA) and 40 HMA at 5048 and 4997 respectively,
which now are the supports in the short term. The
momentum indicator (KST) has given negative crossover
and is trading close to the zero line.
Nifty and Sensex ended in red marginally 8 and 52 points
respectively. Of the 30 stocks of Sensex, Tata Motors (up
3.14%) and TISCO (up 1.68%) were the top performers
while ICICI Bank (down 1.47%) and Reliance Infrastructure
(down 3.20%) were the weak performers.

Volume and price-Negative divergence

2009-11-17T19:48:00.000-08:00

Nifty opened negative but recovered from its lows in the
second half of today’s session giving a Doji close in the
end. This signals that traders are indecisive about the
next move on the index. Nifty traded in the range of 5000-
5080, closing just above the 5050 mark, which is 78.6%
retracement of the fall from 5180 to 4538. Still the close
above this level is not convincing enough. Hence, Nifty
has to sustain above this level to gain further strength.
On lower side, 4940 and 4860 are the two crucial supports
which are holding Nifty up. So till these levels are
maintained we may see some buying on the lower side.
The interesting thing about this rally is that there is a
negative divergence between volumes and index price--
the price is rising at declining volume because of which
the whole move becomes a bit skeptical. So the volume
should support the further increase in price or else we
might see the downtrend resuming.
On the daily chart, Nifty is trading above its 20 daily
moving average (DMA) and 40 DMA at 4897 and 4961
respectively, which are now the supports in the near term.
The momentum indicator (KST) has given positive
crossover and is close to the zero line. The market
breadth, the number of advancing shares to declining
shares, was negative with 592 advances and 678 declines
on the NSE and 1,361 advances and 1,503 declines on the
BSE.
On the hourly chart, Nifty is trading above its 20 hourly
moving average (HMA) and 40 HMA at 5011 and 4891
respectively, which are now the supports in the short term.
The momentum indicator (KST) has given negative
crossover and is trading close to the zero line.
Nifty and Sensex ended in green marginally, up by 4 points
and 18 points respectively. Of the 30 stocks that make
the Sensex, Tata Consultancy Services (up 3.67%) and Hero
Honda Motors (up 2.41%) were the top performers while
ONGC (down 2.29%) and ACC (down 2%) were the weak
performers.

Bulls Vs Bears Neck to neck

2009-11-16T20:23:00.000-08:00

Nifty opened in green and traded in a very narrow range
of 5030-5080. Today, Nifty finally managed to surpass 5050
level, which is 78.6% retracement of the fall from 5182 to
4538, but has just closed near it, which is a dicy signal
going ahead. Above 5050 levels, gates are now open for
our short-term target of 5150. The daily oscillator has
given positive signal, which is good sign in the near term,
but it is trading below the zero reference line, which is
the only concern in the medium term. The volume remains
average throughout the rally. So, a convincing close above
78.6% retracement level will only help Nifty to gain further
strength. Till then 4940 and 4860 remain crucial supports
on lower side.
On daily chart, Nifty is trading above its 20 daily moving
average (DMA) and 40DMA at 4901 and 4956 respectively,
which are now supports in the near term. The momentum
indicator (KST) has given positive crossover and is around
the zero line. The market breadth was positive with 837
advances and 439 declines on the NSE and 1,780 advances
and 1,142 declines on the BSE.
On hourly chart, Nifty is trading above its 20 hourly moving
average (HMA) and 40HMA at 5011 and 4891 respectively,
which are now supports in the short term. The momentum
indicator (KST) has given negative crossover and is trading
above the zero line.
Nifty and Sensex gained 59 and 184 points each. Of the
30 stocks of Sensex, Maruti Suzuki India (up 5.45%) and
Reliance Communications (up 3.05%) were the top
performers while Tata Consultancy Services (down 0.63%)
was the weak performer.

Nifty Triple top formation

2009-11-13T11:14:00.000-08:00

Nifty traded in a range of 5030-4940 finally closing around
5000. It is struggling to sustain above 5000 as there exist
a crucial resistance at 5050 which is 78.6% retracement
of the fall from 5182-4538. On the down side 4940 acted
as a support below which 4850 is the crucial support for
the market. The hourly oscillators are in sell mode giving
negative divergence. Nifty has made triple top above
5000, so going forward it becomes important for Nifty to
surpass it to gain more strength failing which open gates
for lower levels. So, above are the levels which remain
key as breach of any will lead to major move.
On the daily chart, Nifty is trading below its 20DMA and
40DMA i.e. 4907 and 4951 respectively, which are now
supports in the near term. The momentum indicator (KST)
has given positive crossover and is around the zero line.
The market breadth was negative with 617 advances and
651 declines on the NSE and 1422 advances and 1440
declines on the BSE.
On the hourly chart, Nifty is trading above its 20HMA and
40HMA i.e. 4969 and 4891 respectively, which are now
supports in the short term. The momentum indicator (KST)
has given negative crossover and is trading above the
zero line.
Nifty and Sensex gained 46 and 153 points each. Of the
30 Stocks of Sensex Maruti (up 3.90%) and Ongc (up
3.07%) were the Top performers while Ranbaxy (down
0.38%) and Cipla (down 0.38%) were the weak performers.

Nifty 5050 level is crucial

2009-11-13T00:29:00.000-08:00

The Nifty opened in the negative on weak global cues but
has taken support at the 61.8% retracement of the fall which
is 4940. On the upside 5050 remains a crucial resistance
that is 78.6% retracement of the fall from 5182 to 4538. In
yesterday’s session too, it had taken resistance around 5050
after which we had a sharp sell-off. So, in order to gain
more strength the Nifty needs to cross the 5050 level
convincingly. On the lower side, 4940 and 4850 remain nearterm
supports.
On the hourly charts, the KST momentum indicator has a
given a negative crossover and is trading above the zero
line and has given negative divergence. The Nifty is trading
above the 20-HMA and 40-HMA, ie 4949 and 4859
respectively, which are supports in the short run. The market
breadth is positive with 787 advances and 421 declines.

Of the 30 stocks of the Sensex, Maruti (up 2.37%) and TCS
(up 1.96 %) are the top gainers while ONGC (down 0.11%) is
the weak performer.

Sharp U-turn

2009-11-12T03:45:00.000-08:00

Falling from 4940 in yesterday’s trade and closing in red
was quite convincing that Nifty has started its next leg
down. However in today’s trade the index made a sharp
turnaround and swifly surfassed 4940-4970, which was
our reversal level. So, now, Nifty is trading above 61.8%
of the fall from 5182 to 4538, which signals that it can
retrace more from here till 78.6% or even the whole move.
So, in short term, we revise our bias to buy with a target
of 5150 and a reversal down below 4850. We maintain
our medium term bias down with a reversal above 5180
only.
On the daily chart, Nifty is trading below its 20 daily
moving average (DMA) and 40 DMA at 4920 and 4943
respectively, which are now supports in the near term.
The momentum indicator (KST) has given positive
crossover and is trading below the zero line. The market
breadth was positive with 901 advances and 383 declines
on the NSE and 1,781 advances and 1,105 declines on the
BSE.
On the hourly chart, Nifty is trading above its 20 hourly
moving average (HMA) and 40HMA at 4892 and 4791
respectively, which are now supports in the short term.
The momentum indicator (KST) has given positive
crossover and is trading above the zero line.
Nifty and the Sensex gained 122 and 409 points
respectively. Of the 30 stocks of the Sensex, Reliance
Energy (up 5.31%) and Infosys Technologies (up 4.08%)
and TISCO (up 4.28%) were the top performers.

Break in four-day winning streak on NSE and BSE

2009-11-10T08:13:00.000-08:00

After opening in green on very strong global cues, Nifty
gave up all its gains and finally ended in red snapping
four-day long winning streak. Nifty has turned down right
from 61.8% retracement of the fall from 5182-4538. So if
this high is held, the next leg down will ensue and will
drag Nifty down quite lower. The downtrend which started
from 5182 gets more confirmed when we observe the
broader indices such BSE Metal, BSE Midcap etc, which
had five wave declines signaling that this pullback is just
a retracement of the fall and once it gets over the next
leg down with five wave declines should start. Also, there
is a gap and averages resistance at higher levels near
4940-4970. So till Nifty trades below these levels we
maintain our bias down.
On daily chart, Nifty is trading below its 20 daily moving
average (DMA) and 40DMA at 4922 and 4938 respectively,
which are strong resistance in the near term. The
momentum indicator (KST) has given positive crossover
and is below the zero line. The market breadth was
negative with 565 advances and 715 declines on the NSE
and 1,329 advances and 1,551 declines on the BSE.
On hourly chart, Nifty is trading above its 20 hourly moving
average (HMA) and 40 HMA at 4839 and 4758 respectively,
which are now supports in the short term. The momentum
indicator (KST) has given negative crossover and is trading
above the zero line.
Nifty and the Sensex shed 17 and 58 points respectively.
Of the 30 stocks of the Sensex, Tata Motors (up 2.26%)
and State Bank of India (up 2.14%) were the top gainers
while Hero Honda Motors (down 3.27%) and Bharti Airtel
(down 4.47%) were the top losers.

Pullback nearing end Strong resistance at 4860

2009-11-06T01:09:00.000-08:00

Nifty traded quite volatile in the first half but finally closed
up continuing the pullback, which started yesterday. On
the upside, Nifty has a resistance at 4810 and 4860 and
this pullback should end around these levels after which
the next round down will resume. The momentum
indicators continue to be in sell mode, which also signals
weakness going forward. So in nutshell this rally should
be taken as a selling opportunity around current levels
eyeing for Nifty below 4500 which is also our short term
target.
On the daily chart, Nifty is trading below its 20 daily
moving average (DMA) and 40 DMA at 4938 and 4930
respectively, which are resistances in the near term. The
momentum indicator (KST) has given negative crossover
and is below the zero line. The market breadth was
positive with 951 advances and 322 declines on the NSE
and 1,872 advances and 929 declines on the BSE.
On the hourly chart, Nifty is trading above its 20 hourly
moving average (HMA) and 40HMA at 4670 and 4743
respectively, which are now resistances in the short term.
The momentum indicator (KST) has given positive
crossover and is trading below the zero line.
Nifty and the Sensex gained 55 and 152 points each. Of
the 30 stocks of the Sensex Reliance Communications (up
5.34%) and Reliance Energy (up 5.59%) were the top
gainers while State Bank of India (down 1.14%) and Gujarat
Ambuja (down 3.33%) were the top losers.

Sharp sell off Markets Below 20 WMA

2009-11-03T21:57:00.000-08:00

Nifty traded in a range of 4750-4650 in the first half of the session, but ended the day with a steep cut on the downside. Nifty has been trading way below its daily averages, but has given its first close below its 20 weeeklymoving (WMA). This signals a strong medium-term bearish outlook. On the higher side, 4750 remains a crucialresistance and 4350 a short-term support.

On the daily chart, Nifty is trading below its 20 daily moving average (DMA) and 40 DMA at 4966 and 4923 respectively, which are resistances in the near term. The momentum indicator (KST) has given a negative crossover and is trading below the zero line. The market breadth was negative with 168 advances and 1,122 declines on the NSE and 596 advances and 2,215 declines on the BSE.

On the hourly chart, Nifty is trading below its 20 hourly moving average (HMA) and 40HMA at 4747 and 4840 respectively, which are now resistances in the short term. The momentum indicator (KST) has given negative crossover and is trading below the zero line.

Nifty and the Sensex were down 148 and 491 points for the day. Of the 30 stocks of the Sensex, Maruti Suzuki India (up 1.13%) and Dr Reddy’s Laboratories (up 2.90%) were the top gainers while Hindalco Industries (down 10.50%) and ACC (down 6.20%) were the top losers.

Red October in Stock Market

2009-10-31T22:33:00.000-07:00

Nifty managed to open positive, bouncing from its next
crucial support of 4750 and with the help of positive global
cues, but did not sustain at higher levels. Finally in the
second half, 4750 was broken and as expected the selloff
then was sharp.

October is conventionally known as a
month of correction in the stock markets globally. Black
Monday refers to Monday, October 19, 1987, when stock
markets around the world crashed, shedding a huge value
in a very short time. The Black Monday decline was the
largest one-day percentage decline in the stock markets’
history and there are several other occasions when such
events have happened in October. One such instance is
October 2008. The history repeats itself and the same
happened this year in 2009, though at a milder scale.

The benchmark index gave a monthly negative close, which
further signals that the downtrend which started in this
month has still more to go on the lower side. So, we
continue to maintain our short and medium term bias
down, as the wave patterns and momentum both signals
a more downside.

On the daily chart, Nifty is trading below its 20 daily
moving average (DMA) and 40DMA at 4992 and 4925
respectively, which are resistances in the near term. The
momentum indicator (KST) has given negative crossover
and is below the zero line. The market breadth was
negative with 487 advances and 777 declines on the NSE
and 1,069 advances and 1,740 declines on the BSE.
On the hourly chart, Nifty is trading below its 20 hourly
moving average (HMA) and 40HMA at 4800 and 4894
respectively, which are now resistances in the short term.

The momentum indicator (KST) has given a negative
crossover and is trading below the zero line.
Nifty and the Sensex shed 39 and 156 points each. Of the
30 stocks of the Sensex Grasim Industries (up 2.22%) and
Tata Motors (up 1.80%) are the top gainers, while Bharti
Airtel (down 6.38%) and Reliance Communications (down
7.37%) were the top losers.

Tail-end recoverySupport at 2694

2008-11-17T20:30:00.000-08:00

The markets started the day on a flat note, slid afterwards
and during afternoon session tanked further into the red.
Though the markets ended in the negative territory, they
managed to trim the losses on the back of buying at lower
levels during the final hours of trade. On the daily chart,
Nifty saw a tail-end recovery from 50% retracement level
(of the rise from 2,252 up to 3,240), which has still kept
the hopes alive in the bulls’ camp. Further, on the hourly
chart, if Nifty clears the hurdle of 20-hourly simple moving
average (HSMA) and 40-hourly exponential moving
average (HEMA) without breaching today’s low of 2,694,
the probability of Nifty going above the neckline of
inverted head and shoulders pattern will increase. On the
daily chart, the momentum indicator has not yet given
any bearish signal. The market breadth was the only sign
of concern as the losing stocks outnumbered the advancing
ones.

On the hourly chart, the momentum indicator KST has
given a positive crossover, which points towards a bullish
scenario in coming sessions. Our short- and mid-term
biases are up for the targets of 3,000 and 3,450
respectively with the short- and mid-term reversal pegged
at 2,650.

Of the 13 sectors of the BSE, except BSE IT, all other
sectors ended in the red with the BSE Realty, BSE Bankex
and BSE CD (consumer durables) leading the fall. Among
the 30 stocks of the Sensex, Wipro (up 5%), ACC (up 4%)
and Maruti Suzuki India (Up 2%) led the pack of gainers.
While HDFC Bank (down 9%) and Reliance Infrastructure
(down 7%) led the pack of losers.

Market showing points of negative sentiments

2008-11-16T22:10:00.000-08:00

FRIDAY’S closing levels for the Sensex and Nifty were the lowest in nine trading sessions. The Nifty closed at 2810.35, below its major support level of 2860 on a weekly basis. On the weekly charts, formation of long shadow candle indicates good resistance at 3200-3250 levels, which is also indicated by the 10-week centre moving average. The 28-day RSI (relative strength index) oscillator is currently taking support on its nine-day moving average. A positive or negative signal will be triggered when the RSI breaks down or bounces back from its moving average. The Nifty, which currently is moving in a range between 2800 and 3200, may see rise in volatility if it slips below 2800. It could fall sharply all the way down to 2670-2550 levels. On the upside, it could breach 2920, and 3030 and 3200 are the key levels which the index will have to surpass to form a positive trend. Sentiment indicators like advance-decline ratio indicates negative sentiment. The rise in trading volumes in a falling market also indicates a bearish mood. International markets, which are one of the major influencing factors for our stock markets, are likely to remain volatile. The Dow Jones Industrial Average index, which is moving in a range between 8000 and 9640 for past few weeks, may test the lower range again in the coming week. If Dow breaks below the 8000 level on closing basis, the next major support exists at 7400-7500 range. In the daily Dow Jones chart, technical indicator Stochastic (20, 3, and 3) is just trading above its upward trend line and forming a negative reversal pattern as Stochastic is going up but price is not. Breaching of Stochastic trend line will provide early signal for downward breakout and any bounce from here will face resistance at levels of 8900 and 9300. On weekly basis, all sectoral indices closed on a bearish note and there was no buying interest. Auto, capital goods, consumer durables and metal were the weakest sectors last week and on Friday fresh selling was seen in IT and realty sectors. FMCG and healthcare sectors are likely to perform better than others because of the defensive nature of these industries. Index heavy weights like Reliance Industries, Infosys, Maruti, HDFC and ONGC appear weak on their daily as well as weekly charts. Reliance Industries: The stock has a key support at Rs 1,090. Below this level, it could fall to Rs 1,000 and Rs 920. Only a close above Rs 1,250 will change its short-term trend upwards. ONGC: The stock has broken its 20-day Simple Moving Average and is likely to test Rs 650. HDFC: The stock fell on heavy volumes, indicating more bearishness in the short term. It could test Rs 1,470. Maruti: The stock has breached its long term support level of Rs 550. It could weaken to Rs 500. Infosys Technologies: The stock has been trading at the lower end of the Rs 1,200-1,400 range for the past few days. Any breakout on downside may pull the stock down to Rs 1,100 and then Rs 1,050.

Choppy session Retracing previous rise

2008-11-14T22:26:00.000-08:00

Markets started the day on a positive note on the back of
positive global cues. They remained volatile and the
indices oscillated around the previous close all through
the day. At the end of the session, bears won the tug of
war due to which the market ended in the red. On the
hourly chart, Nifty has given a negative crossover of 20-
hourly simple moving average (HSMA) and 40-hourly
exponential moving average (HEMA). However on account
of positive momentum cycle on the daily chart the negative
crossover of 20-HSMA and 40-HEMA will not have a strong
impact and the negative crossover is expected to violate
in the coming sessions. Further Nifty is expected to take
support around 61.8 % retracement level (of the rise from
2,252 to 3,240) at 2,650. On the daily chart, the
momentum indicator KST is still riding its positive
crossover. Market breadth that was dominated by the bulls
slipped under the command of bears at the end of the
session, which is sign of concern.

On the hourly chart, the momentum indicator KST is about
to give a positive crossover. Our short-term bias is revised
up for the target of 3,000 with reversal placed at 2,650.
Our mid-term bias is also still up for the target of 3,450
with reversal placed at 2,650.

All the 13 sectoral indices of the BSE except BSE FMCG
ended in the red with BSE CG, BSE Auto and BSE Metal
leading the fall. Among the 30 stocks of the Sensex, Bharti
Airtel (up 4%) and Reliance Communications (up 3%) led
the pack of gainers. While Tata Motors (down 9%), ACC
(down 9%) and Tata Steel (down 6%) led the pack of losers.

Opec fresh output cut to halt slide

2008-11-14T22:11:00.000-08:00

SWELLING fuel stocks and a more than $90 drop in the oil price has driven Opec to call another round of urgent talks that could agree a deep supply cut to try to shore up the market. Since early September, the Organisation of the Petroleum Exporting Countries has already agreed to reduce supply by a total of two million barrels per day (bpd). It could announce a further cut of 1.5 million bpd at talks in Cairo at the end of the month, an Opec delegate said on Friday. “The organisation needs to cut more rather than less — probably in the range of 1.5 million,” the delegate told a news agency, adding “Demand is going down every day along with the price and we don’t want a big stock-build.” A reduction of that size would be deeper than the one million bpd many analysts have said is necessary, but the organisation has been monitoring an increase in the number of forward days of stock cover, which is a key indicator for the group. Market sources have said Opec has so far removed more than half of the total cuts of 2 million bpd announced at a planned meeting in September and emergency talks in October, but that has failed to halt the price slide. “The price has put a gun to their head. That’s why they’re meeting,” said Mike Wittner of Societe Generale. In September, oil was still around $100, compared with above $60 during the October meeting and this week’s low of less than $55 a barrel — more than 60% below the alltime high of $147.27 struck in July. On Friday, oil prices fell more than $2 on persistent demand worries amid dismal retail sales data and a stronger dollar. US light crude for December delivery was down $1.84 or 3.2% at $56.40 a barrel by 21:30 pm IST, after trading from $56.16 to $59.96. London Brent crude for January — the new front month — lost $1.03 to $55.21 a barrel. The organisation has avoided naming a target price, but some in the group have said privately around $70 a barrel is a level that allows both producer and consumer needs to be met. Instead of focusing on Opec’s determination to reduce supplies, the market’s attention has fixed on the impact of the worst economic slowdown since World War-II on fuel demand and the resulting rise in fuel inventories. At the same time, Opec has watched the number days of forward cover rise. In its monthly market report on Thursday, the International Energy Agency, which represents consumer countries, said oil stocks in developed countries equated to 55 days of forward cover at the end of September and could rise to 56, according to preliminary October data. Figures from the US Energy Information Administration also put September and October forward cover at 56 days. “If winter demand does not erode inventory back down to 53-54 days, there will be excess supply in late January or February of 1.6 million bpd,” said Sadad al-Husseini, a former top executive at Saudi Arabian oil firm Saudi Aramco. The organisation will not release its monthly market assessment until Monday, but its data is widely expected to show a downward revision in demand growth. Following Opec’s last emergency talks in October, supply cuts were very swiftly begun. Many Opec countries use an allocation system, which sets supply levels weeks in advance, but they still have the option of using operational tolerance to add or subtract 10% of total volume. Calling a meeting two weeks earlier than one already set for December 17 in Algeria need not make a difference to how quickly supplies are tightened ahead of early next year when a seasonal drop in demand is expected. But frequent meetings can send a signal to the market that OPEC is determined to act as it did after the Asian economic crisis drove prices below $10 a barrel in 1998.

Rupee records biggest weekly drop

2008-11-14T22:06:00.000-08:00

ALTHOUGH the rupee partly recovered part of huge losses it had registered on Wednesday, this still was the biggest weekly drop in a month on concerns that foreign funds would continue to exit their investments in the stock market. Liquidity remained stable as banks borrowed close to Rs 8,000 crore from RBI even as Rs 10,000 crore left the system after auction of long-dated government securities. The rupee ended at 49.01 against the dollar, off an intra-day low of 49.49, which was its weakest since October and down more than 3% in the week. One of the clear implications of deepening economic crisis for India is the continued pressure on liquidity and on the rupee. For the stock market, it could mean continued FII selling in the near term as financial institutions in developed economies continue to deleverage. However, he expects that continued pressure on emerging market liquidity is likely to force central banks to continue monetary easing and RBI should be no exception, he says. The rupee hit a record low of 50.29 against the dollar in late October. After gaining more than 12% against the dollar in 2007, it has fallen around 20% this year. The BSE sensex, India’s benchmark index, fell 1.6% on Friday to their lowest close in more than two weeks as the gloomy global economic outlook wilted early gains, with wary investors eyeing this weekend’s G20 meeting for some direction. Indian overnight call money rates fell on Friday as demand for funds was lower after the government infused Rs 10,000 into the system by repurchase of MSS bonds on Wednesday. They ended the day at 7.25%, trading during the day between 7% and 8%. Even the Rs 10,000-crore auction of long-dated government securities did not seem to have much impact on them. Dealers say although market stabilisation bonds buyback has helped, this will only last for a day or two as the market will again have outflows on Monday. Bonds rallied for a third day, pushing yields of benchmark 10-year bonds to a nine-month low, after a government report showed the inflation rate fall the most in at least 18 years to just under 9% in the week ended November 1. This was their biggest gain in almost three weeks on speculation that the accelerated slowdown in price gains will add pressure on the central bank to cut borrowing costs. The yield on the 8.24% note due on April 2018 fell 13 basis points to 7.48%.

Investors may see temporary gold shortage

2008-11-12T23:24:00.000-08:00

INDIA is likely to face gold shortage in the near future with more people buying the yellow metal after global meltdown in Europe. With gold being looked as a lucrative investment option in European market, back home, the yellow precious metal will face the temporary shortage. Europe is unable to supply gold to India because European investors have started investing in gold.

Gold prices regained some of its recent losses in the Indian market on Wednesday despite a fall in international markets. Local markets gained mainly on the back of stockists’ buying who returned to market after a fall in equity prices. Some of the investors might have shifted their funds in gold from weak stock markets, boosting the prices of this metal. In Mumbai, pure and standard gold rose by Rs 80 and Rs 65 to Rs 11,885 and Rs 11,815 per 10 gm, respectively. In international markets, gold prices declined by more than 2% as the dollar firmed up against the euro, supported by lower crude prices. In London, spot gold fell to $717.00/719.00 an ounce.

Bulls bleed with Dismal close

2008-11-12T23:10:00.000-08:00

The markets started the day on a weak note. They remained volatile in the subsequent hours of trade. The indices oscillated around the previous close till the afternoon session. While in the penultimate hour of trade, the markets tanked and broke the swing low of 2,860, which was a good support for the markets. Finally the market ended in the red with some range-bound movement in the final hour of trade. On the hourly chart, Nifty has broken the neckline of the head-and-shoulders pattern,so now the probable target for head-and-shoulders comes at 2,700. The hourly momentum is also in the favour of this head-and-shoulders pattern. Further, on the daily chart of the Sensex, we are having a good support of a previous bullish gap in the range of 9,361 and 9,297 (corresponding levels for Nifty is placed at 2,696). On the daily chart, though the momentum indicator KST is still in the buy mode, the gap between the indicator line and the signal line is shrinking. Bears dominated the market breadth with 891 declines and 312 advances.

On the hourly chart, the momentum indicator KST is riding its negative crossover and has breached the zero line. Our short-term bias is still down for the target of 2,745 with reversal placed at 2,975. However our midterm bias is still up for the target of 3,450 with reversal pegged at 2,650.

All the 13 sectors of the BSE ended in the red with the realty, metal and banking indices leading the fall. Among the 30 stocks of the Sensex only IT stocks were spared with Wipro, Tata Consultancy Services and Infosys Technologies ending in the green. On the other side Jaiprakash Associates, DLF and ICICI Bank led the packof losing stocks.

Gold trades lower

2008-11-12T04:19:00.000-08:00

GOLD snapped its three-day long winning streak in the domestic markets on Tuesday as stockists took profits after a steep fall in international markets. In Mumbai, standard and pure gold traded Rs 35 and Rs 45 lower at Rs 11,750 and Rs 11,805 per 10 gm, respectively.

Some investors sold gold to raise funds for paying losses incurred on the equity markets. However, falling prices are yet to attract buyers as they expect more correction in prices. In Delhi, gold prices slipped to Rs 11,910, down Rs 160 over the previous close. While in Kolkata, the precious metal softened by Rs 80 to Rs 12,080, it closed at Rs 11,840 per 10 gm.

In international markets, gold lost more than 2% on the back of stronger dollar and lower crude prices. Even a steep fall in equity prices failed to lure buyers of safehaven metal. A recovery in oil and base metals prices on Monday was short-lived as fears over the outlook for the global economy resurfaced.

In London, spot gold fell to $732.20/734.40 an ounce at 9:30 pm IST, down from $745.75 in New York on Monday, when it rose as much as 3%.

Researchers Are Now Seen As A Cost Burden

2008-11-12T04:13:00.000-08:00

WHEN the Sensex moved from a level of 3,000 in April 2003 to a dizzy 21,000 earlier this year, it was an unbelievable good time for anyone involved with the markets. One such benefactor was the analyst community. That was then. Today’s scenario with the Sensex being at around half the level down from that peak has left a lot of people in a quandary. The analyst community has been one such affected party. Five years ago, an equity analyst needed an MBA and a good reference. That was good enough for a job at a domestic broking house.

Typically, an analyst would spend a year before another broking house would grab him at an impressive hike — often twice as much. If things went to plan, in three years, the analyst would find himself inundated with offers from foreign broking outfits at mind-boggling salaries. Clearly, the journey to 21,000 fuelled a lot of ambitions and the mismatch between demand and supply was working overtime.

Meanwhile, broking outfits wanted research analysts to recommend stocks to their clients. This in turn would generate brokerage income for them. It was the large research team that owners of broking outfits would use as the selling point to prospective private equity investors. The effort seemed worthwhile for the analysts since the money was coming in.

Typically, an analyst with an experience of three years would command an annual salary of Rs 10 lakh and one with around twice that experience would draw as much as Rs 15-20 lakh. This was as far as domestic broking firms were concerned. If one was to head to a foreign firm, the salary would be twice as much as what was being made at the domestic broking firm. That story is hugely different today. “Many analysts came back to their own company after six months at double the salary,” says an industry observer a little wryly.

With cost cutting now the buzzword, broking outfits are looking closely at equity research which is a huge cost centre. Today, with some sectors such as real estate being under intense stress and even mid-caps going off the radar, research analysts in those segments will lose favour.

There is a school of thought which looks at analysts a little sceptically.

“Most of them form an opinion after meeting the company management. Very few of them bother to talk to clients or rivals of the company,” says a fund manager with a domestic fund house. That’s not the end of the story. “Not many analysts have seen multiple bull and bear cycles. With the demand-supply scene easing off now, it may be possible to obtain some quality analysts.

A broker looks at the weakness a little differently. “Not many were able to identify a stock in advance” . The idea comes from the superior in the office which was followed by some number crunching. Some of them made fancy presentations to fund managers to generate business for the fund house. There are many such instances.

A leading foreign broking house in April upgraded its target price for Suzlon from Rs 290 to Rs 380. Another foreign outfit in early March had a target of Rs 450 on the stock. The stock currently trades at Rs 65. There are similar stories for a lot of other mid-cap companies. Industry watchers, say analysts, often have no explanation in such cases. The downturn in the market has separated the wheat from the chaff. Broking houses that are serious about the business would try and retain its people and also get an opportunity to choose from a large pool.

Key supports broken by the Swift fall

2008-11-12T04:09:00.000-08:00

Mirroring the negative global cues the Indian markets
opened on a pessimistic note. Consistent selling pressure
remained at the higher end, which pushed the markets
down without a single pause during the day. Further bears
also broke the wall of 20-day simple moving average
(DSMA), which was a dominant support for the markets.
On hourly chart too, the markets did not respect the
support of 20-hourly simple moving average (HSMA) and
40-hourly exponential moving average (HEMA), which is
not at all a good sign. On the daily candlestick chart, the
Sensex has formed a Black Marubozu candle (a bearish
candle with no shadows on either side), which is also
considered a weak sign. The only favourable sign for the
bulls is the ongoing positive cycle of the momentum
indicator KST. Today the market breadth was strongly
dominated by the bears with 961 declines and 259
advances.

On hourly chart, the momentum indicator KST has given
a negative crossover, which indicates some downside is
still on cards. We are revising down our short-term bias
for the target of 2,850 with reversal at 3,165. However
our mid-term bias is still up for the target of 3,450 with
reversal placed at 2,650.

The Sensex and Nifty ended with heavy losses of 696 and
209 points respectively. All the 13 sectors of the BSE ended
in the red with the BSE Realty, BSE Metal and BSE Power
leading the fall. Among the 30 stocks of the Sensex except
ITC all other stocks ended lower with Jaiprakash Associates
(down 13%), Sterlite Industries (down 12%) and Tata Steel
(down 11%) leading the bunch of losers.

Up and away

2008-11-11T01:27:00.000-08:00

The Sensex started the day 100 points higher and managed
to hold the opening gap all through the day. In the opening
session itself the Sensex made a low of 10,095, which
was never touched again during the day as the market
rallied without any intra-day dip. On daily chart, Nifty is
forming an inverted head-and-shoulders pattern, whose
neckline is placed at 3,241 and an upside breakout of this
neckline will take Nifty to 3,650 in the near future. Further,
the close of Nifty above the 20-day simple moving average
is adding to this bullish scenario until Nifty holds the
support of the moving average. Another encouraging sign
for the bulls is the daily momentum KST that is still surging
and has also breached the zero line. Bulls totally dominated
the market breadth with 913 advances and 309 declines.

The hourly momentum indicator is also getting stronger
in upward direction, which is a good sign for bulls. Our
short-and mid-term biases are up for the target of 3,200
and 3,450. We are placing our short- and mid-term reversal
at 2,855 and 2,650.

Today the Sensex and Nifty both ended with phenomenal
gains of 571 and 175 points respectively. All the 13 sectoral
indices of the BSE ended in green with the BSE Metal, BSE
Power and BSE capital goods leading the rally. Among the
30 stocks of Sensex Sterlite Industries, Tata Steel and
Tata Power were the chief gainers. However ITC and
Maruti Suzuki India were chief losers.

Rising Population makes India a sugar importer

2008-11-11T01:10:00.000-08:00

INDIA, the world’s largest consumer and second-largest producer of sugar, is turning into a net importer of the sweetener as growth in population and household incomes leads to higher consumption and forces the country to meet domestic demand from other nations.

Sugar consumption has increased by two million tonnes in the past two years, pushing up the annual domestic consumption to about 23 million tonnes from only 19 million tonnes in 2005-06. Consumption is growing by over 4% annually, but the government prefers to keep tightlipped about it and pegs the annual sugar consumption at only 21 million tonnes. This means domestic consumption will surpass the projected output (22 million tonnes at present) for the 2008-09 year, paving the way for sugar imports and sharpening domestic sugar prices for both industrial and retail consumers. Analysts have already projected that India will be a sugar importer from the 2009-10 sugar year.

In February this year, the core platform for private sector sugar units, the Indian Sugar Mills Association (ISMA), hiked its domestic consumption figures from 19 million tonnes to 21 million tonnes, against an overall production level of 28.4 million tonnes. It also projected domestic sugar consumption levels for 2007-08 sugar year to at least 22.5 million tonne, up from the official figure of 21 million tonnes.

Keeping domestic sugar consumption level low would mean that the carryover s t o c k s from last year would be lower by two million tonnes, at about 9 million tonnes. Compared to the lower government figures, industry estimates for 2007-08 sugar year (Indian Sugar, September 2008) are that internal consumption was a whopping 22.5 million tonnes (against production of 26.3 million tonnes and availability, including carryover stocks, of 35.5 million tonnes) compared to 21 million tonnes in 2006-07 and 18.5 million tonnes in 2005-06. Interestingly, the closing stocks for the year (as on September 30, 2008) are pegged at only 8.2 million tonnes compared to a higher 9.2 million tonnes in 2006-07 and 3.6 million tonnes in 2005-06.

Lower carryover stocks and the projected low sugarcane output projected for 2008-09 could spell high domestic sugar prices, something that the poll-bound UPA government would prefer not to face in the first half of next year when general elections are held. Sugar prices are among the most sensitive of election issues and the fact that the domestic prices have shot up from around Rs 15/kg in the retail market earlier this year to around Rs 20/kg now has already forced the Centre to pull out all stops to boost open market availability and drag down or at least hold prices.

Ironically, most recent studies show that sugar consumption has gone up significantly on account of industry (such as ice creams, soft drinks, pastries, chocolates and the pharma sector) and not on account of domestic consumption by the economically weaker sections for whom the government commands 10% of the production by mills for levy sugar.

This rally may be short lived

2008-11-11T01:04:00.000-08:00

ON MONDAY, there was hardly any excitement in most dealing rooms, even as the Sensex kept rising through the day. For one, there were no frantic buy orders from clients, as is usually the case when the market is on a boil. Quite a few dealers were tracking cricket on the dealing room television sets while many others were worried if they would still be in their jobs at the end of this month. In short, India’s victory in the Nagpur test and the spectre of job cuts clearly overshadowed the 571-point surge in the Sensex.

There was another reason why Monday’s upswing in stock prices did not mean much. Combined traded turnover (equity + derivatives) on both exchanges was less than Rs 43,000 crore — the lowest in nearly 15 months. Traded turnover on NSE’s F&O segment was a paltry Rs 30,290 crore, indicating the reluctance among traders to take a near-term view on the market.

The Sensex closed at 10,536.16, up 571.87 or nearly 6% over the previous close, and the Nifty closed at 3148.25, up 175.25 points.

If one were to go purely by provisional figures, the rise in benchmark owed much to a slowdown in selling by foreign investors (-Rs 92.33 crore), and sustained buying by the local institutions (Rs 377.66 crore).

The positive trend in world markets also contributed to the upswing. Asian and European stocks rallied after China unveiled a $586-billion package to energise its economy and world leaders urged further reductions in interest rates. At the same time, a steady flow of bad news continued to trickle in. Leading US insurance major AIG reported a net loss for the fourth straight quarter while mortgage finance provider Fannie Mae reported a record quarterly loss of $29 billion after asset writedowns.

“The market is likely to form another intermediate top before breaking the recent lows,” said a BSE broker, adding that gains were unlikely to be sustained in the absence of strong foreign fund inflows, and any significant improvement in macro-economic fundamentals.

Advancing stocks trounced retreating ones in the ratio of 2:1 while 259 stocks hit the upper end of the intra-day circuit filter, and 160, the lower end.

Buy on major declines

2008-11-10T05:55:00.000-08:00

THE most important thing is not to be impatient while trading or investing. The reason is that the market is still volatile and is likely to remain so till global markets stabilise. In the meantime, our market will offer a lot of opportunities to buy at dips and sell at highs. After the steep fall in stock prices in October, a look at the broad market reveals that the damage to individual stocks is severe and that has killed purchasing power drastically. In such type of scenario, I don’t think insiders may adopt rising bottom falling top approach to consolidate (symmetrical triangle). The ideal formation should be falling top falling bottom (falling wedge) or flat bottoms and falling tops (ascending triangle) to consolidate or prepare for the next up move. The average-traded volumes should come down to extreme levels that will indicate diminishing interest of selling force in the market.

For investors, our advice is to have guts to buy on major declines and sell back the same at major resistance levels. For traders, our advice is same; follow major levels to trade without any specific view of bullish or bearish.

The level of 2860/9700 may act as a concrete support for the market and breach of the same may invite further sell-off to the levels 2650/8900, or may be even up to 2580/8720. However, a close below 2580/8720 may empower bears and in that case retesting of previous lows is not ruled out. On the higher side, sustenance of the market above 3050/10450 may lift the sentiment and in that case the market may even surge to 3250/10900. However, weekly close above 3170/10800 may lift the market to even 3400/11600.

Spices move up

2008-11-09T06:00:00.000-08:00

SPICES, except pepper, witnessed good upside on the commodity exchanges through out this week. Jeera, turmeric and chilli moved up due to some demand in the spot market and late sowing in the case of jeera that led to short covering.

Jeera November contract on NCDEX moved up by 4.55% since last week closing at Rs 11,465 per quintal due to delayed sowing reports though demand was weak. Approximately 75% of jeera sowing is normally completed before diwali in Gujarat but due to low moisture content of the soil it has been delayed. According to Alimuhammad Lakdawala of Anand Rathi Commodities going forward there can be some upside but the gains will be capped due to slack demand.

Turmeric also moved by over 4% since last week and the December contract on NCDEX closed at Rs 3,665 per quintal after making a high of Rs 3,689. This was due to short covering as there was some buying in the spot markets where prices moved up by 3% closing at Rs 3,705. Some orders were also registered from the overseas markets. There has been reports of buying by stockists from the North India. According to a report by Angel Commodities, stocks with the stockists in the local market are low due to low production this year. This will support the prices once the demand from overseas market is placed in good quantity. “If prices trade above Rs 3,660 per quintal they may touch Rs 3,800 levels in the coming weeks,” says the report.

In chilli the December contract closed up 2.47% at Rs 5,343 per quintal after making a high of Rs 5,401. The futures market is at a discount to the spot market and the prices were up due to short covering and low stocks at the exchange warehouses. In spot market chilli closed marginally up at Rs 5,532 per quintal at the Guntur market. Faiyaz Hudani from Kotak Commodities said that volumes in chilli are very low and prices will be range bound having a resistance at levels of Rs 5,350-Rs 5,400 per quintal.

Pepper prices traded weak closing down 2.28% at Rs 11,336 per quintal since previous week due to sell-off, short covering and limited trade in the spot market. Buyers have sidelined themselves looking at the volatility in the futures market.

Bulls out of woods with Firm close

2008-11-07T22:32:00.000-08:00

Indian markets started the day on a negative note taking
lead from global markets. The benchmark indices
oscillated within a small range until noon. After noon, the
markets blasted out and closed in the green with handsome
gains. On daily chart, Nifty has taken support at 38.2%
retracement level (of the move from 2,252-3,240).
Further this support was backed by positive daily and
weekly closes, which is a good sign for the markets. The
daily momentum KST also points towards a good northward
rally in the coming sessions. So the gist of the story is
that bears should become cautious. The overall market
breadth also turned from red to green as the day
progressed.

On hourly chart, the momentum indicator KST has given
a positive crossover. Also Nifty has given close above both
20 and 40 hourly moving averages. Our short-term bias
is revised up for the target of 3,200 with reversal pegged
at 2,855. However our mid-term bias is still up for the
target of 3,450 with reversal nailed at 2,650.

All the 13 sectors of Sensex ended in the green with power,
oil & gas and metal sectors leading the rally. Among the
30 stocks of Sensex, leaving Mahindra & Mahindra all other
stocks ended in the green with Reliance Infrastructure,
Hindalco Industries and Reliance Communications
emerging as the chief gainers.

Sensex fails to hold on to 10k

2008-11-07T22:29:00.001-08:00

THE season of bad news seems to be far from over, even as governments and central banks are trying everything possible to limit the damage to their respective economies.

In the US, the unemployment rate for October rose 40 basis points over the previous month to a 14-year high of 6.5%. In the past couple of months, 5.2 lakh works have been laid off, the biggest two-month job cuts since 2001. A foreign news agency reported that automobile majors GM, Ford Motor and Chrysler have sought a $50-billion bailout package to help them ride the worse slump in the auto market in nearly 25 years. The US equity market appears to have discounted these developments, with the Dow Jones Industrial Average quoting slightly higher in early trade. Key markets in Asia — with the exception of Japan — ended higher, while European markets ended mixed. Amid the gloom, there were some indications that the liquidity infusions by various central banks is gradually taking effect. The 3-month Libor — the cost of borrowing dollars in London — fell to a 4-year low, in response to reduction in benchmark lending rates, globally.

In India, equity benchmarks rallied over 2% on Friday, but on thin volumes, reflecting the cautious mood among investors. The 30-share Sensex ended the day at 9,964.29, up 230.07 points, or 2.4%, over the previous close, after having touched a high of 10,065.37 intra-day. The 50-share Nifty ended the day at 2,973 points, up 80.35 points, or 2.8%, over the previous close.

Combined traded turnover on both exchanges was around Rs 48,000 crore. This is the third time this week that it has been less than Rs 50,000 crore. The upswing on low volumes indicates that stock prices rose in the absence of any major selling pressure. Institutional activity was lacklustre; FIIs were net sellers of Rs 19 crore worth of shares, while local institutions net-sold Rs 147 crore worth of shares.

Sensex fails to hold on to 10k

2008-11-07T22:29:00.000-08:00

Gold price falls

2008-11-06T21:55:00.000-08:00

GOLD surrendered its overnight gains in the domestic market on Thursday in the absence of any trigger. However, lower prices failed to propel demand for gold jewellery, as buyers were anticipating further fall in prices. A section of the market players said gold was overbought for the past few days and hence a correction was in the offing. They said further price adjustments were the pipeline. Most investors who had increased their positions in the past few days have sold a part of their holdings despite a steep fall in equity prices , they added. However, a weak rupee restricted the downside of the yellow metal, a bullion merchant said in Mumbai.
In Mumbai, pure and standard gold fell by Rs 105 and Rs 100 to close at Rs 11,705 and Rs 11,645 per 10 gm, respectively. While in Delhi the yellow metal became cheaper by Rs 150 to Rs 11,850, the metal declined by Rs 100 to Rs 12,105 per 10 gm in Kolkata. Chennai markets also saw a loss of Rs 75 as the metal settled at Rs 11,775 per 10 gm.
Meanwhile, gold prices gained more than 2% to $748.10 an ounce in European markets on Wednesday after the Bank of England slashed rates by a consensusbusting 150 basis points and the Swiss National Bank cut its rates by half a point. In London, spot gold after touching intraday high of $748 stood at $746.00/748.50, up from $739.45 in the US market on Wednesday.

Sensex falls again

2008-11-06T21:53:00.000-08:00

EVEN as central banks continued to unveil rate cuts to boost liquidity into the system, equity investors across Asia and Europe dumped stocks on concerns over corporate earnings. Toyota Motor, the world’s secondlargest automobile firm, warned of the biggest drop in profit in at least 18 years, due to a combination of weak demand and strong yen. Indian equity benchmarks fell 3-4%, but fared better than Asian peers like Hong Kong, Japan, South Korea and Taiwan, which were down 5-7%. Key European markets fell despite rate cuts announced by the Bank of England and the European Central Bank. The Bank of England on Thursday unexpectedly lowered its key rate by 1.5 percentage points to 3%, the lowest rate since 1955. ECB slashed its key rate by 50 basis points to 3.25% — the second cut in less than a month — while rate cuts were announced by the Czech and Swiss central banks too. ECB President Jean-Claude Trichet did not rule out a further reduction in interest rates, saying the global financial crisis could lead to an extended economic slump. The 30-share Sensex ended the day at 9,734.22, down 385.79 points over the previous close. The 50-share Nifty closed at 2892.65, down 92.30 points. Traded turnover was slightly better, compared with the early part of the week. Close to Rs 58,000 crore worth of shares and equity derivatives were traded on both exchanges combined. However, foreign institutional investors continued to press sales. As per provisional data, FIIs net sold Rs 511 crore worth of shares on Thursday. Domestic institutions seem to have resumed their buying activity, mopping up shares worth over Rs 350 crore. “The consensus forward P/E slipped into the single digit territory — a level below, which it has not spent much time ever in the past. Most unbelievably, trailing price-tobook has collapsed to within 10% of the lowest levels seen since at least 1995,” said a strategy note by broking house Credit Suisse. “The market has come to a point where long-term, value investors that are not interested in timing the bottom should begin to invest heavily,” the note added. Metal shares took a pounding, and was the worst-performing sector, with the BSE Metal index shedding over 8%. Realty shares were the best performing sector, with the BSE Realty Index ending around 1% higher than the previous close.

Choppy session Inflated/deflated

2008-11-06T21:33:00.000-08:00

The domestic indices opened on a weak note amidst
negative global cues and traded below the previous close
for larger part of the trading session. While in the
penultimate hour of trade, they managed to swing towards
the previous close led by intensified buying activity at
lower levels. However, this momentum was short-lived
as in the final trading hour the markets gave up all the
gains to close deep into the red. On hourly chart, Nifty is
trading within a falling channel and is expected to touch
the lower line of the channel placed at 2,775. On upper
end, Nifty is having resistances of 20 HSMA and 40 HEMA,
which are placed at 2,954 and 3,019 respectively. The
daily momentum indicator is trading sideways. The overall
market breadth was negative with the losers outnumbering
the gainers.

On hourly chart, the momentum indicator KST is still riding
its negative crossover and has also breached the zero
line. Our short-term bias is still down for the target of
2,750 with reversal packed at 3,250. However our midterm
bias is still up for the target of 3,450 with reversal
nailed at 2,650.

The Sensex and Nifty both ended with a loss of 385 and
102 points respectively. Among the 13 sectors of the
Sensex, realty and health care were the only sectors that
ended in the green, while all other sectors ended in the
red with metal and oil & gas sectors leading the party.
Among the 30 stocks of the Sensex Jaiprakash Associates
and Hindustan Unilever led the pack of gainers while Tata
Steel and Tata Motors led the bunch of losers.

Bears Play Show Stoppers

2008-11-06T02:57:00.000-08:00

After positive opening, the markets were unable to hold
on to their opening gains and slid into the negative
territory in the initial hour of trade. The southward journey
continued till the final hour of trade, which pushed the
indices deep in the red. On daily candlestick chart, the
Sensex has formed a bearish engulfing pattern, which
shows that bears will have an upper hand over the bulls,
with today’s high as a dominant hurdle. Further,
yesterday’s close of the index above 20 DSMA has turned
out to be a whipsaw as today Index has again slipped
below that average, which further adds to the bearish
sentiments. Also on hourly chart, Nifty has breached the
neckline of head–and–shoulders pattern and is now
approaching towards its conservative and aggressive
targets that are placed at 2,925 and 2,875 respectively.
The daily momentum indicator KST has turned flat, yet it
has not given a negative crossover. Market breadth, which
was initially in the favour of the bulls slipped into the
favour of the bears as the day progressed.

On hourly chart, the momentum indicator KST is continuing
to ride its negative crossover. We have revised our shortterm
bias down for the target of 2,750 with the reversal
pegged at 3,250. However our mid-term bias is still up
for the target of 3,450 with the reversal nailed at 2,650.

The Sensex and Nifty both ended with a loss of 511 and
147 points respectively. All the 13 sectors of the BSE except
BSE HC ended in the red. Among the 30 stocks of Sensex
Wipro was the only stock that ended in green with a gain
of 2%, whereas Reliance Industries (-14%), Tata Steel
(-11%) and Reliance Communications (-10%) were the key
losers.

Sensex loses 511 points

2008-11-06T02:52:00.000-08:00

MAIN street may be ecstatic at Barack Obama’s victory in the US Presidential race, but Wall Street and European markets don’t see any reason to cheer. The Dow Jones Industrial Average and the Nasdaq were down nearly 2% in early trade while key European markets fell 2-3%, as investors appear more worried about a global slowdown. Back home, a 13% decline in Reliance Industries pushed down equity benchmarks by over 5%, causing India to underperform its Asian peers.
The BSE 30-share Sensex snapped a five-day winning streak to end with a 511-point, or 4.8%, loss at 10,120. The index had rallied more than 2,000 points in the past five consecutive sessions. The NSE Nifty closed 147 points, or 4.7%, down at 2,995 on Wednesday.
The weak sentiment in India was attributed to many factors. There are fears that outsourcing from the US to India may be affected after Obama is elected as the US president. The newly-elected president is apparently against outsourcing, going by his statements in his election speeches. However, IT stocks were among the better-performing sectors. Oil and gas stocks bore the brunt of Wednesday’s sell-off as the BSE Oil & Gas index tanked 637 points, or 9.4%, to 6,112.

Nifty Resistance @ 3100

2008-11-04T01:26:00.000-08:00

The market today has opened flat with a bit of follow-up
selling. The Nifty is forming an inverted head-and-shoulder
pattern, which has a neckline at 3100. The pattern is now
on its way to forming its right shoulder, which has support
around 2850. On the daily charts, the index has strong
resistance at 20-DMA and 40-DMA, ie 3140 and 3470
respectively. The market breadth is positive with 710
advances and 415 declines. The daily momentum indicator
has given a positive crossover. On the daily charts, support
at 2850 and strong resistance at 3100 are indicated.

On the hourly charts, the momentum indicator has given
a negative crossover. We expect the momentum to be
negative for the day. Support at 2970 and a very strong
resistance at 3100 are indicated on the hourly charts.

Of the 30 stocks in the Sensex, State Bank (up 3.60%) and
Aban Offshore (up 5%) are the top gainers. 3i Infotech is
likely to test Rs53 on the upside and has strong support at
Rs43. Among the sectors, the banking sector has gained
momentum and is expected to move upward.

Sensex above 10k

2008-11-04T01:14:00.000-08:00

THE slew of policy measures announced by RBI on Saturday had a positive impact on the market. Combined with positives cues from Asian markets, equity benchmarks extended their winning streak on Monday, closing above psychological levels, but most market participants are viewing it as nothing more than a relief rally. Provisional data showed foreign institutional investors as being net buyers for the second day in a row. However, given the gloomy mood — both in the domestic economy as well as globally — it remains to be seen if these inflows can sustain long enough for the indices to climb back to respectable levels. It is too early to say if mutual fund inflows are tapering off, though there are signs that local investors’ patience is wearing thin. FIIs net bought Rs 363 crore worth of shares, while domestic institutions were net sellers of Rs 97 crore of shares.
Also, Monday’s gains have to be viewed in the context of combined traded turnover, which was around Rs 48,000 crore. Traded turnover in the derivatives segment was less than Rs 35,000 crore, an unusually low figure for the early part of a settlement cycle. The 30-share Sensex closed above 10,000 for the first time in nearly two weeks, rising 549.62 or nearly 6% to close at 10,337.68. The 50-share Nifty closed above 3000, gaining 158.25 points to end the day at 3043.85.
In the currency market, RBI’s move of easing rates last week made an impact, as the rupee fell below 49 to the dollar and call rates cooled down to around 7%. RBI cut the key repo rate by 50 basis points and reduced CRR and SLR by 100 basis points each on Saturday. Its primary aim was to improve liquidity though the impact on the equity market has been positive, at least in the short run.
India was the best performer among key Asian markets. Hong Kong, South Korea, Taiwan and Singapore were up between 1% and 5% while Japan was an exception to the trend, shedding 5%. European markets were mixed, with the European Commission stating that the region’s economy may have already entered a recession this year, and predicting that it would stagnate in 2009. And the steep plunge in commodity prices has led many analysts to forecast that the US may be headed for its longest recession in over two and a half decades.
There were positive developments though, as the three-month London inter bank offered rate (Libor) — the cost of borrowing in dollars in London — fell on hopes of further rate cuts by the European Central Bank. The three-month Libor rate fell to a one and a half month low of 2.86%.
Back home, realty stocks were the star performers, with the BSE Realty index shooting up over 8% to close at 2142. Brokers continued to remain sceptical on the sector though as companies are facing a severe cash crunch, prompting many of them to go slow on new projects and reduce prices in case of already developed projects.
Other strong performers included capital goods and banking sectors. Infrastructure firms L&T and Jaiprakash Associates were up 10-13% while SBI surged 12%.

Today Support @ 2846

2008-11-03T03:46:00.000-08:00

Market today has opened gaped up. Nifty is now trading
above the 40 HMA i.e. 2846 levels, which is a strong
support. On the daily charts, the index has strong resistance
at 20 DMA and 40 DMA i.e. 3150 and 3990 respectively. We
expect momentum to be positive for the day. Market
breadth is positive with 1053 advances and 143 declines.
Daily momentum indicator has given a positive crossover.
On the daily charts, support at 2850 and strong resistance
at 3150.
On hourly charts, Nifty has Inverted Head & Shoulder, which
had it’s neckline at 2920 and has also broken out of the
pattern for the target of 3600, which is a strong sign going
forward. Support at 2900 and a very strong resistance at
3050 on hourly charts.
Of the 30 stocks of the Sensex, Reliance (up 4%) and
Punj Lloyd (up 9%) are the top gainers. TCS is likely to test
Rs520 on the downside and has strong resistance at Rs570.
Among the sectors, Metal sector have gained momentum,
and expected to move downward

Positive weekly close

2008-11-03T03:42:00.000-08:00

The market on friday opened with a gap up--the Sensex was
up 300 points and Nifty was 100 points higher at opening
bell. The market kept consolidating all through the day
and at the end of the trading session, the Sensex and
Nifty closed at their day’s high, posting gains of 743 points
and 188 points respectively. The momentum indicator on
the daily charts has given a positive crossover but trading
below the zero line. The 20- and 40-day moving averages
are at 10,500 and 11,600 respectively on the Sensex,
which are strong resistances on the upside. Good support
levels exist around 9,400 and 9,000. The market breadth
was positive. NSE witnessed 854 advances and 364
declines whereas BSE saw 1,594 advances and 926
declines. Our short-term bias is up with reversal at 8,594
and target at 10,500.
On the hourly chart, an inverted head & shoulders pattern
has been formed with a neckline at 2,920 and target at
3,600. The momentum indicator, KST, has a positive
crossover and trading above the zero line.
The Sensex and Nifty ended the day with gains of 743 and
188 points respectively. Of the 30 stocks of the Sensex,
Reliance Industries (up 14%) and Tata Steel (up 14%) were
the top gainers, while Suzlon Energy was down by 3.4%.
Power sector has gained upside momentum.

Expect the unexpected

2008-11-03T03:25:00.000-08:00

THE benchmark Nifty faces a short-term resistance at 3030. The next major hurdle for the index is at 3495, which is the 30-day simple moving average. If the current rally is only a bear market correction, then the Nifty will not move above the 3030-level. As long as the Nifty Volatility Index remains on the higher side, investors should expect the unexpected. If the index slides, it has a support at 2675 and then at 2525. On Friday, the Nifty closed at 2885.60. The index had hit a panic bottom at 2252.75 on October 2008, witnessing one of the sharpest-ever falls from 3950 early October. The Nifty volatility Index has moved above 69%, which is still on the higher side. But it may be noted that after the sharp fall, Indian markets were in the oversold territory. The daily, weekly and monthly relative strength index (RSI), which attempts to determine overbought and oversold conditions of a security, was in the oversold region, suggesting the recovery that happened in the form of short-covering ahead of the October futures and options expiry was expected. (If the RSI indicator is below the 20-mark, it indicates oversold situation and above 80 shows overbought situation). The broad-based fall resulted in majority of stocks testing new 52-week lows. If a stock falls below its 52-week low, it is said to be bearish. Buying can only be considered in such a stock, only if it appears heavily oversold on monthly charts. Otherwise, it needs to get firm support and consolidation, which can be identified with higher volumes. But caution is important, as even if the stock is consolidating, the indices may not be. Heavy weight stocks such as Reliance Industries, Infosys, ICICI Bank, Bharti Airtel and Reliance Infrastructure were in the oversold territories. The five-month RSI for these stocks, which were in the oversold region, has given a ‘buy’ signal. Reliance Industries faces resistance at Rs 1,432 and a break above this can drive up the stock sharply. Infosys, which is trading above its 20-day moving average of Rs 1,307 on higher volumes, also appears strong. ICICI Bank has resistance at Rs 415, and if the stock closes above this level for at least two days, it will help the bulls to lend support. On the Nifty, many stocks that are available below their book value has given good opportunities to investors with medium-term perspective including Hindalco, Tata Steel, Cairn India, Tata Motors and BPCL. In the US, the Dow’s moving average combination of 30- and 5-day, which has given a ‘sell’ signal on first week of September 2008, has not yet given a ‘buy’ signal. But the interesting point to be noted is that if Dow breaks the 9640-level and closes consecutively for more than three days, then it will give a strong reversal, which can lift the Dow towards 10860. The short-term outlook for the Nasdaq is better than that of the Dow, because the extreme short-term combinations of simple moving averages of 3-, 9- and 18-day combinations have given a ‘buy’ signal. The 3-day simple moving average penetrates the higher moving averages of 9- and 18-day from the lower side shows further possible uptrend for the Nasdaq. It has tested 1500 levels thrice on October, indicating a possible reversal. If that happens, Indian ADR (American depository receipts) stocks, which are listed on the Nasdaq, are going to benefit, especially Infosys, TCS, Satyam computers, Wipro, ICICI Bank, HDFC Bank. Among Indian ADRs, Infosys, HDFC Bank and ICICI bank are showing positive divergence and further accelerated movements are expected.

RBI move may extend rally

2008-11-03T03:18:00.000-08:00

THE sooner-than-expected measures by the Reserve Bank of India (RBI) to ease the money-supply crunch, including an interest rate cut, may enable the bulls to stretch Friday’s rally into early next week. But as the week progresses, the domestic investors will look for directional cues from US and European markets.
The US market rose nearly 2% on Friday, as investors cheered JP Morgan Chase’s measures to stem the crash in America’s housing market. The Fed slashed the benchmark interest rates last week and indicated additional cuts to revive the economy, prompting other central banks to trim the rates in a co-ordinated manner. Equities across the world rallied strongly as a result. Investors in Indian equities took a special note of the decline in inflation, triggering hopes of interest rate cuts, and the Standard & Poor’s (S&P) statement that India’s investment-grade credit ratings is safe. Investors expected RBI to cut rates next week, with the overnight interbank lending or call rates rising to a 19-month high of roughly 20%. “We expect more upsides in stocks early next week, as the much-needed interest rate cut was earlier than anticipated,” said Mirae Asset Global Investments senior fund manager Gopal Agrawal. “For any rally to sustain, it is important that there are no fresh issues in global markets and economies,” he added. The liquidity-injecting measures initiated by several countries last week, following the free fall in equities to four-year lows, has improved investor sentiment world-wide. “In the past few days, we’ve received more requests for stock screens than usual. This may mark a shift in sentiment, from the relentless selling of recent weeks to finding buy ideas,” said UBS Securities in a report on Asian equities. Analysts are, however, unsure whether the bear market is nearing an end. Global investors remain averse to risky assets. Moreover, the credit crunch threatens to jeopardize the growth plans of companies in developing economies such as India. “We continue to believe that investors are underestimating the impact of the credit crunch on countries having current account deficits,” Nomura International Asia and emerging markets analyst Sean Darby said. Driven by high oil prices in recent years, India has a large current account deficit and this shows the extent to which a country’s consumption exceeds its production.

Market Up for third Consecutive day

2008-11-02T05:48:00.000-08:00

The Sensex continued to move up for the third consecutive day with the index registering smart gains on buying in heavyweight and sectoral stocks.
The 30-stock benchmark index of the BSE was above 9,300 points at the starting bell and touched the high at 9,870. However, it pared the gains on selling in heavyweights and shed sharply to touch the low of 9,362 towards the close. The Sensex came close to testing 9,400 towards the day’s close, but ended the session with a gain of 744 points at 9,788. Nifty gained 189 points to close at 2,886.
The breadth of the market was marginally positive. Of the 2,575 stocks traded on the BSE, 1,577 stocks advanced, whereas 916 stocks declined. Eighty two stocks ended unchanged. Of the 13 sectoral indices, BSE Metal surged 10.20% to 5,367 followed by BSE Oil & Gas (up 9.11% to 6,195) and BSE Bankex (up 7.21% to 5,011). The remaining indices also ended higher.
Among the gainers, Mahindra & Mahindra (M&M) advanced 23.09% to Rs372.35, HDFC surged 17.48% to Rs1,764, JP Associates added 16.55% to Rs71.85, ICICI Bank advanced 15.50% to Rs399.35, Sterlite Industries gained 14.48% to Rs282.20, Reliance Industries jumped 13.81% to Rs1,370.75 and Reliance Communications was up 13.76% to Rs220.70. However, Ranbaxy Laboratories dropped 1.97% to Rs169.45 and Tata Consultancy Services declined 0.93% to Rs537.45.
Over 1.68 crore Suzlon Energy shares changed hands on the BSE followed by Hindalco Industries (1.34 crore shares), Reliance Petroleum (1.00 crore shares), Unitech (84.98 lakh shares) and Core Projects & Technologies (81 lakh shares).

Election jobs to set tone for US stocks

2008-11-02T05:35:00.000-08:00

WALL Street hopes to turn a new page as it heads into November, but next week is littered with hurdles ranging from the US presidential election to a likely gloomy jobs report. Traders were more than happy to see the back of October, one of the worst months in history for the broader market, and took heart from the fact that it ended with one of the best weeks on record.
This week’s strength came as the host of efforts by central banks and governments to ease credit strains began to bear fruit, and volatility abated slightly. Bargain hunting and funds buying stocks to rebalance their portfolios also helped boost stocks.
For the first part of next week, Wall Street, like the rest of America, will turn its attention to Tuesday’s presidential election. Democrat Barack Obama’s lead over Republican rival John McCain held steady at seven points as the race for the White House entered its final four days. Investors will likely assess the possibility of quick fiscal stimulus after the election and the risk of protectionist measures or more regulation.
Thomson Reuters data shows that on average the 60 days preceding a new presidential term yield positive returns, suggesting that the lack of uncertainty after elections usually gives the market a boost.
“Once we know what the balance of power will look like, investors can factor that into the equation. The market may not like who wins, but it will like knowing,” said Christopher Zook, chairman and chief investment officer of CAZ Investments in Houston.
But a raft of economic data will be vying for investors’ attention, as will earnings reports in the last heavy week of the autumn results season.
In the week ahead, the main event on the economic calendar is the October US employment report. That data, due on Friday, is expected to show that US nonfarm payrolls shed 2,00,000 jobs in October, according to a Reuters poll, while the unemployment rate is forecast to rise 6.3%.
Other key economic reports include the Institute for Supply Manage-ment (ISM) reports on manufacturing on Monday and non-manufacturing, or service sector, activity on Wednesday. Both are expected to produce readings showing that the economy contracted in October.
Among the major companies set to report earnings next week are Anadarko Petroleum, MasterCard, Cisco Systems and Sprint Nextel. With 59% of S&P 500 companies having reported earnings in the third quarter, on average earnings for companies in the index are expected to fall 23.8% for the quarter.
Meanwhile, the Federal Reserve’s efforts to shore up short-term lending for companies and banks continued to build momentum in the critical commercial paper market with a program the US central bank launched this week. October was a nightmare for US stock investors, with the Dow Jones industrial average ending the month down 14.06%, its worst monthly percent age drop since August 1998. The Standard & Poor’s 500 Index slid 16.83% this month for its worst onemonth percent age slide since October 1987. The Nasdaq lost 17.73% in October, its worst one-month percent age loss since February 2001.
For the week, though, Wall Street wrapped up a rotten month with a Halloween treat. Stocks ended Friday’s session higher, following Thursday’s advance a day after the Fed’s half-percent age-point rate cut. This performance gave the US stock market its first back-to-back gains in over a month.
The Dow finished the week up 11.3%, its best weekly percent age gain since October 1974, while the S&P 500 climbed 10.5%, its best weekly percent age gain since at least January 1980. The Nasdaq rose 10.9%, its best weekly percent age gain since April 2001.

Fresh yearly lows

2008-09-29T23:11:00.000-07:00

The indices opened flat and fell sharply due to consistent
selling among the heavy weights. The fall continued till
mid afternoon (an hour before the last), when the indices
hit the yearly lows. The indices did trim some of their
losses in the final hour, but still ended negative for the
day. On hourly chart, as the momentum indicator is in
oversold region some bounce can be expected in the
coming session, though that bounce is expected only up
to 4000 levels, which is 50% retracement of the fall from
4,207 to 3,778. On daily chart, the momentum indicator
KST is still enjoying its negative trend, which indicates
that the bears will have an upper hand over the bulls in
the near term. Market breadth was depressing with 1,211
declines and only 68 advances.

On hourly chart, the momentum indicator KST is still in
the negative mode, but the gap between the indicator
and the moving averages is getting thinner. We are
revising our short-term target to 3,700 with reversal at
4,000 and our mid-term target to 3,600 with reversal at
4,120.

Sensex and Nifty ended the day with a loss of 506 and 135
points respectively. All the 13 sectors ended in the red
with the banking and consumer durable sectors faring the
worst. Of the 30 stocks that make the Sensex, ICICI Bank
(-13%) Jaiprakash Associates (-11%) and Satyam Computer
Services (-9%) were the worst hit, whereas only Hindustan
Unilever was in the green with a minor gain of 0.3%.

Sensex at a critical level

2008-09-29T00:19:00.000-07:00

IN THE continuing intermediate downtrend, the 13200 mark — a 62% retracement level of the previous rally of 12558 to 14222 — was breached on the downside. As a result, there is a high probability that we may see a kink in the index again to the level of 12500. Though this will form a triple bottom structure, rallies like the ones seen before, it may just not have the momentum to inspire confidence among bulls. Till the Sensex tops 14000, buyers are likely to remain sceptical. On the other hand, if the Sensex does not find support at 12500, the ensuing fall may be far severe than what we have seen so far. So, 12500 remains a critical level, as most short positions are likely to be covered at that mark, in anticipation of triple bottom formation.

In this intermediate downtrend, stocks that had been outperforming so far, like banking for instance, will also attract profit taking. On the other hand, stocks from oil & gas and realty are already in an intermediate downtrend. These sectors will fall steeper than the main indices.

There can be two ways to deal with the situation. One is to start buying only when the trend has reversed. That is above 14000, if 12500 is not breached. If the 12500 is breached, one should start buying below the 11500 to 11200 levels with appropriate stop loss. Markets could turn before 11500 level but below 12500, we are in an uncharted territory. Hence, it is difficult to predict new supports.

Why 14,000? It is the level of the highest closing on the daily charts from where the current downtrend started. The breach will not only stop the lower top-lower bottom formation, but will also give an early indication of possible trend reversal. A prominent technical analysis indicator called ‘Fan Angles’ connects the high with all the lower tops and when the third fan line is breached upwards, the trend is supposed to reverse. Connecting the high of 21207 with the lower tops of 18895, 17735 & 15579, the third Fan Line will be breached at the level of 14500. A breach of 14000 creates higher tops and hence, increases the chance for Sensex to go up to 14500, a crucial upward trend reversal level as per fan lines seen on the weekly charts.

Market participants are awaiting signs of strength in the rallies. The rally from 12500 did have the momentum, but could go only as far as 15580 by mid-August. Bulls ran out of breath even before the index reached even near the 200 DMA of 16500. This set off a downtrend with yet another lower top formation and dragged the index to 14000 by the end of August. The index attempted to rally yet again but this time, the bulls were stopped near 15000, just short of the intermediate reversal level of 15200 mark. These movements formed a bearish structure known as Head & Shoulders’, in just nine trading sessions. Hopes of a strong rebound diminished, when the sharp follow through rally fell short by 80 points from the level of 14300, which could reverse the intermediate trend.

Indices likely to trade with a positive bias

2008-09-22T06:53:00.000-07:00

Market Outlook: • Sensex (14042)/Nifty (4245) LAST week, we had witnessed a triangular breakdown on the daily Sensex charts. The projected target for the pattern was around 12370 (Sensex) /3767 (Nifty) levels. Further on the daily charts, we had witnessed a “lower top lower bottom” formation, which also showed weakness. The indices registered a low of 12558 /3799 levels, which were close to the above-mentioned levels. However, a mix of fresh buying and short covering propped up the market, and indices rose 0.3% on a weekly basis.

Pattern Formation

• On the daily charts, the Sensex & Nifty futures have formed an ‘Island Reversal’ pattern at the bottom, which is a bullish pattern. • On the daily charts, the Sensex has given a close above the gap area (13934-13666 / 4216-4100 levels), which was formed during the downtrend. This suggests further upward momentum in the coming trading sessions. • On the weekly candlestick charts, we are witnessing a ‘Hammer’ formation at the bottom, which is a bullish pattern. • Further, on the weekly charts, we are witnessing a ‘Double Bottom’ formation in process, which is also a bullish formation.

Technical Indicators

On the daily charts, the RSI & Stochastic oscillator have given a positive crossover, which indicates a further rally in the coming week. On the weekly charts, the RSI & Stochastic oscillator are on the verge of giving a positive crossover. Hence, any rally in the coming week will also trigger a positive crossover on the weekly indicators. The latest week has witnessed larger volumes compared to the volumes witnessed in the previous 3-4 weeks. Rising volumes, accompanied with bullish pattern formation should ensure positive momentum in the coming week.

Indices are likely to trade with a positive bias this week, and head towards 14600-14820 / 4450-4530 levels. Any sustainable move above these levels would take the indices to 15580-15800/4650-4700 levels, which cannot be ruled out. The upward gap area around 13347-13675/4073-4143 level, remains an important support level for the next week. There could be two scenarios unfolding in the coming week : • Indices opening with a Gap-Up: In such a scenario, short-term traders who have gone long at the support levels, should book profits near 14600-14820/4450-4530 levels. • Any initial corrective move from the current levels up to 13500-13330/4085-4031 levels, should be used to go long for a target of 14600-14820/4450-4530 levels.

Sensex dips 44 points

2008-09-10T04:30:00.000-07:00

BENCHMARK indices drifted lower on Tuesday as investors chose to take some money off the table, rather than double their bets. The exuberance seen on the previous day was missing, and while the market rebounded from the day’s lows, bulls clearly lacked conviction. Brokers expect the Sensex to oscillate in a 1,000-point range on either side, near term, till there are fresh triggers. The weakness in the rupee vis-à-vis the dollar, and the relatively attractive valuations of Chinese equities, could keep FIIs wary of Indian shares near term, feel brokers. Select index heavy weights pulled down the 30-share Sensex by 44.21 points to 14,900.76. The broader S&P CNX Nifty slipped 13.60 points to close at 4468.70. The premium on Nifty September futures narrowed down to 20 points at 4489.05. The BSE Mid and Smallcap stocks followed suit to close marginally below their previous close at 5,778.20 and 6,964.61, respectively. Banking and capital goods shares, the star performers on Monday, were among the prominent losers, as traders booked profits out of near-term concerns. Even though inflation has been showing signs of easing in the last couple of weeks, market participants feel that the Indian financial sector continues to be on tenterhooks. “We downgrade our stance on the Indian financials sector to cautious from neutral. In our view, rising P&L (profit and loss) headwinds would likely lead to lower market expectations of earnings,” said Goldman Sachs in a note to its clients. “The growth would be stunted due to tighter monetary policy in 2008 (estimated) resulting in slower loan growth, tougher outlook for NIM (net interest margin), and mark-to-market losses due to rising bond yields, deterioration in asset quality, and increase in loan loss provisions as well as the net NPA (non performing assets)/equity ratio,” the note added. Among the frontliners, Sterlite Industries plunged 7.5% to Rs 575.35, its sharpest fall in over two months. Vedanta, the parent company of Sterlite has announced the transfer of Sterlite’s aluminium and energy businesses to Madras Aluminium, as part of the group restructuring. Sterlite stockholders will get seven shares of Madras Aluminium, or Malcom, for every four held. Madras Aluminium jumped 17% to Rs 212, its highest since July 25, 1996. Other bluechips like Hero Honda , PNB, Dr Reddys, SBI, Ranbaxy Labs and DLF fell 1-4%. Tuesday’s session started on a weak note following a similar trend in Asian markets but bounced mid-session after European stocks opened on a firm note. But, bulls struggled in the face of sustained profit selling, with losers outnumbering gainers 7:6. “The market players realised that the nuclear sapling wouldn’t be able to sustain the rally. We expect the range to continue between 4200 and 4650,” said VK Sharma of Anagram Broking. Turnover traded in markets was muted at Rs 58947 crore, breaching the 60,000-plus crore daily average over the last couple of weeks. FIIs net sold equities worth Rs 391 crore while domestic institutions net bought 106 crore worth of shares.

Market sees a positive nuke explosion on St

2008-09-08T04:27:00.000-07:00

EQUITIES appear poised for a surge on Monday after the Nuclear Supplier Group (NSG) on Saturday reached a consensus on the Indo-US nuke deal agreeing on a clean waiver for India, allowing it an entry into the hallowed nuclear club. Dealers expect the Sensex to surge by as much as 500 points, fuelled partly by short-covering of positions. The next key trigger would be the outcome of the Organisation of Petroleum Exporting Countries (Opec) meeting in Vienna on Wednesday. In the wake of slowing demand, an economic downturn and fall in crude oil prices, Opec may decide to trim the supply to avoid a further fall in prices of crude oil. Although inflation appears to be coming under control, analysts say the volatile macro-economic picture will prevent investors from braving the market. “A gloomy global scenario, tight monetary policy, lower economic growth, impending elections and high fiscal deficit — all these are negative for the performance of the Indian market,” said an Indian Equity Strategy report by Lehman Brothers. “We believe that inflation has peaked and the Indian market at current valuations is more leveraged to interest-rate falls and less to a growth slowdown,” the Lehman report added. After the steep fall on Friday, benchmark indices are now at two-week lows. Adding to the macro-economic worries, the rupee weakened further against the dollar on Friday, touching its 20-month low. While the positive outcome of the nuclear deal is a big victory for India, the upside in the stock market will continue to depend on the mood in world markets. A sharp slide in major markets will sour the mood for Indian equities, brokers warn. “We expect the Nifty should be in a range of 4150-4520,” said Dharmesh N Vala of Nayan M Vala Securities. “The surge in the dollar is in the last phase of uprun, and the bull run in the dollar compared with the rupee is just about to end soon around 45.65 levels. We believe every rise above the level of 45.65 is a good opportunity to short dollar or vice versa buy rupee,” he added. Mr Vala said that the dollar topping out will be followed by a surge in FII flows into equities. Broking firms are advising their clients to take a cautious view in the short term. “We would buy the market aggressively around 12500-13000 levels. In the short term, we would suggest running widely diversified portfolios and raising the weights of interest-rate sensitives, especially banks, at more appropriate valuations,” the Lehman note said. Meanwhile, in spite of the general sentiment on inflation, government policies continue to hint otherwise. The commodity market regulator on Friday extended a four-month ban on futures trading in soybean oil, rubber, potatoes and chickpeas to cool inflation. The halt to futures trading in the four commodities has been extended to November 30. However, there is a dissent among market participants on this issue as they feel that there are no conclusive evidences that suggest that futures trading fuels price increases. While macro-economic conditions, opine dealers, would have the last say in the way Indian equities play out in the near term, a delay in the withdrawal of the monsoon may offer some respite to the beleaguered sentiment. A lazy monsoon is expected to benefit crops in the current kharif as well as in the ensuing rabi season.

Neckline Retest

2008-09-02T02:35:00.000-07:00

Market has opened on positive note and Nifty has made a
high of 4,390. However, the early gains have been trimmed
due to selling pressure at higher levels. The previous swing
high, which was a good support, is also broken. So, the
next support for Nifty is at 40 HEMA (ie 4,328). We expect
the momentum to be volatile for the day. Market breadth
is positive with 727 advances and 390 declines. Daily KST
is moving up for a positive crossover. Our short-term bias
is still up for the target of 4,500 with the reversal nailed
at 4,270.

On the hourly charts, the momentum indicator KST is
lingering above the zero line with a positive crossover.
Going further, on intra-day charts Nifty is forming an
inverted head-and-shoulders pattern, which has been
breached for the target of 4,450.

Banking and construction sectors are gaining momentum.
Axis Bank looks good for the day. Unitech has a potential
for Rs180 in short term, as the stock is making a bullish
inverted head-and-shoulders pattern.

Nifty Support @ 4,201

2008-09-01T02:03:00.001-07:00

Market opened on a negative note, but Nifty has witnessed
a follow up buying. Nifty on the daily chart is trading in
the range of 4,200-4,450, which is a crucial level. The
momentum is expected to be positive and volatile on an
intra-day basis. Market breadth is negative with 706
declines and only 426 advances. Daily momentum indicator
has given a negative crossover and is trading below the
zero line. On the daily charts, support is at 4,200 and
there is a strong resistance at 4,450.

On the hourly charts, a small inverted head-and-shoulders
pattern has formed with resistance at 4,370 and support
at 4,280. The momentum indicator has given a positive
crossover and is trading below the zero line. On the hourly
charts, there is a strong support at 4,280 and a very strong
resistance at 4,331.

Reliance Industries has gained momentum and is likely to
test Rs2,250 on upside. Infosys has support around Rs1,695
and on the upside the stock is likely to test Rs1,850. Capital
goods sector has lost momentum and is expected to move
downwards.

Nifty Support @ 4,201

2008-09-01T02:03:00.000-07:00

Market may remain bullish

2008-09-01T00:32:00.000-07:00

Hold on to long positions
The market will remain bullish in the short term with more choppy sessions. Based on the above rationale, the Nifty is expected to continue its upward momentum with or without early consolidation. The 4399-4448 may act as a tough resistance zone . Once this zone gets cleared, the medium term view will get a fresh upward momentum. This view will get negated if the Nifty makes any weekly closing below 4246. For this week, the Nifty has resistance at 4399-4448 (tough for short as well as medium term), 4499, 4515 (on a weekly closing basis), 4563 and 4650 (very strong for medium term).The Nifty has support at 4350, 4315-4326, 4269 (strong for intra week), 4201, 4248, 4179-4202 (strong for short term), 3920 (strong for medium term).

How to trade in a Bear or Bull Market

2008-08-30T22:52:00.000-07:00

1. First we should see the index how it is behaving that is when it is making an intermediate high than we should see where it is taking its first major support at this point we should buy shares of a particular company that is most liquid stock of the Market.

2. Suppose the price of a compay's share at its recent peak is $100 than Buy its share a $62 from the fund you got. Note invest only 25% of your fund at a time and wait for some time where the market is going if the market rises than book profit when the price reaches at $80.

2. Suppose the market falls again and the share price reaches at $50 than again Buy shares of the same company with 25% of the remaining fund. Then see how the market is behaving and book profits accordingly.

3. Never invest all your money at a time.

4, In this way you should make you major buying or selling decision and book Profits.

By this technic you will always earn profit and will never loose money.

Sensex shrugs off GDP blues, gains 516 pts

2008-08-29T23:02:00.000-07:00

BENCHMARK indices surged over 3% on Friday as bulls chose to look at the brighter side of a slowing economy. According to a government release, India’s GDP grew 7.9% in the June quarter, the slowest in three-and-a-half years, and much below the 8.8% growth rate clocked in the April quarter. This, and the slight drop in inflation to 12.4%, has raised hopes that RBI may not have to raise interest rates soon. Still, brokers feel it is too early to say if the market is now poised for a s u s t a i n e d u p s w i n g . The FM himself said no conclusion can be drawn from one week’s inflation numbers. Despite the 500-plus point rally in the Sensex, traded turnover on both exchanges combined was under Rs 60,000 crore, indicating the cautious mood among investors. “I don’t think inflation is fully behind us; the market is likely to trade in a 2000-point range on either sides for some time,” says BSE broker Ramesh S Damani. The Sensex gained 516.19 points to end the day at 14,564.53 while the broader 50-share Nifty gained 146 points to close at 4,360.

Nifty Resistance @ 4350

2008-08-29T02:56:00.000-07:00

The market has opened on a positive note and follow-up
buying was also witnessed. The Nifty on the daily chart is
trading in a range of 4450 and 4200, which are crucial
levels. We expect the momentum to be positive and
volatility on intraday basis. Market breadth is positive with
936 advances and 195 declines. Daily momentum indicator
has given a negative crossover and is trading above the
zero line. On the daily charts, support at 4200 and strong
resistance at 4450 are indicated.
On the hourly charts, a triangle has formed and has also
broken on the down side, with a support at 4200 and
resistance at 4350. The momentum indicator has given a
negative crossover and is trading below the zero line. Strong
support at 4280 and a very strong resistance at 4331 are
indicated on the hourly charts.

Axis Bank has gained momentum and is likely to test Rs750
on the upside. Infosys seems to be having support around
Rs1,695 and on the upside is likely to test Rs1,850. Banking
sector has gained momentum and is expected to move
upward.

Sensex sheds 248 pts ahead of GDP numbers

2008-08-29T00:47:00.000-07:00

EQUITIES continued their slide on Thursday, even as inflation data released post market hours could spell some relief for bulls on Friday. Benchmark indices hit a one month lows, with the 30-share Sensex coming precariously close to breaching the psychological 14,000 mark. Inflation for the week ended August 16 slipped to 12.4%, down from 12.63% the week before. However, market watchers feel a sustained recovery is unlikely till the time there is a significant improvement in the macroeconomic picture. The government will announce the preliminary GDP growth numbers for the first quarter of the current fiscal year on Friday. Brokers said a possible decline in the first quarter GDP growth weighed on market sentiment, prompting buyers to take a cautious view. The 30-share Sensex shed 248.45 points to close at 14,048.34, after having touched an intraday low of 14,002.43. The broader S&P CNX Nifty ended the day at 4,214, down 78 points over the previous close. The BSE Mid and Small cap indices too, ended in the red, shedding over 1% each. On the global front, crude oil prices continued to firm up for the fourth consecutive day, nearly nudging the $120 per barrel mark on speculation that tropical storm Gustav will be the most damaging since Hurricane Katrina. Analysts expect the Nifty to trade with a negative bias ahead near term. “There is huge selling pressure on the index heavyweights,” said Gurudatta Dhanokar, technical analyst, Almonds Global. “We expect Nifty to find resistance at 4,080-4,100 level next week,” he added. For the second consecutive session, all the sectoral indices on the BSE ended down with BSE Capital Goods and Oil and Gas Index losing over 2%. Hindalco shares ended 12% down as the stock price adjusted for the rights issue. Other blue chips like Reliance Industries, Reliance Infra, Bhel, TCS, L&T, ICICI Bank, Wipro, Reliance Petroleum, and DLF fell over 2-3%. There were nearly two declines for every one stock that gained. Lack of a clear trend in world markets also added to the weak trend. US stocks climbed for a third day on Wednesday, led by financial and technology companies, after the economy grew more than estimated in the second quarter. Robust exports and a smaller decline in inventories helped the US economy to grow at a 3.3 % annual rate in the second quarter, according to reports. However, markets across the Asia-Pacific region finished mixed. Hong Kong's Hang Seng index plunged 2.3% and South Korea’s Kospi Composite index declined 1.3%, while Japan’s Nikkei 225 index inched up 0.1% and China’s Shanghai Composite index rose 0.3%. Traded turnover on both exchanges combined was higher than usual at Rs 83,297 crore. However, this was due to the expiry of derivative contracts for the August series.

Market Volatile

2008-08-28T01:56:00.000-07:00

The market has opened on a flat note but the Nifty has
witnessed selling pressure at higher levels. The Nifty on
the daily chart is trading in a range of 4450 and 4250,
which are crucial levels. We expect the momentum to be
negative and volatility on intraday basis. Market breadth
is negative with 423 advances and 703 declines. Daily
momentum indicator has given a negative crossover and
is trading above the zero line. On the daily charts, support
at 4235 and strong resistance at 4435 are indicated.
On hourly charts, a triangle has formed and has also broken
on the down side, with a support at 4235 and resistance
at 4400. The momentum indicator has given a negative
crossover and is trading below the zero line. Strong support
at 4235 and a very strong resistance at 4325 are indicated
on the hourly charts.

Century Textile has gained momentum and is likely to test
Rs400 on the downside. Infosys seems to be having support
around Rs1,695 and on the upside is likely to test Rs1,850.
Banking sector has gained momentum and is expected to
move downward.

Nifty Expiry time

2008-08-27T21:28:00.000-07:00

The market has opened on a negative note. The Nifty on
the daily chart is trading in a range of 4450 and 4250,
which are crucial levels. We expect the momentum to be
positive and volatility on intraday basis. Market breadth
is positive with 581 advances and 535 declines. Daily
momentum indicator has given a negative crossover and
is trading above the zero line. On the daily charts, support
at 4235 and strong resistance at 4435 are indicated.
On the hourly charts, an inverted head & shoulder pattern
has formed with a support at 4248 and resistance at 4400.
The momentum indicator has given a positive crossover
and is trading above the zero line. Strong support at 4275
and a very strong resistance at 4331 are indicated on the
hourly charts.

Tata Steel has gained momentum and is likely to test Rs650
on the upside. Infosys seems to be having support around
Rs1,695 and on the upside is likely to test Rs1,850. Metal
sector has gained momentum and is expected to move
upward.

Gold gets its bounce back on global cues

2008-08-27T20:39:00.000-07:00

Taking a cue from global markets, gold prices bounced back in local markets on Wednesday as surging crude prices boosted the yellow metal’s appeal as an inflation hedge. The sliding dollar also boosted buying sentiment to some extent. In Mumbai, prices of standard and pure gold shot up by Rs 200 and Rs 205 to Rs 11,895 and Rs 11,970 per 10 gm, respectively. While in Delhi the yellow metal breached the Rs 12-k-mark to close at Rs 12,030 per 10 gm, it rose by Rs 195 at Rs 12,135 per 10 gm in Kolkata. Chennai markets saw a gain of Rs 70 as the metal closed at Rs 11,955 per 10 gm. In London, spot gold rose to $828.35/829.55 an ounce from $822.90/824.30 in New York on Tuesday.

Oil rises for 3rd day on Gustav concerns

2008-08-27T20:37:00.000-07:00

Oil rose for a third day on Wednesday, boosted by the possibility that tropical storm Gustav could become the first major storm since 2005 to threaten Gulf of Mexico oil and gas installations. Crude for October delivery was up 93 cents at $117.20 a barrel by 22:00 pm IST after settling up $1.16 on Tuesday. London Brent crude was up 74 cents at $115.37 a barrel. Oil could head towards last week’s near-three-week high of just above $122 a barrel in the next few days depending on the weather in the Gulf of Mexico, said Masaki Suematsu, analyst at broker Newedge in Tokyo.

Rollover worries pull Sensex down 185 points

2008-08-27T20:32:00.000-07:00

BENCHMARK indices shed more than 1% on Wednesday, a day ahead of the derivative contracts expiry, as it is widely felt that most traders holding long positions are not keen to roll them forward to the next series. Lack of positive triggers — both at the local and international level — is keeping bulls on the backfoot, say brokers. Adding to the gloomy outlook, the 50-share Nifty slipped below the psychological 4,300-mark to close at 4,292.10, down 45 points over its earlier close. The 30-share Sensex fell 185.43 points to end the day at 14,296.79, down 1.3% over its previous close. Equities started off on a firm note, but were unable to hold on to their initial gains due to the indifferent trend in key Asian markets. Geopolitical tensions because of Russia’s aggressive stance over Georgia, and continuing worries over the subprime crisis kept investors in world markets jittery. Crude prices inching up towards the $120 per dollar mark, and record high inflation in South Africa completed the gloomy picture. Back home, investors were cautious ahead of the inflation data and GDP report to be announced in a couple of days. The finance minister is confident that the economy will log 8-9% growth in the current fiscal, but not many share his optimism. Analysts expect the market to be volatile on Thursday because of the current month derivatives contracts expiry. “We expect Nifty to find support at 4,200 and probably go to 4,600 within a month,” said Vinit Birla, technical analyst at Pranav Securities. The rupee strengthened 0.2% to 43.75 a dollar, but investors continue to be cautious. Of the 30 Sensex stocks, 26 ended in the red. Hindalco, Tata Steel, Infosys and Mahindra & Mahindra were among the handful of gainers. Overall, three shares fell for every two that rose. Overall trading volumes were muted, with both exchanges together clocking over Rs 60,000 crore worth of turnover. This is a low figure on the previous day of the derivatives expiry. Among sectoral trends, all the BSE sectoral indices ended in the red, with BSE Bankex and BSE Reality faring the worst. The rate-sensitive indices plunged 3.5% and 2.2% respectively. Global credit rating agency Moody’s expects RBI to further tighten monetary policy by way of rate hikes, to contain inflation. The government will unveil weekly inflation data after trading hours tomorrow.

Keep An Eye On Resistance

2008-08-26T21:08:00.000-07:00

August 24, 2008- Market SummaryIt was a week of mixed results as market participants tried to discern the future direction of the broad market indexes. Many traders are attributing the market's indecision to nearby resistance levels. These levels of resistance, which are shown on the charts below, are causing many traders to question whether bullish rallies will be able to sustain a longer-term move higher. The chart of specific interest this week is of the Russell 2000 because it bounced off the identified resistance level and it is now trading near the support of the consolidation pattern that we mentioned in our previous report.
Last week, we also mentioned that the Nasdaq broke out of a period of consolidation (shown by the converging trendlines). As you can see from the chart, the momentum that was sparked after the rally faced resistance as the index neared the 1,995 level. It is important to note that the 50-day moving average remains below the 200-day moving average, so traders may want to wait on the sidelines in this market until confirmation of a longer-term reversal appears.

Inflation-defying gold offers a respite

2008-08-26T20:49:00.000-07:00

AT A time when consumers feel the pinch on the back of spiralling prices of most essential commodities, the yellow metal has offered them some breathing space. The precious metal saw another round of free fall on Tuesday in the domestic markets in the wake of strengthening dollar and sliding crude prices. The relentless fall since its recent peak has weakened the metal’s appeal as a hedge against inflation. In Mumbai, the prices of standard and pure gold tumbled by Rs 95 and Rs 90 to Rs 11,695 and Rs 11,765 per 10 gm, respectively. “As the prices slump by nearly Rs 2,000 per 10 gm in six weeks, consumers have already started their festival and marriage shopping well in advance as the current prices are most ideal for them,” said a leading bullion merchant in Mumbai’s Zaveri Bazar. The fall in prices has brought in consumers back to stores where sales have reportedly jumped nearly 10 times since the price fell below Rs 12,000 per 10 gm. The price of yellow metal touched a historic high of Rs 13,680 per 10 gm on July 15 this year. If prices stabilise between the Rs 11,000-10,500 level, sales could see another jump, he said. But the future direction of the metal will largely depend on the movement of the US dollar and crude price, he added. Dealers attributed the rising US dollar against the euro and a slide in crude prices as the main reasons for the yellow metal’s fall. A similar trend was reflected in other metros, too. In Delhi, after touching an intraday high of Rs 11,960, gold plunged by Rs 160 to Rs 11,800 per 10 gm in late trade as stockist took profits after a meltdown in the global markets. While, in Kolkata, spot gold lost Rs 80 to Rs 11,940 per 10 gm, it, however, rose by Rs 25 to Rs 11,810 per 10 gm in Chennai. In domestic futures, gold for October delivery fell by 1.2% to Rs 11,593 per 10 gm on the Multi Commodity Exchange. In London, gold bounced back as investors returned to market after the dollar lost ground against the euro and spot gold rose to $828.55/829.55 an ounce from $820.20/821.40 in New York on Monday.

50% of demat a/cs hold no shares

2008-08-26T20:48:00.001-07:00

IT’S not just asset management companies in the country that are into the number game for shoring up their assets under management. The two stock depositories, NSDL and CDSL, are not far behind. A significant number of demat accounts — as much as 50% — with the two depositories are without any shares in them, an official with one of the depositories told ET. The number of such accounts usually rises when the stock market goes into a downturn. However, the official said even if such periodic fluctuations were to be discounted, the number of zero share accounts at both depositories would account for nearly 50% of the total accounts. Market watchers say many investors would have opened multiple accounts within the legally-permitted limit, during the IPO boom in a bid to apply for the maximum number of shares under the retail investor quota. National Securities Depository (NSDL), promoted by the National Stock Exchange (NSE) is the larger and the older depository, but the Bombay Stock Exchange (BSE)-promoted Central Depository Services (CDSL) has been catching up in recent years. A detailed email sent to NSDL went unanswered despite repeated phone calls, but CDSL furnished some information on the empty demat accounts. It said around one third of its ‘active’ accounts are without any shares in them. This works out to a little over 17 lakh accounts. “It is observed that this figure increases in a bear market as a lot of investors liquidate their portfolios and wait for the bull phase to start when they resume purchases,” the CDSL official said while explaining the zero balance accounts. Despite the market moving sideways in the past eight months since January, both the depositories have shown fair growth in the number of demat accounts with them. While accounts with NSDL have grown 13% in this period to over 96 lakh accounts, those CDSL have risen by more than 50% to around 53 lakhs. The ongoing rivalry between the two depositories for claiming ownership over maximum demat accounts could be another reason why NSDL and CDSL are not keen to close down these empty accounts. When a stock market investor (called beneficial owner in technical parlance) opens a demat account with a broker or a bank, the latter in turn approaches either of these two depositories, which store shares in the electronic form. In the past 12 months, NSDL and CDSL, India’s two stock depositories, have been fighting each other on a host of issues. CDSL was formed in 1999 and has been aggressively trying to garner market share for opening demat accounts. However, NSDL even today owns more than two-thirds of all the demat accounts in the country.

Sensex survives oil flare-up Sensex survives oil flare-up

2008-08-26T20:46:00.000-07:00

INDIAN equities eked small gains in Tuesday’s listless session, even as dark clouds gathered in the global skies. Crude oil prices rose more than $2 per barrel to $117.38 on fears that Hurricane Gustav may enter the Gulf of Mexico, home to more than a fifth of US oil production. Russia’s RTS Index hit a near two month low, and the ruble weakened to the dollar following the government’s decision to recognise Georgia’s breakaway regions, which could further worsen its relations with the West. The euro fell to a six-month low against the dollar as German business confidence dropped in August more than forecast. Things were slightly better on the other side of the Atlantic as the US Consumer Confidence Index rose more than forecast in August, and new-home sales improved in July. Back home, the rupee fell to a 17-month low of 44 to the dollar on Tuesday, which is positive for the IT sector, but spells bad news for the country’s trade balance. Select IT majors and a few index heavyweights were in demand as the BSE Sensex rose 31.87 points to close at 14,482.22. The broad-based Nifty ended almost unchanged over the previous close at 4,337. Indices were held in check by a 2.3% decline in Reliance Industries’ shares, as investors are unsure about the price at which the oil and gas behemoth will transfer its 80% holding in KG D6 to its wholly-owned subsidiaries. The market responded positively on the news of a healthy monsoon. India’s annual monsoon rains between June 1, 2008 to August 24, 2008 were just below the long-term average, the government said. Dealers attributed Tuesday’s gains in the key indices to short covering of positions ahead of the derivative contracts expiry on Thursday. But it is the bulls who are on the defensive, say some market watchers. “Traders are going short-selling at lower levels. We expect the market to remain range-bound between 4,000 and 4,500 levels,” said Pravin Agarwal, CEO, Lotus Investments and Securities. In sectoral trends, rate sensitive indices like BSE Bankex and BSE Auto led gainers, rising over 2% each. IndusInd Bank, HDFC Bank, Bank of Baroda and Kotak Bank rose 3-6%. However analysts feel that it is too early to take a call on these sectors as the RBI may hike interest rates further in its attempt to curb inflation. The BSE Auto Index rose 50 points, up over 1% to close at 3,916.49. Gainers were led by Bosch, Apollo Tyres, M&M, Maruti Suzuki, Exide Industries and Ashok Leyland, which were up between 1% and 6%. Technology stocks like NIIT, Satyam, Tech Mahindra, HCL Tech, Wipro and TCS gained over 1-3% as the BSE IT index closed at 3,895.48, up 33 points over its last close.

Copper marginally high

2008-08-26T20:44:00.000-07:00

Base metals: Copper higher on US existing home sales
data
Yesterday, copper closed with minor gains on the COMEX as
the US existing home sales data topped the forecast. Sales
of previously-owned homes in the USA grew by 3.1% in July.
However, on the flip side unsold inventory rose. There were
record 4.67 million unsold houses and condos on the market
in July, representing 11.2 month's supply at the current sales
pace, matching the highest ever. The jump in the inventory
was driven by an increase in the supply of condos, as projects
started one or two years ago came on the market, the Realtors
group said.
Yesterday, the London Metal Exchange was closed, so the
trading in the rest of the base metals was in line with that
of copper.
Today, oil prices in Asia rose on concerns that the hurricane
Gustav may disrupt oil operations in the Gulf of Mexico.
However, strong tone in the US Dollar is keeping it down,
though crude oil is expected to find support around $111.
Today, we had German consumer confidence data that
weakened further as fears that Europe's largest economy
will lose more steam than anticipated weighed on the
sentiment. German market research group GfK said that its
forward-looking consumer climate index continued to decline
sharply to 1.5 points for September from a downwardly
revised 1.9 points in August. A Dow Jones Newswires survey
of 14 analysts expected the index at 2.1 points for
September. The Euro is sharply down on this data and has
fallen below its low around 1.4630. The Euro could fall to
1.44 in this cycle. This is bearish for the base metals.
In a further bearish development for the base metals, we
see that China's production is climbing. China's zinc mines
increased their output by 21% in July compared with a yearago
period, producing 331,200 metric tonne of the metal,
while lead production gained 23% to 212,700 tonne in the
same month. Copper output climbed 6% to 2,34,900 tonne.
Various reports suggest that Chinese, the world's biggest
buyers of copper have put off purchases on expectations of
further price decline amid rising US Dollar.
We still remain bearish on copper. A slide in copper could
lead to a downward movement in all the base metals.
Bullion: Flat close
Yesterday, the bullion complex had a flat closing as spot
gold closed nearly $1 lower, while silver was up nearly 17
Cents. Today the complex is taking a hit on sliding Euro. As
crude is expected to stabilise around $111 and a decent
pick up in physical demand for gold is being witnessed at
lower levels, gold could find a support around $800, while
silver could find support around $13.
Sharp plunge in bullion prices in August is due to massive
sell off by some of the US Banks. In short-term as the US
Dollar rises we would see further pressure on gold and silver,
however with festival season round the corner and the US
Dollar fast approaching its short-term target of 1.44/1.43
against the Euro, downside in bullion appears to be limited.
A slip below $800 could take the spot gold to $780. Similarly,
a decisive breach of $13 could take spot silver to $12.40.
These levels could very well be the bottom for these two
metals.

Nify Support @ 4248

2008-08-26T07:07:00.000-07:00

The market has opened on a negative note. The Nifty on
the daily chart is trading in a range of 4450 and 4250,
which are crucial levels. We expect the momentum to be
positive and volatility on intraday basis. The market
breadth is negative with 335 advances and 750 declines.
The daily momentum indicator has given a negative
crossover and is trading above the zero line. On the daily
charts, support at 4235 and strong resistance at 4435 are
indicated.

On the hourly charts, an inverted head & shoulder pattern
has formed with a support at 4248 and resistance at 4400.
The momentum indicator has given a positive crossover
and is trading above the zero line. Strong support at 4275
and a very strong resistance at 4331 are indicated on the
hourly charts.

What are penny stocks

2008-08-25T22:05:00.000-07:00

Penny stocks can be defined by:
Price Per Share: Sometimes any shares that trade under a certain price are considered to be penny stocks. For example, the SEC considers all stocks that trade for less than $5.00 per share to be penny stock. Different individuals and organizations have their own cut-off.
Market the Stock Trades Upon: In some schools of thought, any shares that trade on a certain market (ie- the OTC-BB, or the OTC, or the 'Pink Sheets,' or the CDNX) are treated as, or considered to be, penny stocks.
Market Capitalization: Market cap is simply the total trading value of the entire company. The value of each share of a stock, multiplied by the total number of shares outstanding, equals the market cap.
For example, 12,343,000 shares of ABC at $0.29 each gives ABC Corp. a market cap of $3,579,470 (12,343,000 shares times $0.29 per share = $3,579,470). That is kind of like saying that the company's total value is 3.5 million dollars.
In some cases, organizations or individuals will treat any company beneath a certain market cap (for example, less than $10 million) as a penny stock.
Interestingly, using option 1 or 3, a company can have its shares change in price moment by moment, and may drop in or out of the definition of 'penny stock' over time. What may be a "penny stock" when the market open in the morning, may not be a penny stock by noon.
In some cases the definition of penny stock is generated by a combination of the above criteria. For example, any stock trading on the OTC-BB with a market cap of less than $20 million is considered a penny stock.

Penny stocks are high risk, high reward investments. It is easy to lose money on a penny stock investment. However, if your shares do begin to move, they can produce hundreds of percentage points of gains, and they often do this in only a short time frame.

Penny stocks are often very volatile, and just as often unpredictable.

Double Moving Average Bounce

2008-08-25T21:38:00.001-07:00

The double moving average bounce trading system is a variation of the original moving average bounce trading system. The variation still uses a short term timeframe (such as a five minute chart), but now uses two exponential moving averages. The second exponential moving average is used as a filter for the direction of the trade, so that the trading system only includes trades in the longer term direction of the market.
As with the original moving average bounce, the default settings use a 1 to 5 minute bar chart, but use two shorter exponential moving averages, instead of one longer average. Both exponential moving averages are based upon the typical price (HLC average), with the longer average being a 20 to 30 bar average, and the shorter average being a 10 to 20 bar average. Both the chart timeframe, and the exponential moving average lengths, should be adjusted to suit different markets.

What is Day Trading

2008-08-25T21:33:00.000-07:00

Day trading (and trading in general) is the buying and selling of various financial instruments, such as futures, options, currencies, and stocks, with the goal of making a profit from the difference between the buying price and the selling price. Day trading differs slightly from other styles of trading in that positions are rarely (if ever) held overnight or when the market being traded is closed.
Day trading was originally only available to financial companies (such as banks), because only they had access to the exchanges and market data. But with recent technology such as the Internet, individual traders now have direct access to the same exchanges and market data, and can make the same trades at very low cost.
Trading Styles
There are several different styles of day trading, suited to different day trader personalities. The styles range from short term trading such as scalping where positions are only held for a few seconds or minutes, to longer term swing and position trading where a position may be held throughout the trading day. Most day trading systems have a lot of flexibility, and can have open positions for anywhere from a few minutes to a few hours, depending upon how the trade is doing (whether it is in profit). Some day traders will trade multiple styles, but most traders will choose a single style and only take that type of trade.
Day trading also has different types of trade, such as trend trades, counter-trend trades, and ranging trades. Trend trades are trades in the direction of the current price movement (i.e. buying if the price is moving up), and counter-trend trades are trades against the direction of the current price movement (i.e. selling if the price is moving up). Ranging trades are trades that go back and forth between two prices, and are used when the market is moving sideways. Most day traders will choose a single type of trade, but some traders will take different types, and choose which one to trade depending upon the current condition of the market.
In addition to the style and type of day trading, there are other variances between day traders. Some day traders like to make many trades throughout the trading day, while others prefer to wait for what they consider the best conditions for their trade, and perhaps only make one trade per day. However many trades are made, the trading process that is used, and the desired goal of making a profit, are the same.
Markets
There are many different financial instruments, or markets, that can be day traded, and they are offered by various exchanges throughout the world. The main types of day trading markets are futures, options, currencies, and stock markets. Within these types, there are groups of markets based on stock indexes (such as the Dow Jones, and the DAX), currency exchange rates (such as the Euro to US Dollar exchange rate), and commodities (such as gold, and oil). Day traders can have access to all of the exchanges and their markets via direct access brokers, so called because they offer direct access to the exchange, which provides faster trade execution at lower cost.

Dreary close

2008-08-25T20:39:00.000-07:00

After opening 242 points higher, the Sensex traded in a
narrow range during the early hours. However in the
second half of the trading session, the index could not
build on its early gains and finally wrapped the session on
a flat note--only 49 points higher than its yesterday’s
close. The Sensex opened near the day’s high and closed
near the day’s low, which points to weakness in the camp
of the bulls. Further, on the hourly charts, the Nifty faced
the hurdle of 40 HEMA from which the sell off came in the
afternoon session. The Nifty also closed below 20 HSMA,
which is one more sign of weakness. On the daily chart,
the level to watch out for support and resistance is 4,250
and 4,400 respectively. Apart from the above story, the
daily momentum is also dying as the indicator KST has
breached the zero line on downside. Market breadth,
which was positive, with more advances than declines
during the earlier half of the session turned in the favor
of bears with 636 declines and 574 advances. This shows
that the bears have overpowered the bulls.
On the hourly chart, though the momentum indicator KST
has not given a negative crossover, it has turned down
facing the resistance of falling trend line. Our mid-term
target is at 4,000 with the reversal at 4,650 while our
short-term bias is still down for the target 4,200 with the
reversal at 4,435.
The Sensex closed 49 points higher, while the Nifty gained
8 points for the day. The BSE Midcap index closed
marginally higher by 0.25%, whereas the Smallcap index
closed 0.05% lower. Of the 30 stocks of the Sensex, HDFC
(up 3.63%) and Tata Motors (up 2.04%) led the pack of
gainers, while Ranbaxy Laboratories (down 2.05%), BHEL
(down 1.6%) and Tata Steel (down 1.49%) led the pack of
losing stocks.

Sensex closes with just 49-pt gain despite a good start

2008-08-25T20:36:00.000-07:00

EQUITY benchmarks closed with marginal gains on Monday, after a firm start, as a weak opening in the European market and a minor rebound in oil prices sparked some selling midway through the session. Analysts said investor sentiment remains nervous, even though the cooling-off of oil prices has eased nerves, in the absence of money flows from foreign institutions. Market participants are awaiting the expiry of the August derivatives contracts on Thursday for a clearer picture of the market. “The volumes were low and market was pretty much dull. The initial gain in the morning was clearly a result of profit booking and we expect the market to remain at these levels till the expiry date of derivatives contract this week,” said Venkatesh Iyer, vice-president-equity sales, Brics Securities. The BSE-30 share Sensex ended at 14,450, up 48.86 points or 0.34%, giving up over 220 points from the session’s day high. The broader 50-share Nifty closed at 4,335, shedding over 63 points from the day’s high. The broader market also showed an indecisive trend, with gainers just about managing to outnumber losers 1347:1287 on the BSE. Shares of Tata Motors rose over 2% to Rs 425, despite uncertainty over the small-car project, as investors expect a favourable pricing of the rights share issue. Shares of interest-rate sensitive sectors, real estate and banks outperformed the benchmark indices on Monday, led by short-covering but analysts maintain it would be too early to turn bullish on the sector fearing further monetary tightening by RBI. With inflation expected to rise further, after touching a 16-year high, the broader consensus is that a rate hike or more measures to mop-up money from banks by the RBI, could be round the corner. “With persistent inflation and monetary policy officials giving the highest priority to stabilising inflationary expectations, we expect RBI to raise policy rates at least once more this year. However, given the policy stance to keep liquidity conditions tight, the CRR (cash reserve ratio or the minimum cash banks need to keep with the RBI) could be used more than once,” said Citigroup economists in a research note. Analysts said further dip in oil prices could ease the pressure on the central bank to tighten monetary policy, but they feel this factor alone would not be enough to renew a bull rally in Indian equities, as its economy continues to face the specter of a sharper-than-expected slowdown. on Monday, crude oil on the New York Mercantile Exchange rose as much as 1% to $115.80 a barrel, after falling 6% on Friday.

Smart investors have to wonder who’s dumb now

2008-08-25T20:34:00.000-07:00

EVERY time financial markets become unhinged, there are calls to protect investors. Twenty-one years ago this October, global stock markets crashed, dragging down investors who had been persuaded to buy shares in companies they had never heard of, with names they couldn’t pronounce, engaged in businesses they didn't comprehend and located in places they couldn't find on a map. It’s no different this time — except that the acronyms have changed, the losses are bigger and the investments more complicated. On August 6, the Counterparty Risk Management Policy Group III — a 16-person private-sector initiative representing major investment and commercial banks, moneymanagement companies and a top law firm — released a 176-page report aimed at reducing risk and ultimately making the financial system more efficient. It includes measures to better understand and manage risky, complex securities. “The policy group strongly recommends that high-risk, complex financial instruments should be sold only to sophisticated investors,” reads the report. That raises the question of what constitutes a sophisticated investor. The group’s goal is to complement official oversight in encouraging industry practices that will help mitigate systemic risk. The report, “Containing Systemic Risk: The Road to Reform,” contains many good proposals. But when it comes to listing some of the characteristics that might define a sophisticated investor, it comes up short. Sophisticated investors should be able to understand an instrument's risk and return characteristics and have the ability to price and run stress tests on a security, says the policy group, which is headed by E. Gerald Corrigan, a managing director at Goldman Sachs Group and former president of the Federal Reserve Bank of New York, and Douglas Flint, deputy head of global markets at HSBC Holdings Plc. Investors should also command the procedures, technology and internal controls needed to trade an instrument and manage the risks associated with it, the policy group says. Furthermore, they should be wealthy enough to be able to absorb potential losses. Authorisation to invest in complex, high-risk investments should come from the highest levels of management. UBS AG, Merrill Lynch, Citigroup, HSBC and Wachovia presumably satisfy these criteria and surely regard themselves as financially sophisticated. Yet they and other institutions worldwide have racked up $505.5 billion in losses and writedowns because of the mortgage meltdown. Given such a performance, the folks who steered clear of collateralized-debt obligations and similar instruments may be considered the more sophisticated, if only because they were smart enough to acknowledge what they didn't understand. The policy group also advocates that investment term sheets, a summary of a transaction's details, and offering memoranda carry “financial health” warnings displayed in bold print. Yet given the propensity with which smokers ignore health warnings on cigarette packages, there is no reason to assume that investors will be any different. In addition, the group calls for stronger relationships between financial intermediaries and counterparties in sales and marketing and ongoing communications relating to complex financial instruments. “The policy group believes there is a responsibility on the part of large integrated financial intermediaries to provide clients with timely and relevant information about a transaction,”

MF Distributors Load It Over

2008-08-25T20:33:00.000-07:00

SEBI’S decision to waive entry load for investors approaching mutual fund houses directly instead of going through distributors, has evoked a tepid response so far. Eight months since the waiver has been introduced, most investors prefer to go through distributors while investing in fund schemes. There has been only 1-2% rise in customers approaching AMCs directly for investing in funds, officials at fund houses said. The exemption on direct applications also extended to investments in existing and new schemes and for additional purchases by the investor under the same portfolio. Investors switching over to a scheme from other schemes also got an exemption from entry load. “Investors (more than 90% of them) still prefer to come through distributors. Direct investments into mutual funds schemes may have hardly increased by 1%,” said UTI Asset Management chief marketing officer Joydeep Bhattacharya. By approaching the AMC directly (or through any of the affiliated bank or collection centres), investors could save 2.25% entry load on open-ended schemes and 6% amortised charge on close-ended schemes. Mutual fund companies waive entry charge only for large investors who invest more than Rs 5 crore. “Investors prefer coming through distributors as they service clients much better than AMC-appointed counter staff. It is a difficult task for investors to select better schemes from a lot of 500-odd funds,” said the marketing officer of leading fund house. According to Lotus India AMC chief executive officer Ajay Bagga, investor volumes have dropped significantly due to bearish market conditions. “There has not been many NFOs or large inflows into equities over the past eight months; so it is not very clear as to how investors will react to this Sebi ruling when markets are bullish. But, I don’t think investor will be comfortable investing in funds without the help of distributors,” Mr Bagga added. According to industry sources, there are over 450 open-ended schemes in market now, which include both equity and balanced schemes. The top 5 fund houses control 50% of the market. Distributors bring in more than 97% business for fund houses whereas banks earn Rs 650 crore annually by selling existing schemes and earn more than Rs 1,200 crore annually by selling NFOs. Less than 3% investors (overall) apply directly or approach fund houses. “Investors need professional advice while investing in mutual funds. AMC-appointed staff will not be able to report frankly about a fund; much more than distributors, it will be AMC officials who will forced to push to their own products to investors,” said Bajaj Capital managing director Rajiv Bajaj. “An independent distributor is in a better position to advise clients on redeeming or skimming fund portfolios. All the more cumbersome (as a result of huge paper work) are the procedures for applying/redeeming fund schemes,” Mr Bajaj

Valuation is still high, but look for growth picks

2008-08-25T20:31:00.000-07:00

The recent carnage has seen many investors shift from momentum stocks to fundamentally-good companies with good growth prospects and value. However, equity investment is a long-term game with a time horizon of around 3-5 years. Government actions/inactions on divestment, etc., impact the markets only in the short-term. Long-term value investors do not base their investment decisions on such factors. With the general elections due soon, it is difficult to assume that there will be any large-scale disinvestment action this year. Even if that happens, long-term investors particularly institutional investors will wait for the outcome of the elections to judge policy stability. What is your sense of the kind of sentiment that is building around emerging markets and Asian economies? Where does India stand vis-à-vis other emerging markets? Indian valuations still look comparatively high compared to other emerging markets. However, there are lots of stocks that are available at much cheaper valuation. If one can identify such value and growth stocks trading at moderate-to-cheaper valuations, one can emerge a winner in the long term. The relatively high valuation in India is justified on the assumption that the rate of growth of India’s economy will be high in relative terms compared to other emerging market economies. What do you make of the recent changes in the QIP norms? Do you think India Inc is now better equipped to raise money vis-à-vis ADRs (American Depository Receipts) or GDRs (Global Depository Receipts) route? Good companies have never faced problems to raise money from the market in the recent past at fair valuations. However, new QIP norms would certainly benefit in the pricing strategy, as last 6 months average price would work out quite low when compared with last 15 days’ average prices. However, our market along with the regulatory administration must ensure that there is no price manipulation in the market for the success of the new norms. Foreign flows continue to look bleak, do you think we will have to live with lesser flows? Indian economy is worth $1 trillion, growing at around 7% per annum. Now, that works out to annual accretion of $70 billion worth output in the economy, a large part of which will be generated by companies engaged in manufacturing, services, infrastructure, etc. Our savings rate is higher at 30%- plus. So, that means $300 billion worth money flows into different asset classes like real estate, bullion, bank’s fixed deposits and of course, equities. That flow also keeps growing by $21 billion annually. However, as Indians are under-invested in equities, even a slight incremental flow from the domestic savings pool going into equities will see a surge in liquidity in the equity market. In this backdrop and over a period of time FII inflows would impact market sentiment less and less. Given that equity markets are in such turmoil and currency futures are to kick off by month-end, what would be your advice to investors? Currency futures will be an excellent instrument for knowledgeable investors and speculators to swiftly shift their assets from one to another and hedge the risk associated with the asset class. The way equity traders speculate on the basis of quarterly results there could be large speculative action in the currency futures ahead of weekly inflation data making the instrument a very liquid and vibrant one. Conventional risk takers in currency market, like exporters and importers, will find it very useful and transparent for hedging their risk.

Bottoming Out

2008-08-24T20:56:00.000-07:00

THE MARKET declined for the second successive week, with the Sensex finishing 2.19% or 323 points lower, the Nifty losing 2.33% and the CNX Midcap falling 2.71%. Ranbaxy was the biggest winner among the Sensex stocks with a 4.6% gain. The other gainers were HUL, HDFC Bank, Tata Power, Sterlite, Bhel and Infosys with accruals ranging between 2.5% and 0.3%. ACC was the biggest loser among the Sensex stocks with an 8.4% loss. The other losers were SBI, Satyam Computer, Grasim Industries, NTPC, M&M, ONGC and ITC with losses between 7.7% and 4.7%. Vishal Information Technologies was once again the biggest winner among the more heavily traded non-Sensex stocks with a 29.7% gain. Other non-Sensex winners with gains ranging between 11.3% and 3.1% were Core Projects & Technologies, Dish TV India, Rolta India, GHCL, KS Oils, SAIL, Indian Bank, Balrampur Chini Mills and Gujarat NRE Coke. SEL Manufacturing was once again the biggest loser among the more heavily traded non-Sensex stocks with a 29% loss. Other losers were Indiabulls Financial Services, India Infoline, Sesa Goa, HPCL, IOC, Wire & Wireless, Nagarjuna Construction and HDIL with losses between 15.8% and 7.9%.

INTERMEDIATE TREND:The market remains in an intermediate downtrend, with the indices having closed at three-week lows a day before Friday’s rally. The downtrend started on July 12, and is nearly two weeks old. The levels to be crossed for a new intermediate uptrend have moved closer to 14,746 for the Sensex, 4,435 for the Nifty, and 5,791 for the CNX Midcap. A moderate rally lasting just two sessions can do the trick, if it takes place early in the week. Almost all global indices are in intermediate downtrends, and most markets are some distance below their uptrend triggers, unlike the Sensex. This is not surprising, as it has been the strongest global index since mid-July.

LONG-TERM TREND:The indices have falling intermediate tops and bottoms, and are therefore, in major (i.e. longterm) downtrends. This means we are still in a bear market. The market’s long-term trend will turn up if the Sensex closes above its last intermediate top of 15,580. The equivalent for the Nifty is 4,650, and that for the CNX Midcap is 6,016. The odds will shift in favour of a new bull market if this intermediate downtrend were to end at a higher level than the previous intermediate bottom of 12,514 for the Sensex. Global indices also have falling intermediate tops and bottoms, and are also in major (long-term) downtrends. Our market looks more likely to end its bear phase than most others.

TRADING & INVESTING STRATEGIES:Long-term investments should be made as soon as this intermediate downtrend ends, and especially if a bottom is established above 12,500. There is not much point in getting out of existing holdings now, as the bear market is now over six months old and had resulted in a 40% fall in the Sensex when the July lows were hit. Going by the history of the past 20 years, we should be closer to a market bottom. In fact, some investments can be made even now in technology and pharmaceuticals, as these are not being affected much by the downtrend. Swing trading may not be that successful, as the market is tending to change direction overnight. Day-trading opportunities appear to be available on both the long and short sides. Remember that proper risk and money management is more important for profitable trading than a bet on the market’s direction.

GLOBAL PERSPECTIVE:Major international markets are in intermediate downtrends, and most are above their last intermediate bottoms, typically established in mid-July. Hong Kong, Shanghai and Brazil are among the markets that have fallen below their last intermediate bottoms. The Dow Jones will enter an intermediate downtrend if it crosses 11,800, and it will have to stabilise above 12,000 to enter a possible bull market. A fall below 10,700 will mean a continuing bear phase. The Sensex was almost exactly at the same level after the 12 months that ended on Wednesday, taking it up one spot to the sixth position among 40 well-known global indices considered for the study. Brazil still heads the list with an 8.1% gain. Slovakia, Belgium and Spain occupy the next three spots. The Dow Jones Industrial Average has lost 13.6% and the Nasdaq Composite 6.8% over the same interval. (These rankings do not take exchange rate effects into consideration).

The Worst May Be Over

2008-08-24T20:54:00.000-07:00

CALENDAR YEAR ’08 has seen a very volatile domestic capital market. From the highs of about 21,000 in January ’08, the BSE Sensex came down to a low of about 12,500 in July ’08, before recovering to its current levels. In the process, it wiped out all the gains accumulated since April ’07. Before forming a medium-to-long term strategy for the stock market, one should look at the reasons for this volatility. In late ’07 and January ’08, the market marched higher on the back of high gross domestic product (GDP) growth, and good corporate performance. Significant foreign institutional investors (FII) inflows in late CY07 (September-December ’07) helped the market ride higher. This euphoria led to the Indian market outperforming its Asian peers by about 15% in December ’07-January ’08. However, during this period of euphoria, the stock market ignored the factors which were impacting global bourses negatively. These included rising crude prices, the subprime crisis in the US and depreciation of the dollar vis-à-vis major currencies, including the Japanese yen. On the valuations front too, at 21,000 levels, the market was already discounting next year’s (FY09) earnings by about 21x, which was at the higher end of the valuation band. These global concerns led to an eventual withdrawal of liquidity from the Indian market, resulting in a steep fall. Subsequently, domestic factors like rising inflation, increasing interest rates, rising fiscal deficit (due to ever-increasing crude/commodity prices and subsidies) and prospects of an economic slowdown took over. This led to the under-performance of the domestic market in the second quarter of ’08, vis-à-vis other emerging markets. If we look at the current scenario, inflation has touched 12.63% (due to high crude and commodity prices) and is expected to remain at higher levels in the coming months, according to the Reserve Bank of India (RBI). The monetary and fiscal measures taken by the RBI and government are impacting growth. The high commodity/crude prices and interest rates are affecting corporate profitability. While this is negative from the stock market perspective, we think that the same is now already getting factored in. In fact, the consensus GDP growth for FY09 is already lower than RBI’s estimate of about 8%. The market also recognises the fact that inflation may inch up further in the near term before cooling down and interest rates may move up marginally over the current levels. However, a further deterioration in the US economy and a surge in crude prices remain the key risks. Crude and commodity prices have fallen appreciably from their highs, of late. But with the global economy slowing down, demand is expected to moderate. Some members of the Organisation of Petroleum Exporting Countries (Opec) have also increased the supply of crude. This is expected to provide relief to global equity markets. The monsoon in India has also revived in recent weeks, providing a much-needed relief on the inflation front. Recent developments on the political front suggest that stalled reforms may see the light of the day in the near term. We expect the market to move up once it gets more confident about FY10 earnings. This is expected to make the market more attractive from a medium-term perspective. This should lead to improved FII liquidity especially, as India, despite the slowdown, is expected to be the second-fastest growing economy in the world. Post the recent under-performance, we believe that the valuation premium of the Indian market has also reduced significantly. Though negative global and domestic factors have impacted the economy, corporate performance and the market in CY08, things appear to have taken a positive turn in the recent past. With FY09 valuations looking fair, we expect the market to undergo a correction in the short term before seeking a trend. The triggers which are expected to provide the medium-term direction are FY10 earnings, inflation, crude prices and the US economic scenario.

Not Everybody Is Selling

2008-08-24T20:52:00.000-07:00

While it’s demoralising for investors to hear about the exodus of deep-pocketed FIIs, they can take heart from the fact that LIC, the big daddy of the Indian equity market, is on a shopping spree. Krishna Kant tells you why
THE WAY the Indian equity market has moved during the year so far, it seems a big sale is going on at the bourses. The biggest party poopers have been foreign institutional investors (FIIs). They have reportedly sold nearly Rs 50,000 crore worth of equity in the first seven months of the current calendar year, or an estimated 6% of their cumulative portfolio at the end of ’07. This has created an impression that all large long-term investors have lost faith in Indian equities. Nothing can be further from the truth. While it’s demoralising for retail investors to hear about the exodus of deep-pocketed FIIs, they can take heart from the fact that the big daddy of the Indian equity market — Life Insurance Corporation (LIC) — is on a shopping spree. Taking advantage of the fall in stock prices of India’s top companies, the insurance behemoth is meticulously preparing for the next bull run by accumulating additional stakes worth Rs 11,000 crore in India’s top 21 companies across sectors. LIC now owns an average of 6% of the equity capital of these companies, compared to around 5% by the end of the June ’07 quarter. In many top-rung companies including Tata Motors, Siemens, Grasim Industries, Cipla and Kesoram Industries, LIC’s holding has now crossed or is approaching the technically important mark of 10%. Combined with its already large stake in companies such as Larsen & Toubro (L&T), ACC and ITC, the life insurance major is truly emerging as a force to reckon with on Dalal Street. Interestingly, a bulk of the incremental investment came during the bear phase. Nearly three-fourths (73%) of LIC’s total incremental investment was done in the past two quarters of the current calendar year. And in quite a few companies, LIC’s net buy ratio in the first two quarters was in excess of 100%. This means that LIC was booking profits when the market was at its peak during the December ’08 quarter and used the profits to raise its stake in these companies when their stock prices subsequently fell in ’08. And that’s where the lesson lies for retail investors: Make long-term bets, but don’t lock in your entire investment in any stock, and don’t exit completely unless you have lost faith in the company or its management. Divide your investment in two parts — core and floating. Keep your core portfolio untouched across the ups and down, but churn the floating part to take advantage of market movements. Say you own 500 shares in ACC, then you can define 250 shares as core and keep churning the other half (the floating part) to take advantage of a rally. The profits so booked will raise your purchasing power when ACC is in a bear phase, as it is right now. This is exactly what LIC has been doing over the past year. It used last year’s rally to book partial profits in some of its oldest equity investments. For instance, it was continuously shedding its stake in L&T and Tata Steel during June-December ’07, when their stock price was rising. As the tide reversed in January this year, LIC become a net buyer on both these counters. In the past two quarters, it picked up an additional stake worth Rs 1,500 crore in these two companies, overwhelmingly financed by nearly Rs 1,100 crore raised by selling them at their highs. In all, LIC raised nearly Rs 4,000 crore by diluting its stake in the 21 companies during the latter half of the last calendar year. This cash came in handy when the market turned bearish in the new year. The bull run profits financed nearly 40% of LIC’s bottom-fishing during the January-June ’08 meltdown. And in quite a few counters such as Tata Steel, LIC is cash positive even after hiking its stake, thanks to its right timing. LIC’s moves during the past 12 months also demonstrate that it pays to go against the market mood if the company has a compelling growth story in the long term. The insurance major has been accumulating Tata Motors, Kesoram Industries, Indian Hotels and Bharat Heavy Electricals (Bhel), among others, for more than a year now, even as these stocks continue to underperform the market. While bottom-fishing in these counters is yet to pay off, LIC has made a small fortune on its incremental investment in ITC and Cipla during ’07. Till last year, both these counters had underperformed the market, but have since then become two of the top performing large-cap stocks. Who knows what lies ahead for the current underperformers in LIC’s portfolio. However resourceful you may as an investor, predicting the future course of the market with full certainty is impossible. But it is very much within your means to minimise the downside in a meltdown and increase your chances and quantum of gains when good times arrive. And this is exactly what the bigdaddy of D-Street is doing. LIC has ensured that when the tide in the currently unpopular sectors such as auto, capital goods, cement and hospitality reverses, it will be sitting on fat profits, which will more than make up for the losses it has endured so far. Nothing stops you from following in LIC’s footsteps. So, go ahead and be brave.

Fear of monetary tightening may keep market edgy

2008-08-24T20:49:00.000-07:00

EXTENDED uncertainty over the direction in global crude oil prices in the near-term may keep Indian equities volatile this week. With the chances of more monetary tightening measures by RBI increasing, and inflation rising to a 16-year high, the market undertone is nervous. Analysts said the government’s increased desperation to bring down inflation before the general election in May next year could trigger monetary tightening measures that could be more than desirable. “This political factor (elections) is why the risk of further monetary tightening cannot be dismissed out of hand, be it more hikes in interest rates (repo rate, at which banks borrow from RBI for short-term) or further increases in the cash reserve ratio (CRR or the minimum amount banks need to deposit with RBI in cash) to reduce bank liquidity,” CLSA’s Christopher Wood, said in his write-up, Greed and Fear. India’s inflation rose its fastest in more than 16 years, by 12.63% in the week to August 9 from 12.44% last week. A section of the market speculates that monetary tightening measures by the central bank may happen over the next 2-3 weeks in an anticipation of further rise in inflation, as the recent salary hikes for government servants could fuel further consumption, feel analysts. Against this backdrop, Woods notes: “Indeed, from an absolute-return point of view, Greed and Fear is far from clear that the market has yet bottomed despite the anticipated further decline in oil prices.” On Friday, crude oil on the New York Mercantile Exchange (NYMEX) fell 5.4% to settle at $114.59 a barrel, the biggest drop on a percentage basis since December 27, 2004, led by a stronger dollar and reduced demand for the commodity from the US, which consumes almost 25% of the world’s oil production. “We believe that a virtuous circle of a stronger dollar and lower oil prices is what the world needs now. Calmer commodity prices should also temper the hawkish bias that some inflation-targeting central banks have had,” Morgan Stanley said in a research note. Amid lingering concerns over the impact of strong oil prices on the economy, companies and the government’s finances, brokers said influential foreign institutions will defer their return to India till the situation improves. They feel their return was highly unlikely in the foreseeable future, as valuations of Indian equities remain at premium levels compared with other emerging countries. Foreign institutions have net sold shares of Rs 28,411.50 crore so far in 2008. “It is fair to state that the picture for the Indian stock market should be much clearer by the middle of next year. By then, the elections will be over and with them the need for pursuing economically irrational policies. And by then, reported inflation should be dramatically lower and RBI should have commenced monetary easing,” CLSA’s Woods said.

Gold, silver soar as $ falls, crude rises

2008-08-23T22:43:00.000-07:00

GOLD and silver moved by over 5% this week due to physical demand, fall in US dollar against major currencies and increase in the crude oil prices. Gold October contract on Comex division of New York Mercantile Exchange closed up 5.23% at $833 per ounce against previous week. Silver September contract on Comex closed up 5.1% at $13.59 per ounce against previous week. Locally on MCX gold October contract closed up 3.76% at Rs 11,681 per 10 grams against the previous week making a high of 11,865. Silver September contract on MCX closed up by 3.49% at Rs 20,009 per kg before making a high at Rs 20,590. Physical demand from India and other consuming countries and a shortage of American Eagle bullion coins due to soaring demand supported the gold prices. Even the dollar which was down 1.2% this week against the euro supported commodity prices including crude oil. Crude oil prices also increased on speculation that rising tensions between the US and Russia may disrupt supply. Going forward, Subodh Gupta from Anand Rathi Commodities feels that one important point to look at is the money flow into gold. He said that despite gold rising fund managers continue to liquidate their long positions in gold. “We expect gold prices to resume its bearish trend for the coming week with prices expected to touch previous lows of $772. Possible breach of this level will lead to prices coming down to $750 in coming days,” Mr Gupta added. The critical indicators which may affect gold prices include US home sales data and the minutes of Federal Open Market Committee meeting which will give further direction on the policy of Federal Reserve in coming days. However a research report from Angel Commodities is bullish on the precious metals if oil prices move up and dollar weakens. “Fundamentals are supportive for precious metals with rising geopolictical risk, deepening worries about the financial sector. Gold prices can trade between $800 and $850 per ounce in coming weeks,” the report adds. Physical demand from India and Middle East countries is expected to rise in coming months. “This can lead to short term supply shortages and sharp rise in gold and silver prices in coming months,” the report said.

US stocks brace for a whipsaw week

2008-08-23T22:36:00.000-07:00

WHAT should be a holiday lull of a week looks set to be anything but, with Wall Street on high alert for the latest twists and turns in the credit crisis, more volatility in commodity prices and key developments in the race for the White House. Fallout from the credit crisis continues to plague markets, with investors increasingly believing in the likelihood of a federal bailout of home-funding giants Fannie Mae and Freddie Mac. Some market watchers expect the Federal Reserve and US Treasury Secretary Henry Paulson to take action as early as this weekend. Lehman Brothers will also remain firmly in the spotlight, after state-run Korea Development Bank said on Friday that the US investment bank was one of its options for acquisitions. That announcement came a day after veteran bank analyst Dick Bove said Lehman could become a target of a hostile takeover. Financials aside, the sharp and frequent turnarounds in the direction of the price of oil have played a key role in the market’s daily fortunes. Mounting geopolitical tensions between the West and Russia and any economic data showing slowing global growth could tug oil either way. The US presidential campaign also will take a more central role, with Republican John McCain and Democrat Barack Obama set to reveal their vice presidential running mates and the Democratic Party’s national convention in Denver. Investors will look for how Wall Streetfriendly the vice presidential picks are, analysts said. “There are a lot of cross-currents here. You’ve got oil, financials and politics coming together, and it’s hard to see that combining in a way that’s a perfect storm to the downside or a perfect environment to the upside,” said Jeffrey Kleintop, chief market strategist at LPL Financial Services in Boston. All these cross-currents come in the week before the Labor Day holiday, and analysts said the low trading volume could exacerbate swings in the major stock indexes. “I think it’s important that the week ahead is the last week in August and so whatever happens, we should take it with a grain of salt,” said Linda Duessel, market strategist at Federated Investors in Pittsburgh. For the week ended August 22, the Dow Jones industrial average dipped 0.3%, while the Standard & Poor’s 500 Index declined 0.5%, and the Nasdaq Composite Index lost 1.5%. Housing will be a dominant theme at the beginning of the week, with July existing home sales on Monday, followed on Tuesday by the S&P Case-Shiller home price index and new home sales for July. Consumer confidence data on Tuesday, plus consumer sentiment and personal income data on Friday could give the market more clues about the health of consumer spending and the economy as the boost from tax-rebate checks wanes, said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey. The personal income data includes the Fed’s preferred inflation gauge. Preliminary real GDP data is expected to show second-quarter growth at an annual rate of of 2.7%, compared with 1.9% in the first quarter.

Resistance @ 4350

2008-08-22T23:15:00.000-07:00

The market has opened on a negative note but has bounced
back. The Nifty on the daily chart is trading in a channel,
which is in the downward direction. The Nifty is at the
lower end of the channel with a support at 4235 and a
resistance at 4350, which is the upper end of the channel.
We expect the momentum to be negative and volatility on
intraday basis. Market breadth is negative with 495
advances and 649 declines. Daily KST has given a negative
crossover and is trading above the zero line. On the daily
charts, support at 4159 and strong resistance are indicated
at 4523.

On the hourly charts, KST, a momentum indicator, has given
a negative crossover and is trading below the zero line.
Strong support at 4316 and a very strong resistance at
4400 are indicated on the hourly charts.

Aban Offshore has gained momentum and is likely to test
Rs2,800 on the upside. Reliance seems to be having
resistance around Rs2,260 and on the downside is likely to
test Rs1,850. Banking sector has gained momentum and is
expected to move downward.

Banks, metals save the day

2008-08-22T23:08:00.000-07:00

KEY indices posted decent gains on Friday, but the near-term outlook remains cautious in the absence of any fresh triggers. Bulls took heart from the steady trend in European markets, though overall trading volumes remained thin. With Friday’s rise, benchmark indices have managed to restrict their weekly loss to a little over 2%. “Activity in banking and metal counters helped trigger the rise. We feel oil (crude) will once again take a battering and the market will remain range-bound between 4250-4500,” said Prabhudas Lilladher head of institutional sales Rahul Jain. The 30-share Sensex rose 157 points to close at 14401.49, a gain of more than 1% over the previous close. The broader S&P CNX Nifty gained 44 points to close at 4327. The interest for second line shares seen the previous day was missing on Friday, with the BSE Midcap gaining a mere 18 points to close at 5,726. Among frontline stocks, Sterlite Industries, SAIL and Hindalco were the best performers, each gaining over 4%. Other notable gainers included HDFC, Hindustan Unilever and BHEL, up 1-3%. Major losers included Satyam,Grasim and NTPC, down 1-3%. Brokerage firm Morgan Stanley said that price earning ratio would be a more critical driver than earnings. “At the portfolio level, it is advisable to avoid stocks and sectors that are most susceptible to a fall in price-toearnings ratio. They include stocks and sectors where the P/E is trading well above average and has risen a lot over the past five years,” the Morgan Stanley note to clients said. According to the broking firm, industrials, financials, and utilities appear to be the most vulnerable sectors. Total turnover trade in market stood at Rs 58,989 crore, which is very much within the average daily volumes for the past few months. On the global front, crude oil dropped from $121 a barrel on Thursday to close at $119.40 a barrel on Friday. Analysts say that a strengthening dollar and a report of higher output from OPEC helped correct oil prices. Meanwhile, the nuclear supplier group (NSG) proposed conditions to lift a global ban on fuel and technology exports to India at a meeting in Vienna on Thursday. Market observers are keeping a close watch on the developments over the issue, as a green light from 45-nation NSG is imperative for the nuke deal to proceed to US Congress for final ratification. European markets were trading strong early on with shares in the UK and Germany strong by 2% and 1.7%, respectively. Asian markets ended lower, with China and South Korea falling over 1%.

Exit Parameters

2008-08-22T06:08:00.000-07:00

1. Exit at a retest of intraday high/low or swing high/low
2. Exit at fixed profit objective in dollars
3. Exit at an objective chart point
4. Exit at a time interval (i.e. four days)
5. Exit at a combination profit time: i.e. first profitable
open or second profitable close
6. Don’t exit but just reverse
7. Exit on a range expansion
8. Trail a stop off the low
9. Trail a stop off the high
10. Exit on close
11. Exit if the day’s close is less than a certain percent of
the daily range in the direction you are trading

Entry plan for breakout trades:

2008-08-22T06:06:00.000-07:00

Use the first few hours’ range for a breakout trade
· Pre-publications and criteria will be for a narrow range
market that has been consolidating for at least five trading
days
· Let the market breakout of its first hour’s range and look
to buy a bull flag on a one-minute chart
· Should the market trade back and test support of a high of
first hour range this would be a good time to buy
· The exit will be just under the support of the first hour
range. Shorts are reversed. Profits will be taken for more
than x points on 50% of position, and move stops up to
breakeven. Look for continuation patterns for pivots to
adjust stops and seek to exit into recent resistances or
higher timeframes’ EMAs.

Entry plan for trending environment:

2008-08-22T05:58:00.000-07:00

· Markets to retrace 38-50% off its highs
· A support at its 20-period exponential moving average
· A bull-flag formation
· On a smaller timeframe, look for a ABC corrective wave to
confirm bull flag pattern
· Test of the lower trend-line of the bull-flag pattern
· Stochastic to have reached oversold condition of 20 or lower
· Once the market confirms all this criteria, place a buy order
at the market
· Exit at the pivot low below its 20 EMA as risk point, typically
no more than x points of risk on any one trade. Exits will be
as follows: when profitability is more than x points, seek to
take off 50% of my position immediately and move the stop
up to the break-even point. Short sells are simply a reverse
of the above.

What is a Bull Market

2008-08-21T20:58:00.000-07:00

In a Bull Market the Market is dominated by buyers.

There is huge pressure from buyers buying shares in the Market.

Huge demand for share is seen in in the Market.

When the Market closes at the High Point of the day than it is a Bulls day.

When the Market forms high tops and high bottoms over a continues period of time than it is a Bull Market.

Suppose in a month if a market closes at the high point of the day for at least 25 days than the market is in full grip of the Bulls.

iPhone comes to India

2008-08-21T20:55:00.000-07:00

“Your wait is about to end! iPhone 3G arrives on 22 August. 8GB model is for Rs 31,000 and 16GB for Rs 36,100… Confirm your booking by paying Rs 10,000…” And it's not Vodafone that's going all out to promote the phone, Airtel launched the Apple iPhone 3G at its centre in Salt Lake at 11.20 p.m. on Thursday. Members of the Press were invited to interact with the “first celebrity customer”! How would representatives of these companies react when something like Richard Branson's WhiteKnightTwo arrives in India? Yes, customers in the USA drooled for months before iPhone 3G became available and they queued up during the wee hours, speaking geeky terms. Here it's more to do with the “show off” factor. The question is why should anybody pay Rs 31,000 for a cellphone that was priced at $199 (8 GB model) on 9 June in the USA? Mr Sridhar Rao, CEO of Vodafone East said: “The phone has been designed basically for people belonging to the high-income group and we hope that it will attract our customers to buy the product.” Echoing similar view, a spokesperson of Airtel said: “Not only the model but there are certain enhanced features in this iPhone which will compel the users to buy this model.”