( 6th June to 11th June 2011)
Dear Investors
Indian markets ended in weekly loss on Friday. It was a week
Of Tug of War, between, Bulls and Bears through out the week.
Bulls tried to take market beyond 5600 without much success
And bears, with the help of bad economic performance by Indian
Companies and global events brought markets back to the
Psychological support level of 5500, thus making life difficult
For bulls
.
It was a disappointing week for traders and investors as there was no
Help from large cap stocks like RIL, Tata steel, Hindalco,Tata Motors
SBI and others. Mid caps helped the broader market remain in good
Health
On the background of, falling $Index and some buying by FIIs
Markets remained in positive mood, but rising crude prices, bad economic
Data from US, Euro default and governmental apathy in taking
Strong decisions on different policies along with socio political
Instability due to 2G/Ramdeo baba, etc...Spoiled the week to
End on subdued note.
Now all depends on the week- end US data, Europe , Monsoon
Progression, EGoM meet on 9th (doubtful) June and how
Government tackles the ‘Ramdeo baba’ event
Market is poised in such a ‘Delicate’ position that…
Any small news or event on either side will tilt the balance on one side.
The argument in favor of ‘Bulls’ is
All the bad news and events Are ‘In the Valuations’, and any ‘Good’
News from, Government, Monsoon and /or Global front will help them to
Come out of ‘Bear Grip’
While Bears are pressing bulls to the wall with the help of
‘Bad performance by Industrial majors, Government apathy, EU default
And bad economic data from US
The fear of US slow down, falling consumer interest (consumer accounts for
70% of US
(Institute for Supply Management index) at and around 54, the report on
Manufacturing, housing and the consumer, all pointed to slowing demand
Prompting, debate among investors about the duration of the economic
Softness, clearly indicate a slow down in US economy, which is looked
Up on in different angles by bulls and Bears
Bulls Feel
a) Money will flow back from Developed markets to Emerging markets
b) Slowing in demand will reduce Commodity prices, crude prices which
Will help Indian Economy
c) Money will move from ‘Riskier assets like Gold, Silver, Crude to relatively
Cheap equity markets
Bear argue that
a) As there is a loss in consumer interest in US and other part of
Developed Markets, it should be looked up on as a worrying factor
For exports from Emerging Markets, Jobs and order book for
IT and other exporting sectors like Textile, Auto. to, US, Europe and
Other markets.It may affect turnover and ultimately lead to slowing
Of industrial production and growth in EMs
All in all we can not afford US or Global Weakness, even though
It may reduce Commodity, Crude demand leading to lower prices, but
All this has to be seen in the light of ‘GROWTH’ OF THE ECONOMY.
As it is the data, from US and other Developing economies, suggest that
They are on the brink of ‘Double Dip Recession’ which we can not afford.
All these ifs and Buts are keeping Analysts, Economists and
Investors in a state of Limbo or Suspended animation, investors
Are hoping for a change and are not pressing the ‘Panic Button’
FII s and Fund managers have displayed caution in making investments
leading to this situation of ‘Range Bound Trade’
Money is getting rotated from one asset To another,
There is no new money coming to market, so as to change the trend.
Unless this situation gets reverted we are not going to go beyond
‘Technical Patterns’
.
Technically markets are facing lot of resistance at and beyond
5600, unless Nifty manages to close above 5690/5756 range
(200Day Exponential and 200 Day simple average)
Markets will not be out of ‘Bear Phase’
As long as Nifty holds 5400 on down side,’ Bulls’ have some chance
To recover, on some good news (which is not in site), and move beyond
5650/5700
Chartically
200 DMA @ 5755 will be the main barrier for markets to be called
As ‘Moving out of Bear Phase’ Nifty may test 200Day Exponential
Average @ 5590 and move above to 5600/5650, but all these up moves
Will fetch lot selling by all those who are stuck at higher levels along
With short selling by ‘Waiting Bears’
Market is going through the correcting phase, of rise from 6Th March 2008
Low at 2539 to the high of 6338 on 5th Nov 2010, In between this top
Of Nov.2010 and June 2011 market has tried to move towards
All time top, but has failed by making lower tops and lower bottoms.
Last time market scaled higher levels were, 6275/5944/5820
And 5715/5698 but every time market has fallen to lower levels,
5515/5480/5400/5310/5177. All this gives an impression that
There is some pain left before making new high. In short term Nifty
Has to close above 5650 and move on to test 5750 with a support
At 5400/5330 level. Any divergence below 5310 will
Open new lower levels below 5177, while moves above 5650/5700
Will give some chance, to regain lost ground
COMMENTS
We are in an uncertain territory, only thing which can help markets
On positive side is
Some Governmental action
Good Monsoon
FII Flows from weak US
Falling Commodity prices
Falling crude prices
And
Lower $index
So all in all, even though ‘Market valuations have priced in all the
Negatives, still Market require some positive news and events to
Move forward, if nothing happens then it will drift down under the
Pressure of ‘Strong Bears’ and ‘Nervous Bull’
Investors and traders should wait and watch the events in coming days
Market has gone through ‘Price correction’, now it is going through
‘Time correction’,
Market Strategy
Short term traders should trade with caution and with stop loss
Short term traders should book early profits and be cash rich
Long term investors should wait for the ‘Deep corrections’ to collect
Good mid cap and beaten down large cap stocks, High dividend yield
Stocks, to be added to their portfolio for next 12 to 18 months .
Till that time ‘Flirt’ with markets without expecting large gains while
Restricting losses to small amounts, if any.
Sector Considerations:
FMCG: ITC, Dabur, Colgate
Banking:ICICI Bank, BOB, PNB,Axis,Yes Bank,Federal Bank
Indus ind
Capitol Goods:LandT,Thermax,Voltas
Infrastructure: GMR,GVK,Ramkey Infra,LANCO and Suzlon
IT: TCS, HCL Technology, Polaris, NIIT Tech.
Auto: Tata Motors, Maruti, Bajaj Auto
Telecom: Bharti
Metals: Sterlite, Hid Zinc
Coal India
Pharma; Lupin, Rangaxy, Divi’s Lab
NBFC: Sriram transport finance, IDFC,REC,PFC
MID CAP STOCKS Like
Sintex Talwalkars
V guard India Glycol
Celestial Lab Coromandal Inter.
Deepak Fert. Ador Fontech
Camphor and allied Techpro systems
Sharp Ind.
ACE BATA
Arvind/Alok/Raymond/Suryalat spinning
Hercules Hoist GMDC
Sun Pharma Recent advances Dish TV
SPIC Everest Kanto
Globus Spirit Tilaknagar Ind.
Sterlite Technology HDIL
Deewan Housing IRB
There are number of stock at compelling valuations with
Good management, Product mix, Low debt, Low PE
And high book value. Investors should watch all these
Parameters before choosing the stocks.
For next week one has to watch the developments on......
Political front (In the light of ‘Ramdeao’developments)
Meeting by the Ministers for Oil/Gas policy
$ Index
Crude and Commodity prices
Europe settlement for Greece and Spain
Monsoon progress across the nation
Thanks
Dr. Vasant Bele
All the views are personal, invest with caution and after
Consulting experts
No comments:
Post a Comment