DO NOT GET CARRIED AWAY

Dear Investor,

As expected and expressed in last letter market has bounced back from 5690 (Nifty).  Market, after going through all the ups and downs during the day has closed at 5862 level. This is a very important sign for short term. There is every chance that unless there is some bad event locally or globally market may test the levels of 5890/5920/5950 in coming days. The most important resistance for upward move is at 6010/6048 levels. Closing beyond this may change the short term trend in to upward bias. If market starts retracting from immediate level of 5890 to important support of 5802, which if not sustained then one has to watch for 5700/ 5680 supports. If market is not able to sustain previous bottom of 5690 (closing basis) then it will go on to testing lower supports of 5620/5600. The level of 5620 should act as a base for bounce back. If not, then the picture will be grim. The 200 Daily Moving Average (DMA) at 5440 may be tested and if not honored, we may go to 5330 level from where market, after lot of grinding, had started the journey to all time top of 6321.

Market may not require any ‘Ranging’ for going down, it may happen in a fast mode, because volatility in downward momentum is very fast as the short term trend is down. It will require side ways movement in a range, say 5620-6000, for few trading sessions to go ahead and test the resistances in upward direction and reach all time top, which at least for the time being looks difficult. There are number of external as well as internal causes stopping markets to go ahead and form new top in near term. Best way to have a sustainable top is, market should move in a range of 50 DMA and 200 DMA AND CONSOLIDATE TO MOVE UP AND UP.

 Once 50 DMA is broken, it is more than inevitable that 200 DMA would be tested which is at 5440. So, unless we are able to maintain above 5860 on Nifty cash in the market for a reasonable length of time, say 2 to 3 trading sessions, I think at higher levels selling will come back in. We can see Asia is giving back its gains. Yesterday, we did not see big institutional buying. At higher levels there could be pressure unless 5860 is taken out, at which point I would like to try out a buy trade. But unless that happens we may short in the market.

Many traders are asking sectors and or individual stock’s for buying in falling market for long term investment. There are certain sectors and scrip’s which have sustained the fall. These will bounce back fast if there is upward momentum in markets.

There are certain sectors/stocks which should not be bought because they have fallen 30% to 40%. Hence, if market takes a downward direction these will be the first to be hammered to death. They will be ‘Hanged till death’, so try to avoid such sectors and stocks. These stocks (momentum/high beta) which have fallen like nine pins need to be consolidated before they are bought, or in every bounce one should lighten the position and wait for side ways move in them before creating new positions. They are the stocks which will be smashed again in next fall. If at all it comes, these are most vulnerable donkeys to get kicked on.

SUGAR 

PHARMA

BANKS

INFRA

REAL ESTATE

RIL

SUGAR

Prices of sugar internationally are holding up Rs. 27-28. So Renuka Sugars seems to be a good buy around the level of Rs 72. It can get to Rs 90 and then Rs 97. Sugar may remain resilient after the fall that it already had. On dips, sugar stocks should be bought.

PHARMA

You cannot go wrong with healthcare in this market. When the market goes up they outperform, when it goes down they under perform and do not fall as much. So, Lupin, again fresh highs for this; we buy this with a stop of about Rs. 495 and a target of Rs. 540, is quite possible here. Ranbaxy, SPARK, ORCHID are the others which can be looked upon.

BANKS

BOB, AXIS, INDUSIND, ICICI

Banking could have more correction. So yes, if you want to buy it, then buy in installments. These are the good prices to start your buying. But do not get in all at once because these stocks have run up quite a bit. If this is a larger correction then I think probably some more correction may happen on both of these stocks. If market broadly is going to 5500 then you will get these stocks cheaper. So, buy 25-30% and leave the rest for latter.

I think, now, the big fall the market is done and we may dip lower instead of crashing lower. So, you still have winners in this market. IndusInd Bank has not really corrected which shows its strength and we can buy this with a stop of about Rs 285 and target of about Rs 308. Same is the case for ICICI Bank, Axis and BOB.

INFRA 

GMR, LANCO, BGR

All of these stocks have fallen so sharply that you need some quite consolidation base building before they really move back up. All of these stocks, which had sharp rallies yesterday, now become vulnerable because if the market cannot hold up then it gives a fresh opportunity to ‘shorts’.

I think, GMR is broadly a range bound stock - Rs 40 to 50 is the range. BGR needs to get past Rs 720. If it does that, we will probably see it touching Rs 775. But given the volatility it would be much better off if it consolidates around Rs 550-600 zone. LANCO Infra is one stock which has bucked the ‘down’ trend and has not fallen too much.

REAL ESTATE

The rise in valuations of Real Estate stocks is ‘Dead cat bounce’. The smoke is not clear from the heads. So either get out of the ‘longs’ or do not try to build new ‘longs’ in such stocks.

RIL/OIL AND GAS

Unless Reliance can really now get past Rs 1018-1020, this could be just a one day pullback. If you see the chart of Reliance, it had fallen 12-13 sessions continuously. If it cannot maintain above Rs 1018 then this becomes a big pullback.

On Cairn, it is still sideways between this range of Rs 290 and about Rs 350. So nothing unusual has happened yesterday. Just within that range, it has had large moves. But all of this needs follow through. If the Nifty starts breaking down below 5809, all bets are off.

If some one wants to take the advantage of falling market one should enter in stocks which have shown resilience in given situation. These are the stocks which most probably bounce back faster than others.

So,

I would much rather be on the long side with things like Lupin, SPARK, IndusInd Bank, ICICI bank, Bharti, Renuka, REC, HERO HONDA, TVS MOTOR and M&M. All these are nicely trending stocks which may give you nice upward moves. They have sustained the falling market, and will move up in next bull period (these are few ones, there are number of stocks which have shown resistance to fall, they will be the winners in next move).

WAIT AND WATCH FOR

·         US markets

·         $ Index movement

·         Europe situation

·         Crude

·         And Rupee/$ movement

Happy hunting

Thanks

Vasant Bele

Disclaimer: Views expressed are mine. Take your own investment decisions.

  

The GOOD, The BAD and The UGLY

      THE GOOD THE BAD and THE UGLY

Dear Investors,

Last week we had most volatile trading in Stock markets, Nifty recorded the intra week low of 5690 before closing at 5751 on Friday (Sensex intra week low was 18955 and Friday’s close was 19136). There was greater fall in Mid Cap and Small Cap indices indicating that the broader market is weakening. Though all the technical parameters indicate ‘Oversold’ conditions in the market one has to wait till Monday (Nov 29, 2010) as number of events has taken place in India and surrounding world. A weak beginning to the week can pull the Nifty and Sensex to lower support levels and the drag downward, so one should not take positions before the market settles to a stable level,  

It all depends on response of investors to,

GOOD Events (U.S.)

Strong holiday spending data was reported. Signs are indicating a ‘recovery’ in the labor market. The U.S. government's non-farm payrolls report on Friday (Dec 3, 2010) is set to be another sign of a turnaround in hiring that could boost stocks through the end of the year. In October, companies hired at their fastest pace since April, while the latest weekly initial claims for unemployment benefits have dropped to their lowest in over two years. November consumer sentiment rose to the highest level since June. October consumer spending also gained marginally.

BAD part (INDIA)

As the markets in U.S. were closed during recent carnage in India, we do not know how the investors in the world will respond to the scams and political events in India on Tuesday when they open. The ‘Loan and Bribery’ scam is getting deeper as many companies are getting dragged in by SEBI and CBI. The sword is still hanging on Indian Markets.

The events in Parliament in relation to 3G, events in Andhra Pradesh & Maharashtra and results of Bihar Assembly polls indicate that the Indian Political situation is worsening. It remains to see how world looks at it in near future.

UGLY part (EUROPE)

The worst part of the event is ‘News from Europe’. There is a fear that Europe’s debt crisis may spiral out of control on that background. The declines in European stocks this week had looked "really, really ugly." Even though a financial rescue plan was in the works for Portugal and called a newspaper's report that Portugal was under pressure to seek a bailout "absolutely false", while Spain said it did not need help to manage its finances. But the market was less sanguine and stocks took a nose dive.

The U.S. dollar rallied while the euro slid to a new two-month low amid fears that Portugal and Spain could follow Ireland in needing bailouts to shore up their economies.

SO   WAIT TILL MONDAY………

To See,

What effect will it have on investors inside and out side India will be visible on Monday when markets open.

What psychological effect will be created due to devaluing and postponement of Claris IPO by few days due to insufficient subscriptions. A worry though small, on inland investor sentiment.

Even though Indian economy is to grow by 9 to 10 %, the results of Corporate India are satisfying. There is no doubt that Indian markets were out performing global markets. But how long one can ignore the events around us? Markets are ultimately in correction mode; only thing is to see how far it travels?

Before you jump watch for important land marks for Nifty in coming days:

·         Nifty has closed at 5751, which is just above the important support level of 5745

             (38.2%  retrenchment).

·         Immediate fear is of breaking intra day low of 5690 (Friday)- 5620. If Nifty does not bounces back from these levels then the chance is that it may drift down to the immediate support level of 5560

The resistance for upward move comes at:  5798, 5860, and 5950.

Nifty has to close above 6050 so as to keep medium term ‘Bull Trend’ Intact. Till that time one has to wait for ‘Investment Decisions’.

TODAYS THOUGHT

Markets are a cycle, no rocket science there! But somehow we tend to believe that the market is uni-directional – irrespective of whether is it a bull run or a bear trend! When the markets were at 21000 levels D-Street was full of positive news that markets in a short term will touch 25000 levels. So much optimism turned to a complete pessimism in less than a week. But markets, never grew tired of throwing surprises, which makes even the best of market pundits sit up and watch.

It is not advisable to give buying calls in such uncertain environment so wait till markets take a Direction.

Thanks

Dr. Vasant Bele.

DISCLAIMER: Views expressed are mine. Risk taking is yours. 

Caution

Dear investor,

Market has broken important support level of 5820 on closing basis, so take care. It may bounce back but it may be ‘dead cat bounce’. DO NOT rush to create ‘Longs’ till market closes above 6050/6115 or dips down to 5620/5680 on Nifty.

No thoughts for the day. Only 'Caution'.

DISCLAIMER: views expressed are mine, risk taking will be yours.

Confusion

CONFUSION…….MORE CONFUSION …..More AND More……

Dear Investor,

Today, BANK/REAL ESTATE  scam jammed the market, though as compared to the turnover of Indian Banks the scam (Bribing to the authorities for loan sanctioning, advances forwarding against highly leveraged balance shits) is not big. But, as written in one of the articles, this market wants a reason to get ‘CORRECTED’. Though in Indian context valuations are fair there is very low retail participation in present market; all across the border. Today’s incidence indicates that market is responding to any thing and everything in a strange manner making Traders, Investors, Analysts and every one confused and more confused.

As stated in last article, market has not given signals for upward moments. On the contrary, market has not only tested but broken (Intra Day) previous low (5867), to test 5834 indicating that the market participants are nervous and do not want to carry forward long positions. One has to note that Nifty is forming lower lows on day to day basis and market volatility has increased to great extent. Market has to have side ways movements for few trading sessions so as to stabilize the trend - either upward or downward. There are more chances that market will break in downward direction in near future, as it is forming lower lows and testing lower levels in every intra day fall. So, best way is to watch’ MAUT KA KUVA’ of stock markets from gallery and enjoy.

So by giving buy or sell calls ‘I DO NOT WANT TO ADD TO YOUR CONFUSION’

Today’s thought:

 In such situations,

“Even though you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble."

If at all you have irresistible desire to make investments, do it in small lot at every fall in stocks which you have marked and which you were unable to buy when their valuations were high.

For the time being pray God that 5820 (Nifty) remains intact or Sensex does not break 19380.

DISCLAIMER: I may go wrong totally in predicting markets. Invest with care and with your own perception.

                                                                           

Bull Is On "Weak" Wicket

Bull is on "Weak" wicket

Dear Investors,

The three test match series against the kiwis is over on a disappointing note. There was great optimism that Sachin Tendulkar will achieve a landmark of 50^th test century. This pressure of ‘over optimism’ of people around the word made his approach cautious, resulting in a benign delivery claiming his wicket.

Similar is the state of Indian markets, bulls/traders and investors are over optimistic regarding market crossing ‘All time top’ of 6321(Nifty - a land mark). Just a smallest event like firing across two Korean borders has caused steep intra day fall, people dealing in Indian markets have created lots of bullish positions expectantly, so that a small event can make people scary and surrender the holdings to take markets to lower levels. This indicates that the sentiment of traders and investors is very weak across the section of market, indicating that the bulls are really on weak wicket. So, take care in forming long positions and carrying them for next series, even a small thing can create a panic in the market.

As written yesterday market retraced from the Nifty levels of 6000 plus and tested 5860, 5827 intraday and bounced back to the levels of 5934. This market is forming lower tops and lower bottoms, indicative of probable short term downward trend, so ‘Bulls be careful’. Nifty has to close above 6050 for two trading sessions, so as to give some indication of bullish trend reversal, otherwise take care in forming ‘Longs’. You might get trapped and stripped. Below 5820 do not keep your ‘Longs’ or book profits if you are in. Even do not create ‘Shorts’ at this level.  Bears will become aggressive below 5650. You can start creating ‘Shorts’ at 5720 (closing basis) in anticipation. (but above 5620 be prepared to jump back to school of Bulls)

Market at this period is very critically placed, window shoppers should tighten their purse and wait in the wings till there are signals for trend reversal, till that time ‘CASH IS KING’, and enjoy market’s ‘BUNGEE JUMPING from sidelines.

Today’s Thought

There are few ‘Dare Devils’ in the market who in a falling market try to do ‘AVERAGING,’ It would be wise not to try to catch ‘A FALLING KNIFE’, you will cut your fingers and pocket too. And even a plastic surgeon will not be of any help.

No buying calls today, only prayers for the Bulls and curses for Bears

      Hope for

6050/6115

Hate at

5720 / 5680

Just a friendly advice of caution: ‘Stop pilling Longs to save Losses’.

Thanks,

Dr. Vasant Bele.

DISCLAIMER: I might have personal interest in stocks advised, I might go totally wrong in predicting the markets so you are advised to invest on your own perception and responsibility.

Walk, Do Not Run

Dear Friends,

                                                                                                                 

As expected and written in last article market has moved in upward direction. It seems that Nifty has taken 'Temporary' support at 5867 and moved in upward direction, may be because of 'Short Covering' (to great extent) and some fresh buying at lower levels.Nifty's closing above 6000 is significant but not to the extent so as to create' long-term' long positions, for either positional or investment buying Nifty has to close above 6055/ 6115 resistance levels in coming days and run 'Side Ways' for some trading sessions. 

As nifty has closed above 6000 it will test both the levels mentioned above, during this you can have day trades or short term long trades.

In SECTORS WHICH HAVE CORRECTED IN LAST FALL, like Banks, Textile, Auto etc., bank- Index has not crossed its previous top, so be careful. Except  UCO Bank as it is one of the strongest PSU Bank. It has formed all time top and has entered in 'Uncharted Territory'. One can buy it with a stop loss of 138 for a target of 168.

Please do not take long term positions till specific levels are crossed. This may prove to be 'DEAD CAT BOUNCE'. So, do not 'Run Ahead' of markets but 'Walk With' the market trend. 

Watch for short term bounces in some of the stocks like:

Textile:

Arvind

Alok

Himatsingka

Suryalata Spinning

Raymond

Aviation:

Jet

Kingfisher

Capital Goods & Enginering:

Action

Elecon

SPIC

TILAKNAGAR IND

FOR PRIMARY MARKET LOVERS

Consider applying for: ‘CLARIS Life Sciences’ IPO. It is a major player in Inject able pharma product; specially in ONCOLOGY (Cancer Drugs) and Anesthesia products. It has presence in number of geographies and large number of specialty products out of patents.

SPECIAL ADVICE:

1) Do not create positions in First 20 minutes after opening of the markets ‘Just Watch’.

2) Keep tracking $ Index and Rs/$ movement regularly, as both affect equity markets to great extent.

Happy Investing

Invest for CAPITAL creation and not for PROFITS only'

DISCLAIMER: I might have personal interest in stocks advised, I might go totally wrong in predicting the markets so you are advised to invest on your own perception and responsibility.

NEXT MOVE OF STOCK MARKETS

Dear Investors,

On 19th Nifty closed at 5890 indicating that it has broken important support level of 5920. There appears to be heavy selling momentum in market,at the same time there are very few short positions created( which could have helped market to go up), and last but most important is , F&0 expiry is in this week (25th), all these things are not good for marker to recover in coming weeks.the last hope for BULLS is Nifty taking support at 5850, below which there is every chance that Nifty may tank to the levels of 5720/5680, if not sustained then the mid term reversal of trend is in sight.

According to charts Nifty is trading below 20 DMA ( days moving average)@6110 and 40 DMA @ 6040. these will act as important resistance in upward movement. Market has to close above these levels to resume the broken upward trend.Important daily levels to watch are5990/6050. One is advised to be very careful in creating positions either positional or investment buying as the range of volatility will be heavy. Investment buying is advised in staggered fashion  up to the levels of 18300 below which all longs should be booked as new downward trend may get in.

Investment buying is suggested in

CAPITAL GOOD COS.
ENG. COS
FMCG
PHARMA
and BANKS after correction
Advices to create small positions at all falls in

ELECON ENG.
ACE(Action Construction and Eng.)
SPIC( Southern Petro)
L&T
LUPIN LAB
IPCA

MENGLORE CHEMICALS AND FERT.
GMR INFRA
LANCO INFRA
HIMATSINGCA SIDEC
ARVIND
INDUS IND BANK
FEDERAL BANK
CENTRAL BANK OF INDIA
ANDHRA BANK
ICICI BANK
IDFC
CHARTERD CAPITAL(CCP)
BANCO PRODUCT
BALASORE ALLOYS
ETC.

Thanks
Happy Investing
Take care to protect your capital
Dr. Vasant Bele

DISCLAIMER: I might have personal interest in stocks advised, I might go totally wrong in predicting the markets so you are advised to invest on your own perception and responsibility.