Some more pain left in the market

As expected Nifty faced the heavy resistance at 3150 and started the downward journey. You call this because of Satyam fiasco or some other reasons. It had to happen and happened!!

 

Remember one thing! In this kind of bear market, market takes time to recover and rally, but downfall will be steeper than as expected. That is what happened on last Wednesday.

 

Many people were telling in media ,we have seen all the negatives and factored in so we should see a recovery. But I remind you one thing. Nothing has been changed over the period. We might see some more negative news going forward. Satyam is just an example.

 

Even if the government gives all kinds of stimulus package, sentiments have to be improved. All the countries across the globe are offering all kinds of stimulus package to improve the economy. But the economy will take its own course of time to recover. Even if it is the case, fiscal deficit is all set to increase for all the countries.

 

The result season has been started! Everybody is watching Infosys result on Jan-13^th.That will set the next course of action for the market. As Everybody is expecting, Q3 is very bad for almost all companies. So I strongly feel ,Nifty might touch October lows this time. It is at the  very strong crucial level right now. If it breaches this level, we might see some more downward journey.

 

This is the time to shop some of the value companies. No doubt, investor’s confidence has been shattered after Satyam’s fiasco. People started questioning the validity of the balance sheet. Do we take a call based on their audited report? Do we believe in balance sheet?

Only time has to give answer it and boost the confidence.

 

My picks are

Axis Bank, SBI in (Banking sector)

Infosys  (IT)

Punj Loyd and L&T ( in Infrastructure)

DLF ( in realty)

 

I will give you more and more picks when market starts going down!

 

 

Happy New Year

I wish “Happy New Year ” to each and everyone..Market started with a bang.I was missing from this blog. My sincere apologies for that.

I will start writing this blog regularly..This is my new year resolution.

This week we will have a positive opening ..Thanks to RBI and second stimulas package. But the question would be ,is this rally sustainable?

My view is that Nifty faces the strong resistance at 3100 and 3250.From there, southward journey should begin .I strongly feel that we will see the October lows in Jan or Feb.If any rally, it would be surprising for everyone especially for me.

Many people would feel that valuations are good.That is true..

But should other factors as well ? I will post you on this in a short while..

Hang on……………………………………..

Short term looks positive..

Volatility is the second home of the equity market nowadays. Things swing either ways. That is the same reason; retail investors are away from the market.

 

What would be the outlook of the market in a short term? I feel, it looks brighter. Have we seen the bottom of the market? No. Have we seen all pain in the market? Answer is no.

 

The recession fear has mounted once again after the US Q3 GDP shrank at the rate of 0.3%.It might be higher in Q4 as we are seeing more and more credit crunch problems and other problems in Q4.

 

Dow is in an upside move right now. It might face a small resistance at 9300-9500 and it might move till 1000-10300 ranges where it faces a strong resistance.

 

Back to India, We haven’t seen the upside move last week or this week when other emerging markets were on a roll because of holidays and October series expiry. One interesting thing to observe, we had an auspicious trading on Tuesday, Oct 28^th 2008. That is the Muhurat Trading. Last year it was in negative, indicating the bearish sign. This year it ended up in a positive territory. Can it be a positive signal to the Bulls? Let’s wish for it.

 

Many more global events and political events will lead the market in next couple of quarters. As I mentioned in one of my previous blog, we should see the bottom in Feb-March time if the magnitude of the problem is what we are seeing now.

 

There is an old saying. When US sneezes rest of the world gets cold..

When DOW is moving up, can’t we follow that? Yes.

In my view, NIFTY will go up for the short term. It might face a resistance at 3250-3500-3750.So my first target would be 3200-3250.

 

Inflation is softening. This may be the indication of softening in interest rates.

But we might see a bizarre response from the market as and when news breaks out .So be cautious while trading….

 

Tough time ahead for everybody and let’s face it together to overcome this crisis. Remember, Every horror movie has a happy ending!!!

The tip of the iceburg or the comprehensive solution? Let’s wait and watch….

Last week we saw mayhem in the market. It was truly a devastating experience with the equity markets across the globe. Nobody would have expected that much of fall in the market. That reflects the kind and amount of nervousness in the market. Across the board stocks got hammered and Nifty closed at 3278. I never expected that much of fall in the market given the fact that we had lost a lot from 6000 levels.

 

My question is, Are we in the period of recession?  Is it correct to justify the recent fall of the stock markets?

 Are we seeing the bottom of the market? A hundred million dollar question which everybody is trying to get the answer.

 

I was reading Baron’s and I would like to give you some heads up on that.

 

Typical recession period lasts for 10 months as we go by history. The great depression happened once during 1929. It lasted for 44 months. I don’t know what is great about the “great” depression. We call depression when growth contacts more than 10 percent.

If we go by what most of the economists say , we are right now  in the recession. This time, the recession started in July and it might lasts till April 2009. If you are pessimistic, it will extend till June 2009. If we go by history once again, Market finds its bottom usually 3-4 months earlier than the end of the recession period.

 

So if you have money, don’t aggressively invest in this kind of market. I feel early 2009 would be ideal to start investing if you are a long term investor. For the time being, you can invest 20%-30% of your cash.

 

Right now we are seeing more volatility in the market .This week we might see some relief rallies based on the news flow. But would it be sustainable, we need to watch till it crosses 3900 level. We have seen the tip of the ice berg till now. If problem is deeper than expected, it would be difficult to assess the situation.

 

As of now, DOW future is in green, up about 300 points. So we might see some kind of upward moves in all the Asian markets.

 

Till the dust settles down, it is better to stay away from the market.

Many countries are working towards restoring the confidence and bailing out all the banks. We might see more actions going forward, which will change the market sentiments. The European Union is coordinating the rescue packages so as the US.

 

The domestic factors such as cut in CRR, P-note relaxation might change the sentiments. We might see some more changes in monetary policies to address the liquidity issue. We need to see the leadership qualities of our global leaders during this crisis.

 

We have studied that most of the leaders fail when environment changes at the same time many leaders emerge during the crisis. Similar example would be UK’s Prime Minister Gordon Brown. He was not a popular prime minister in the UK. But after this crisis, his bold moves double folded his popularity. We should see more and more leadership actions from our global leaders to bailout the current crisis. More than credit crunch problem, people have lost the trust. People are not willing to lend  each other because they doubt about one’s solvency.

 

We might see a better time ahead. Let’s keep our fingers crossed.

 

3800 level to watch out…Two to Tango in Dalal Street

Last week we saw a disappointing performance of NIFTY. As per the data, rollover from September series to October series is less compared to previous month.

 

This week I would suggest, keep an eye on 3700-3800 levels, which is acting as a strong support zone. If it bounces back from there, once again we are heading towards 4100-4300 levels. I am telling you again, 4250-4300 range acts as a strong resistance level. Breaching of this level is highly unlikely, as we don’t have any positive news coming in.

 

The ray of hope for the Indian market would be N-deal closure, which is expected to happen on October 4^th.

 

Below 3800, we might see new lows. So we should watch out that level ,as in coming days, chances of Nifty hitting 3800 levels is very high!

 

On the US front, bailout package is in a final stage and mostly likely it would happen by Monday. But my question would be, is it sufficient to bailout the current situation, which is worse than what somebody could think off? I don’t think. It might give a temporary relief ,as it does when we take crocin …

 

One more news is that, Wachovia is in talk with Citibank and other banks for the potential bailout. Guys.. It   started with investment banking and Now it is spreading to financial world including insurance companies.

 

I am not sure..How long would it take to recover? If we go back to history, typical bear market continues for 2-3 years. So we might see a resumed bull run from 2010, once we have the new government. Till then we can trade but it is difficult to invest. If you have surplus money, keep it safe in Fixed Deposits.

 

Alternative would be, you can give it to me..It is as safe as any financial company in the US now..

Settlement Week-Be cautious

If you wonder and searching for me these days, you can find me in Wall Street …True folks. I am in New York right now at the time of writing this blog. I have been busy these days meeting many wall street bulls and bears. Now you know the reason why DOW was up by 800 points in last two sessions.

I heard that there will not be a name by  “Wall Street” any more as one by one, all the invest banks are getting closed down. Any way .we will choose another name for them. Think about it. So that creative mind can choose one for them.

Today I am planning to visit  Atlantic City  where I am planning to play Casino to test my luck before Monday’s market opens. So I am keeping  this blog short.

As I mentioned in my previous blog, NIFTY will test 3600-3800 range. It took support at 3800 and bounced back. Now it is at crucial resistance level so as the DOW Jones Industrial Average. In my view, On Monday NIFTY will face the resistance at 4300 technically and intra day spikes will be there. But being a settlement week of all the contracts , you might see heavy volatility ahead. I advice  it would be better to stay away if you don’t have a proper hedging mechanism. I feel downward journey hasn’t  been fulfilled yet and Nifty will test 3600-3800 range once again. It would be range bound for next few weeks.

I have a 4400 CE so I am planning to go short on Futures Sept series on Monday. I have started trading with OCTOBER series as well. I have taken a position with 4200 OCT PE.

Guys, I am writing this blog on options and futures trading. I will also write on basics of Market trading as soon as possible with the public demand. Till then you need to bear with me…as suggested by you folks , I will have one more blog on Equity Investment and fundamentals…

So this week watch the roller coaster as the settlement is ahead….Watch the data on NIFTY roll over…

 

Monday mayhem..Here to stay!!!!

Yesterday me and my wife went for a movie by name “Rock On”. I must admit, that was my first movie experience in the US. We were late by 20 mins and after all the requests ,we got the ticket. We entered the cinema hall ..to our surprise ,no one was there..believe me .. it was only me and my wife in the entire cinema hall…for this to happen in India we would have to book the entire hall as  Amitabh does in Sharabhi!!

 

That was the beginning of my Monday morning.. Rock On movie was a real magnum opus..We enjoyed a lot!

When I came back from movie , market was on a roller coaster ride. It was down by 5%. To my surprise ,as I told you in my previous blog..my 4200 and 4300 puts were Rocking. Real Rock On Guys!!!

 

Monday was a real mayhem at the market..across the globe.. Asian Markets were down , DOW was down by 500 points.. What more could we expect??

 

somewhere in February – March time frame, when everybody was talking about the end of write downs and the fresh ray of hopes in the wall street, I still remember my SAPM professor Shyamnath telling that this is not going to end soon. The kind of exposure these companies are having, difficult to sustain..

 

True..It was true…Lehman Brothers filed bankruptcy, Merril is sold to Bank Of America ,AIG is struggling to raise fund ,Washington Mutual is having trouble. Do we have an end  to this?

 

We’ll come back to see what is ahead. as I mentioned , Nifty is clearly heading towards 3800-3600 range. But some relief rally might be expected on Tuesday or Wednesday..

But Nifty will touch maximum of 4200-4300 before diving back to south..

 

I advice you to buy a PUT of 4000 or 4100 of October series when it goes up.

If you want to take risk, go short on Nifty future keeping a strict  SL at 4400-4450.

 

Tueday ,Fed might cut the rates as financial turmoil continues. as Oil is slipping so inflation worries might be eased in the US..So Federal might go ahead and cut the rates which will trigger 1-2 days of relief rally…Let’s keep our fingers crossed..

 

But I iterate have PUT in your kitty as Nifty had broken the support level and clearly in negative territory..

Venu’s Market watch On Monday-15-Sep-08

Despite the good data of IIP on Friday, market closed on lower. Nifty lost 60 points and closed well below the 50 day average. So does it mean more downturn or again it would be a range bound as it is happening for a couple of weeks?

Well one needs to observe for next week:

Factors Influencing on Monday :

Dow closed marginally in red. Lehman Brothers deal might be anounced before the asian markets open.If it happens, it will trigger the Asian Markets.It would be momentary as more pain left out in the financial crisis.And Dow is headig towards south in the short term.

India specific, NIFTY broke the major support line and Monday it might go up in line with the asian peers. Now NIfty faces the resistance at 4290-4320 ,it will come back after Monday’s trading.I feel in the short term to Medium term ,Nifty will touch the low of 3800 mark as technically Nifty is in downtrend. We might see a few spikes here and there.

Monday’s trigger might be good IIP data and one more news is that EPF money would be transferred to fund managers partially and money would be invested in the market on the same day. This will give some cushion to the front line stocks and NIFTY.So Overall I see Nifty touching 4300 mark on Monday before diving towards South.

My Strategy :

I hold 4300 PUT and 4200 PUT (Sept series)

I hold 4400 CALL (I will sell this on Monday).