Indian Stock Market Blog

Trader’s Corner November 26, 2006

At any given point in time, there is always a story in the stock market that is cited to be a sure-shot winner, mutli-bagger, jackpot or whatever else it may be called. It can be Internet stocks one day, retail stocks the next, and realty stocks the day after and so on.

As more and more traders hear about the story and prices starts zooming, there is always the temptation to jump on the bandwagon and shovel in a large chunk of the portfolio in such stocks. That is not such a good idea.

Over-betting stems from over confidence and over-confidence, as we all know, has no place in stock markets. Betting a large chunk of your investment into any one idea can lead to significant diminishing of capital once the sector falls out of favour.

It is best to restrict exposure to any one stock to 2-3 per cent of your portfolio.

Diversification is the key to successful management of your investment portfolio. We talked about diversification within the equity portfolio in the preceding paragraphs. But the overall investment portfolio should also be diversified with money invested across asset classes so that the portfolio is cushioned from the vagaries of the stock market.

The exposure that an investor or trader has to the stock market should be related to his assessment of the market’s trend. As the market starts looking over-bought, over-stretched etc., the exposure to the stock markets should be reduced and cash should be moved into safer avenues of investment. The extent of speculative activity evident in the markets can be used to guide the investors regarding formation of market peaks.

Revival of interest in penny stocks, increase in the number of stocks hitting 52-week highs, surfacing of scams etc. are some of the common symptoms of a market nearing its peak.

Similarly, as the market sentiment turns negative more money should be moved away from equities. It is not possible to take all the money out of the market or to move all the money in to the market. Scaling down the exposure is the second best alternative.

Index View at 12500. October 11, 2006

I may be wrong here as its all about money. As far as money comes into the market, market will go high. But dont forget my previous post or can check it at (Click Here.) Also do note that signs of correctio have never been indicated on charts before they come. I am sure everyone would have been earning a good profit in large caps and some of the small caps. So one can take their pie to re-enter at later stage.

I expect 1000 points correction from current levels within next few days. Though my target for the sensex is at 13500 by March 2007.

Book Profit and Enjoy!

Index View October 2, 2006

Sensex (12454.4)

The resolute march towards a new high continues in the Sensex. Though the Sensex closed the week with a gain of 1.7 per cent, the climb is getting more and more arduous. Some of the pivotals like SBI, RIL and Infosys are flirting with their all-time highs. These stocks need to sustain the momentum if the Sensex has to reach the magical land beyond 12700.

The background indicators in the market are not very heartening. Volumes continue to be low. The high percentage of rollover of the September contracts points towards an unwarranted sense of smugness building up in the market. We are beginning the October series with an open interest that is nearing the May 2006 levels. That is not very comforting either.

The momentum indicators in the weekly chart are reaching overbought levels again. The 10-week ROC has attained the level last seen in May 2006. The momentum indicators in the daily chart are still diverging negatively. The inference that can be drawn from these indicators is that a correction can materialise anytime from here.

The tentative nature of the rally witnessed since August lends credence to our wave count that we are in a running correction that could be unfolding in a triangular pattern.

We could be still in the C wave of this triangle with the D and E yet to unfold. That makes us believe that the index will continue to move upward but with increasing bouts of volatility.

For the week ahead, the Sensex is expected to move up to 12541 and beyond that to 12631. The index would face stiff resistance in the zone between 12550 and12630. Short-term traders can book some profits here. The support for the week would be at 12160 and then12029. Investors would be better off enjoying the show from the fence this week.

Nifty (3588.4)

The Nifty achieved our upper target of 3605 last week and closed with a gain of 44.3 points or 1.2 per cent. The short-term trend is positive, as the sequence of higher peaks and troughs is unbroken. The upper targets this week are 3630 and then 3658. We can expect considerable resistance in the zone between 3630 and 3650 this week. If this zone is breached, there can be a rally to 3702. Traders can play long with a stop at 3540. Investors can stay sanguine as long as the Nifty stays above 3440. A fall below 3440 is required to signal a medium term trend reversal.

BSE Midcap Index (5148.3)

The BSE Midcap Index hit a weekly high of 5154.7 on Friday. This is the 61.8 per cent retracement of the fall from the May 2006 high of 6070.5. It will be interesting to watch if this index surpasses this resistance next week. If it does, then the mid cap stocks will launch into a fresh up-move that will take this index to its May 2006 highs once more. The support that needs to hold this week is at 4820.

Global Cues

The Dow Jones Industrial Average is on the verge of surpassing it all-time high of 11750.3 that was made on 14th January 2000. The DJIA, however, shied away from this record on Friday to close at 11679.1. The Nasdaq too closed the week on a strong note at 2258.4. Crude is rebounding from its recent lows in what could be a technical pullback in a down trend. Nymex light crude for November delivery closed at $62.9 on Friday. All the other equity markets too closed the week on a positive note.

Pre Market Opening from HDFC. September 18, 2006

Easing US inflationary pressures gave Asian markets a push on Monday after fears that the Federal Reserve may decide to hike rates during its September 20 meeting were brushed away.

Taiwan`s TAIEX index advanced by 146.92 points, a lead of 2.20% to trade at 6,828.01, while the Japanese benchmark index Nikkei was closed for a holiday.

Besides, Hong Kong`s benchmark Hang Seng index moved northward by 93.61 points or 0.54% to trade at 1,7331.26 as stocks of China Mobile and Cnooc jumped.

South Korea`s KOSPI added 6.18 points or 0.45% to trade at 1,367.28, while Singapore`s Straits Times improved by 15.92 points, up 0.63% and is currently trading at 2,537.83 (7:45 am IST).

However, Indonesia`s Jakarta Composite index remained flat, marginally shedding 0.03 points at 1,465.67.

In addition, China`s Shanghai Composite index climbed 5.52 points or 0.32% to trade at 1,726.56 as Baoshan Iron and Steel Co surged on strong demand forecasts.

The US stock market closed higher on Friday on lower-than-expected inflation data. Nasdaq gained 6.86 points, or 0.31% to 2,235.59.

The Dow Jones Industrial Average rose 33.38 points, or 0.29%, to 11,560.77. Out of the 30 components of the Dow, 17 finished higher, 9 were lower and 2 were flat.

Among the Indian ADRs, the highest gainer was Satyam, which rose 1.08% to USD 38.29. Infosys gained 0.51% to USD 46.91, Dr. Reddy`s rose 0.12% to USD 16.04 and VSNL added 0.06% to USD 17.64.

Among the Indian ADRs, the top loser was Wipro, which shed 1.65% to USD 12.54. The other losers were Rediff.Com, which shed 1.62% to USD 15.20, Sify fell 1.55% to USD 8.92, MTNL down 1.47% to USD 6.71, Patni Computers down 1.3% to USD 19.00, ICICI Bank shed 0.91% to USD 28.46, HDFC Bank lower by 0.39% to USD 59.06 and Tata Motors lost 0.16% to USD 18.97.

October light sweet crude contract ended the day at USD 63.33 at the New York Mercantile Exchange (NYMEX), after dipping as low as USD 62.03 a barrel.

Metals slid further taking cues from crude oil and strengthening US dollar. The yellow metal futures ended the week at USD 583 a troy ounce, giving up at least USD 3 at NYMEX.

Foreign institutional investors (FIIs) remained net buyers in equities worth Rs 491.5 crore (USD 105.6 million) on September 14. They bought equity worth Rs 1604.9 crore and sold equity worth Rs 1113.3 crore. Till September 14, they have been net buyers in equities worth Rs 2476.2 crore (USD 532.3 million).

Also, Mutual Funds (MFs) turned net sellers in equities worth Rs 2.36 crore on September 14. They bought equity worth Rs 361.69 crore and sold equity worth Rs 364.05 crore. Till September 14, they have been net buyers in equities to the tune of Rs 501.14 crore.

On the technical side, analyst Vishwas Aggarwal predicts a mixed trend in today`s market.

There is no established direction yet. Except Reliance crossing the 1,135 mark, which was a good sign, there are no strong indicators.

No overall bull-run is expected, except in Nifty cash trades, which are expected to cross the 3,500-mark.

12K to 12K September 17, 2006

Four months after it fell off the mark and five months after it first touched it, the Sensex is back at 12,000. Time to rejoice that all’s well with the world? Not really, if you take a close look at the underpinnings of the rally that has taken the index back to stratospheric levels. The present rally appears to be selective in terms of the participating stocks, and the market has turned discriminating in the mid- and small-cap spaces. There has been a virtual shake-out among the mid-caps that were in the vanguard of the last rally till May. Ditto for the small-cap stocks, where, again, the participation has been minimal in this rally.

A number of large-cap and emerging large-cap stocks, including some marquees, are now valued lower than the first time the Sensex closed above 12,000, on April 20. Significantly, three out of every four stocks traded in the market are yet to catch up with their values of April 20.

So, what’s driving the market then? The present rally seems to be driven largely by select stocks from such sectors as banking, information technology, tyres and auto/auto components.

That the rally is not broad-based is borne out by the following:

About 75 per cent of all traded stocks are yet to regain the values they recorded on April 20. In absolute numbers, 1,664 of the 2,244 stocks that constituted the sample for this analysis are trading at values that are lower by 2-72 per cent compared to April 20. And 930 of these, or 41 per cent of all traded stocks, are priced over 20 per cent lower than their April 20 values.

Six out of every ten large-cap stocks are now trading at values lower by 2-37 per cent compared to their prices when the Sensex first closed above 12,000. Every third stock in this category has dropped by more than 10 per cent in this period. These are largely from sectors such as metals, FMCG and oil.

Some prominent stocks that are trading lower include Tata Motors (9 per cent), Hero Honda (11 per cent), ONGC (14 per cent), Nestle (13 per cent), Hindustan Lever (12 per cent), Ranbaxy (12 per cent) and Nalco (37 per cent). Large-caps have been defined as those with market capitalisation exceeding Rs 5,000 crore, which is a sample of 94 stocks.

Three out of every four emerging large-caps are trading at values that are lower by 10-51 per cent compared to April 20. These are largely from sectors such as pharmaceuticals, FMCG, oil, construction and sugar and include Lupin (14 per cent), Castrol (6 per cent), Pfizer (16 per cent), Biocon (19 per cent), Punj Lloyd (17 per cent), Nagarjuna Construction (18 per cent), Bajaj Hindustan (39 per cent) and Balrampur Chini (51 per cent). Emerging large-caps have been defined as those with market capitalisation between Rs 2,000 crore and Rs 5,000 crore, which is a sample of 101 stocks.

The big story is the shakeout in the mid-cap space, where three out of every four stocks have failed to regain the values of April 20 and are quoting lower by 2-60 per cent. Mid-caps have been defined as stocks with a market capitalisation of Rs 500-2,000 crore — a sample of 275 stocks in the analysis.

Of these, 160 (roughly one out of every two) are trading at values lower by over 10 per cent than their April 20 close and include Punjab Tractors, Ballarpur Industries, Indraprastha Gas, Mastek, Eveready and Bata. Clearly, the market is now more discriminating in the choice of mid-cap stocks.

No other stock tells the story better than Gateway Distriparks, which is down 34 per cent since April 20 and trades even lower than the closing price of June 14, when the Sensex touched its low of 8,900 points.

In the small-cap space, again, three out of four stocks are trading at levels far lower than the first time the Sensex touched 12,000. Of the 491 small-cap stocks forming part of the sample, 372 are trading lower by 2-72 per cent. And 323 of them, or about 65 per cent of the sample of small-cap stocks, are now trading at values that are lower by more than 10 per cent compared to April 20. Some of the well-known small-caps to suffer include Savitha Chemicals, GVK Power, Ciba Specialty, Maharashtra Scooters and Timex.

Pharma, FMCG lose, banking gains

Banking stocks are stars of the latest rally, with some, such as Bank of India and Karur Vysya, gaining more than 20 per cent over their April 20 values. Bank of Baroda, ICICI Bank and SBI have also posted significant appreciation.

The bull-run in these stocks appears to be driven by two factors — one, the discreet push to consolidation in the industry from the Government and the RBI, and, two, the clearer picture on interest rates. Banking stocks had declined earlier on fears of impending rate hikes and consequent loss of treasury incomes.

Auto component and tyre stocks have been the other major groups to gain, with Ceat, Kesoram, Apollo Tyres and TVS Srichakra posting handsome gains compared to their April 20 values.

The rally in auto components has been selective, with Sona Koyo, Subros and MICO being the major beneficiaries.

The biggest losers of the last four months are sugar stocks, which have been beaten down mercilessly. EID Parry, Bannari Amman, Dhampur Sugar, Balrampur Chini and Shree Renuka Sugars have all lost heavily.

The bearish outlook for metal prices has meant that important stocks such as Tata Steel, SAIL, Hindalco and Nalco are trading at prices well below the level when the Sensex last touched 12,000.

Among oil stocks, ONGC has yet to catch up with the heady valuations of four months ago despite the sustained rise in crude oil prices. This could be because higher crude prices also mean a disproportionately higher share of the subsidy burden on the company. Refining companies such as BPCL and HPCL, despite the rise of the last two weeks, are still way below their values of April 20 while Indian Oil has regained the price level touched in the last rally.

Interesting sidelights

1,958 stocks, or 87 per cent of the sample of 2,244 stocks, are trading below their prices of May 10 when the Sensex closed at its life-time high. More than 900 of these stocks are lower by 20-80 per cent.

48 stocks are at around the same price as on May 10 and these include Maruti, NTPC, TCS and Bank of India.

233 stocks are trading at prices higher than what they were on May 10 and these include IPCL, Infosys, Zee Telefilms, EIH, Satyam, Grasim, HDFC Bank,Punjab National Bank and Divi’s Labs.

303 stocks, or about 14 per cent of the sample, are trading at prices lower than on June 14 when the Sensex closed at a low of 8,900 points. Sugar stocks such as Dhampur Sugars, Thiru Arooran, EID Parry and Sakthi Sugars are the stars of this apart from Force Motors and Britannia, to name just a few.

Whats Ahead? September 16, 2006

Markets had a volatile session and closed marginally in the green. The Sensex closed at 12,009.59 up 36.57 points. The Nifty gained 7 points to close at 3478.60. Will the markets remain above the 12,000 levels next week?

Technical analyst E Mathew expects the markets to move above 12,020-12,100 levels next week.

He says, “I would look forward to the next week. I do feel that in the next week barring unforeseen circumstances, one should see the Sensex moving above 12,020-12,100 levels and giving a clear direction for the target of 13,200-13,400. The Nifty would of course follow suit.”

He adds that there is increasing scepticism building up in the market. “In this market there is profit-taking at each and every stage and there is increasing scepticism building up at each and every stage. If everyone was bullish that would have got me worried. But I think there are very few bulls really in the market and that is the cause for optimism for me,” he says.

Sajiv Dhawan of JV Capital Services says that if markets open strong next week, then one can see another 200-300 points run up. He says, “If on Monday morning markets open strong, then one could very easily see the market run up another 200-300 points on momentum because that would really scare some of the short sellers.”

Index Outlook 11-09-2006 to 16-09-2006. September 10, 2006

Sensex (11918)

It was a quiet week devoid of any major news. The market players in India relieved their boredom by playing a guessing game. The game was to guess when the Sensex would touch 12000.

The Sensex was, as ever, at its wilful best, hitting an intra week high of 11983.4 before reversing; generously allowing this innocuous pastime to be carried on for yet another week. The tally of successive weekly up closes has now extended to seven.

Though the Sensex closed the week with a gain of only 1.2 per cent, the BSE Midcap index gained 4 per cent, and the BSE Smallcap index gained 3.7 per cent indicating shift of focus from the frontline stocks.

The volumes stagnated through the week. The 12000-level appears to have unnerved the FIIs and mutual funds as they turned net sellers.

The domestic traders and retail participants are currently playing the atlas, and very successfully too. The sentiment is turning a trifle too positive as is displayed by the creeping up of open interest in the derivatives segment.

There is a slow-down in momentum in the short term. But, the weekly charts are not showing any signs of weakness yet. The sideways market witnessed last week keeps our outlook for the market unchanged.

The intermediate term uptrend, which started from the low of 8800 in the Sensex is still continuing. We are still with the view that this move is part of a correction that started from the top of 12671 in the Sensex.

There is a famous adage that goes “If you feel that there is something not quite alright with the market, it is most likely to be in a B wave”.

As explained before, it is difficult to pinpoint the exact place where a B wave can end. It can rise above the beginning of A wave also, which in this case is 12671.

We are, however, nearing 12015, which is the second target for the third leg from the low of 8800. It is best to be extra cautious at this juncture as the next wave down has the minimum downward target of 10504 (we do not want to dwell on the subsequent targets just yet). The Sensex can move higher to 12091 or even 12256 this week. Traders can buy in dips till the Sensex is above 11550. Investors should, however, stick to the sidelines and wait for a firm close above 12200 before contemplating fresh buys.

Nifty (3471)

The Nifty reversed from an intra week high of 3490.9 to close the week with a minor gain of 1 per cent. It was a flat, sideways move witnessed there. The immediate upward targets this week are 3514 and then 3546. The upper ceiling this week is likely to be at 3582. The stop for traders should be at 3370. The support level for the medium term is at 3250.

Global Cues

Equity markets across the globe were playing a more complex guessing game last week involving, inflation, recession, crude prices and geo-political tensions. Most markets moved sideways while selling was witnessed in European and some Asian markets such as Hongkong, Malaysia and Thailand. Nymex crude for October delivery closed at $66.2 providing a reason for markets to rally. The next support lies at $64. Base metals moved higher.

Index View For 04-09 to 09-09, 2006. September 3, 2006

And the rally continues… Laboriously and tediously, piling one green tick on top of another, the Sensex is inching its way higher. The Indian markets showed remarkable resilience last week refusing to be buffeted by turbulence in the derivatives segment.

At the end of last week, the Sensex had gained 1.7 per cent. This is the sixth consecutive week in which the Sensex has closed in the green.

Profit booking was, however, evident in the mid-cap and small cap stocks. Both the BSE mid-cap index as well as the BSE small cap index moved sideways and closed almost unchanged for the week.

Both the mutual funds, as well as the FIIs turned net buyers last week. The peaceful expiry of the August contracts, the healthy rollover and the relatively low open interest in the September contracts indicate that there is no speculative froth in the derivative segment.

As per e-wave analysis, there are multiple counts at this juncture. That is usually the case with corrective waves, where the pattern becomes apparent only after its completion.

We have been sticking to the count that the move from 9875, which is the c wave from 8800, is still continuing. But the sideways consolidation seen over the last two weeks makes us put forward another very bullish count.

That is, a double zigzag formation was completed at 11619.8 on August 22. The subsequent move is an x wave, which will be followed by another strong upward spurt that takes the Sensex to a new high.

We will revert to this count if the Sensex races past 12200 in the next couple of weeks.

The oscillators in the daily chart are continuing to diverge negatively. This is due to the obvious lack of momentum in the short term. But the weekly momentum indicators are still looking good. The chart patterns are not giving any indications of a reversal yet. The Sensex achieved our intra week target of 11779 last week. The immediate upward targets for this week are 11845 and then 11951. Some profit booking can be expected in the 12000 to 12200 zone.

To sum up, the narrow range bound move seen over the last two weeks looks like a precursor to a strong upward surge in the Sensex. It is to be seen if the market can garner sufficient conviction to take the Sensex past 12200. We advocate caution till 12200 is crossed convincingly. It would be a good idea to take some money off the table, to be re-invested after the Sensex crosses above 12200.

Nifty

The Nifty hit an intra week high of 3452.3 before closing with a gain 51 points for the week. Nifty has the immediate upward targets of 3473 and then 3482 this week. The major medium term resistance will fall between 3500 and 3532. The outlook for the Nifty will stay positive as long as it stays above 3300. Traders can buy in dips with a stop at 3380. Fall below 3380 will point towards a short-term trend reversal.

Global Cues

At last, one can look back on a quiet week in the global markets. Falling crude prices assuaged the sentiment, as did a pause in rate hike by ECB and further signs of slowing economy in the US.

DJIA closed in a gung-ho mood at 11464.1. NASDAQ too had a very strong week, closing at 2193.1. Asian markets moved sideways.

Nymex crude for October delivery closed at $69.1. The trend is weakening substantially in crude. If the support at $67 is breached, it can fall to $60.

For 01-09-2006. August 31, 2006

Expect a strong trend tomorrow. Though waiting for global cues. Check this site for more updates tomorrow.
Thanks,
Bhavin Mehta.

Index My View 28-08-2006 August 28, 2006

Index(11572):

For intraday I would advice people to start buying if market came down to 11500-11520 levels. On upside my target would be 11750-12000.

Enjoy!

Index View August 28, 2006

Sensex (11572)

Indian markets spent the last week in a somnolent state not going anywhere in particular. The Sensex managed to pull off a positive close thanks to some rearguard action by the heavyweights such as Reliance and SBI towards the end of the week.

News-driven activity was seen on select counters, even as the overall market dithered.

The extremely narrow range seen in the Sensex over the last eight trading sessions denotes that our markets are evenly divided between the bull and the bear camps.

The Nifty put-call ratio continues to be high, pointing towards portfolio hedging by funds and HNIs.

The heavy sales by the FIIs in the derivative segment last week, too, points towards some directional calls being taken on our market at these levels.

We have always maintained that caution and skepticism is preferred over irrational exuberance as the later hastens the market towards a sharp correction.

The chart patterns have not undergone any change last week. The sequence of higher troughs and peaks since the low of 9875 in the Sensex is unbroken.

The shallow correction to 11297 last week denotes the underlying strength in the market.

The momentum indicators on the daily chart are weak and are diverging negatively. This means that we are undergoing a short-term correction over the last two weeks.

But this correction is making prices move sideways rather than taking them sharply down.

The weekly charts are not showing any signs of weakness, yet. But the target of the third leg of the upward move from the low of 8800 in the Sensex falls at 12015. It would be best to wait for this level to be breached before taking fresh exposure in the markets.

We cannot find any feasible argument for taking the Sensex any higher from these levels, but if it does cross 12015, we are assured of a new all-time high.

The Sensex can move up to 11708 and then to 11779 this week. We have the convergence of many counts around the 11750 level on the Sensex. Some resistance can be encountered here. We can also expect some volatility to surface as the August series heads for expiry in the derivatives segment. The support this week would be at 11300 and then 11101 in the Sensex. The outlook for the Sensex would stay positive as long as it stays above 11100.

Nifty (3386)

The Nifty hit an intra-week high of 3402.7 before ending the week with a gain of 29 points. The immediate upward target this week would be around 3430.

This is the short-term resistance that traders need to watch out for. The target beyond 3430 would be at 3468. Supports this week would be at 3292 and then at 3234. The outlook on the Nifty would remain positive as long as it stays above 3230 this week.

Global Cues

Flat was the theme that ran across most global equity markets last week. However, some markets in Asia such as Taiwan, Thailand, Hong Kong, Philippines and Pakistan saw a deep sell-off.

Other markets moved sideways with a negative bias. Nymex crude for October delivery spiked in the later half of last week to close at $72.5.

Market View August 28, 2006

The revival of global investor interest in emerging market stocks is led by the BRIC economies — Brazil, Russia, India and China. Emerging Portfolio Fund Research reports that 25 per cent of all emerging market fund flows this year have been into BRIC dedicated funds. There are two factors supporting the relative attractiveness of BRIC markets. First, the impact of a possible slow down in the US is unlikely to hurt these economies due to their progressively low dependence on US for exports. China’s exports to Asia and Japan, as a per cent to total, is higher than that to US; Brazil and Russia have commodity exports not expected to be impacted by a US slowdown; and India has a low share of exports in GDP growth. Second, BRIC economies have increased their interdependence, which feeds their growth — India and China’s growth contributes to increased demand for commodities that Brazil and Russia produce, for example. Fund flows to the BRIC markets have increased after the trough, leading to a sharp recovery that outperforms the broader MSCI emerging market indices since then.

OptiMix View and Outlook

There is an increasing feeling of a great Indian Land Grab going on, with projects being justified on associated land. Companies across the board are finding it difficult to acquire land for industrialisation and those who do are able to command premiums based on commercialisation. There is a danger that industrialisation would fall behind commercialisation — that higher cost of mortgages, land and high prices in general would stress the savings of the middle class.

Franklin Templeton Mutual Fund

Our long-term fundamental view hasn’t changed — that of a positive demographic profile driving savings and consumption, the capex cycle enabling a higher and sustainable growth, and tax reforms. Having said that, the risk-return trade off for a short-term investor remains unfavourable and the kind of volatility we have been seeing will remain. Liquidity and flows are difficult to predict and while it is tempting to comment that the markets will remain range-bound on fair valuations, it is more likely that they will move one way or the other, near-term. As a strategy, we recommend investors develop a longer-term perspective to portfolios while looking at equities to optimise returns.

Index Level For 25-08-2006. August 25, 2006

As expected and wrote yesterday that market will show strength and thouh market came down it shown strength an enormous strength to sail against wind. I continue to remain bullish for the day. Though market can come down after a morning sppurt. Target for sensex in near term is around 11700.

Remember my old blog http://rupya.blogspot.com where I said market likely to touch 12000 till Saptember and here we are very near to that target.

Watch this space for more informations,

Regards,

Bhavin.

Important Levels Test 24-08-2006 August 24, 2006

Yesterday’s close of 11420 though important yet not reliable. Thus today’s close become much more important.

Buy today in morning if index level reaches 11250-11300 and take long position in selected stocks. Global cues are all negative yet expect our market to outperform the global markets.

Watch this space for more update.

Add bhavin_mht@yahoo.com

Thanks.

August 23, 2006

Dont short sell if sensex opens by more then 100 points down in morning itself. And cover your shorts if market tries to close above 11420. Only below 11420 target will be 11000.

Regards,
Bhavin.

Getting Refreshed. August 22, 2006

European Indices shows mixed session while Asian Indices are positive to rangebound in late hours of trade. Not much of selling in any indices. Expecting same to carry out in India..while we rose against the Asian Wind yesterday we may calm to settle down just to get strength back and get ourself refreshed.

Watch for supports. August 21, 2006

If market comes below 11420 and closes below that level we can expect 11000 soon. For more information on why market may come down read
for more informations.

Thanks and regards,
Bhavin

Index Outlook August 20, 2006

Sensex (11466)

Indian markets demonstrated their patriotic zeal by ushering in the 60th year of Independence with a weekly gain of 274 points in the Sensex. In a week that was devoid of triggers, the Prime Minister’s speech on August 15 provided the cue to the markets to send the price of oil marketing companies soaring.

Falling international crude prices too contributed to the buoyancy in the markets.

Interest in the midcap and smallcap stocks continued last week. The BSE Midcap index gained 3.3 per cent for the week while the BSE Smallcap index gained 3 per cent. Sentiment readings show that market participants are largely skeptical of this rally.

The large build-up in Nifty put options underlines this fact. The open interest in the derivatives segment too has not become uncomfortable yet.

The momentum readings are unchanged from last week. There is a perceptible slow down in momentum in the short-term oscillators. This is understandable as the Sensex has been moving up relentlessly over the last two weeks. Weekly oscillators are in the process of reinforcing the buy signals that were generated two weeks ago. The 14-week RSI has moved to 59 and the 10-week ROC is deep into the positive zone.

The inference to be drawn from the oscillators is that, though there may be short-term blips, the Sensex can head higher to 11758 and then to 12015. The supports for the Sensex this week would be 11256 and then 11074. The short-term outlook will remain positive as long as the Sensex stays above 11000.

The intermediate term view too remains the same. We are in the B wave of the correction that started from the peak of 12671. As explained last week, it is not possible to predict where this wave can terminate.

Since our markets revel in beating all expectations, both on the upside as well as the downside, it makes sense to ride this rally as long as it lasts.

To sum up, the Sensex seems headed towards 11758 and then to 12015 over the medium term. Our outlook remains positive as long as the Sensex stays above 11000. Investors should, however, stay watchful and invest with a long-term perspective only.

Nifty (3357)

Nifty closed with a gain of 2.5 per cent last week after hitting an inter week high of 3385.15. If we extrapolate the move from the low of 2595 in the Nifty, the target of the third leg falls at 3484. That would be the medium term target for the Nifty. There is a short-term target at 3449 where it can face some resistance.

Supports for the Nifty this week would be at 3292 and then 3234. The short-term outlook for the Nifty would stay positive as long as it stays above 3220.

Global Cues

Global markets had a reprieve last week, as finally there were some positive news flows in the form of cessation of hostilities in West Asia and signs of Federal Reserve bringing rate hikes to a halt. DJIA closed strong at 11381.4. It seems to be headed towards its May highs of 11700. Nasdaq Composite Index too was a strong performer last week, gaining 5 per cent.

Other equity markets too made progress. Crude closed at $71.14. Base metals and gold headed lower.

Market Views August 20, 2006

Reports suggest that Indian companies’ capital expenditure during FY06 has risen significantly, indicating capacity expansions coming on stream. This indicates that FY07 will be another year of high growth in capex, ultimately driving expectations of strong financial performance of companies. A couple of IPOs have hit the market, which signals optimism about the growth proposition offered by India.

Valuations are settling down in a fair-value zone and, to an investor who is willing to discount FY08 earning, the market looks attractive. The investors may take comfort from the fact that the FIIs returned to buying, helping stocks rally in last two months. The market will look for some consolidation at current levels.

PruICICI Mutual Fund

We believe that the long-term growth story is intact, supported as it is by the thrust on infrastructure, demographics, rising income levels and favourable India-specific geopolitical developments. Our near-term cautious view on equity is more a reflection that a bullish long-term outlook for the economy need not translate into a relentless upward movement in stock prices, especially when global headwinds (interest rates, commodity prices and geo-political developments) are stronger than ever before.

Sundaram BNP Paribas Mutual

The IIP (Index of Industrial Production) numbers for the first quarter indicate that the capex cycle continues to remain robust. Crude prices and interest rate rise have still not hit the performance of companies. This may be visible only by the end of the third quarter.

Kotak Mutual Fund

The current market discounts the FY07 consensus EPS 15 times. Our sense is that even with revisions in earnings estimate and fluctuations in investor risk appetite, the Sensex movement will be range-bound. Low participation and low liquidity in small- and mid-cap stocks may result in violent swings.

Birla Sun Life Mutual Fund

The pause to interest rate increases in major economies such as the US and Japan may have positive implications for portfolio flows. Recent trends suggest that liquidity is beginning to trickle back into the emerging markets, with India attracting a relatively high share of the allocations. The strong signals from quarterly results announcements could also be helping this trend. With macroeconomic numbers continuing to suggest optimistic trends and worries about a below-trend monsoon receding, the overall tone appears to be turning positive for the market.

Franklin Templeton Investments

Where Now? August 18, 2006

Market looks to be in a clear bullish phase, though profit booking at high levels is inevitable. Keep S.L. of 11420 on downside and close above 11500 will take it to next target zone of 11700.

Regards,

Bhavin.