Archives : VOLATILE & UNCERTAIN. - 22/02/2008

VOLATILE & UNCERTAIN. – 22/02/2008

 MARC FABER APPEARS AGAIN ON TELEVISION. THANK YOU.

The renowned investment guru once again gave darshan on the Indian news channel and as in his usual style warned equity investors and traders that the market is still overpriced and needs a 30 to 40 % correction even from this level. This has set the panic button amongst the investor and trader fraternity. But please refresh your memory to the May 2006 period and one will remember this same great guru appearing on TV channels after the May massacre had already occurred, started warning that the Sensex which was already reeling near 9700, would go on to test atleast 6000 and added that anyone who cannot digest such corrections should not come into the equity market. I would like to point a few facts that once this so called guru comes on TV, one thing is sure and that the correction is certainly in its last phase. Last time too, the market made a bottom around the 8800 levels on the day he came on TV and then had a dream Bull Run!! Second, he wants to buy more stocks in the Indian market and is trying to spread fear and panic amongst all of us investors and take away our stocks at a throw away price. This fact can be verified by what he is purchasing from the Indian markets. I am sure if there is any panic next week, he will be a big buyer in our markets.My only request to all my readers is not to panic and understand that the correction will end sooner rather than later. So in panic start invest in scripts with good fundamentals and have a view of over six months to reap a handsome reward.
            ONCE AGAIN I THANK MARC FABER FOR APPEARING ON INDIAN TELEVISION which has helped solve some mystery about the direction the market will now take. Investors and Traders Rejoice.

  1. HDFC BANK - CBOP SET TO MERGE.
  2. BONUS TO POWER R-POWER.
  3. SENSEX.
  4. NIFTY.
  5. HOW TO TRADE?
  6. LAST WEEK’S RECOMMENDATIONS:
  7. THIS WEEK’S RECOMMENDATIONS:

HDFC Bank – CBOP set to merge.

The biggest merger in Indian Banking history is about to happen. HDFC bank and Centurion Bank of Punjab are at an advanced stage of merger. If this deal works out then the merged entity will become the seventh largest bank in terms of asset size. Last year, Centurion Bank had managed to swallow two small banks viz Bank of Punjab and Kerala based Lord Krishna Bank. This will set the ball rolling for the season of marriage between banks. Watch out for smaller banks as they all will be soon gobbled up by the big sharks in the banking sector. One can safely assume that the smaller banks will continue to attract more attention of traders and investors as all big banks will be on the prowl searching for their right fit. SBI & ICICI is looking hungry for more.

 BONUS TO POWER R-POWER.

Reliance Power issue was priced at Rs.430 per share for retail investors, but it ended with huge losses for subscribers to the issue and went all the way down to 333. Now in order to win back investors R-Power has planned bonus issue of shares. It has decided to issue bonus shares to all categories of investors except promoters. This move is seen as a face saving exercise undertaken by the ADAG group, who plans to list more companies from its stable in the current fiscal. Already Reliance Infratel is in the pipeline. Because of the poor listing, brand Ambani had taken a pounding and this move is aimed at restoring investor confidence in the script. One conclusion that can be drawn is now the promoters are also acknowledging the fact that the issue was overpriced.

SENSEX.

                Sensex opened the week at 18228, made a high of 18314, low of 17294 and closed the week at 17349. The net loss on a weekly basis was 766 points. We had predicted the market will bounce back after four weeks of correction, it bounced back, but then we again pointed out that this will be a time wise correction and the market needs more time to consolidate and will therefore trade sideways with a negative bias. On the daily charts, there are two gaps, on the higher side between 18274 – 18509 and the other gap between 17141 – 17265. The gap on the higher side acted as a resistance last week and now lower side gap will act as a good support in the downfall in the next week. The trendline resistance is at 17823 and 18076. The trendline support is at 17142 and 16800. The support at 17142 is coinciding with the unfilled gap between 17141 – 17265. Thus 17141 level assumes significance in this down fall. If it breaks then the Sensex will test the 200 DMA which is falling at 16967 and the Sensex should not close below that or panic will set in and a retest of the previous low is also not ruled out. In fact if the trendline support at 17142 is broken then it may go on to achieve a target of 15350 on the down side. This incidentally is also the low registered during last fall. For the week ahead resistance is at 17515-17823-18076. The support is at 17141-16967-16820-16457-15350. 

NIFTY.

                Nifty opened the week at 5304, made a high of 5368, low of 5092 and closed the week at 5110, thus registering a weekly loss of 192 points. The indicators are looking weak. The trendline support for the Nifty is at 5040. The trendline resistance falls at 5312-5380. If the support is 5040 is broken then that may lead to a retest of the 200 DMA which is at 5009. Thus it is important that the Nifty should not fall below 5009, or it may lead to a target of 4475, which is coinciding with the panic bottom formed last time. Keep stoploss of 5009 for all your long trades. All upward rallies will be termed as pull back rallies only. Selling will be visible at higher levels. Nifty futures closed at 5093 with discount of 17 points. For the week ahead, resistance is at 5143-5225-5267-5312-5368. Support is at 5040-5009-4803-4475.

HOW TO TRADE?

            This week one can buy Hindalco 192 for a target of 206-218 and hedge it with Nifty futures.

LAST WEEK’S RECOMMENDATIONS:

            Once again we were on the mark for all except ABB & J.P.ASSOCIATES where stoploss got triggered.Punj and Jsw steel are on the way to achieve their targets.

            ADLABS @ 925 TGT 974, REACHED 998.

            SIEMENS @ 1563 TGT 1594 REACHED 1640

            GMR INFRA @ 171 TGT 181, REACHED 184.

            IVRCL @438 TGT 466, REACHED 476.

            ABB @ 1352 TGT 1402, REACHED 1374.

            J.P.ASSOCIATES @ 286 TGT 317, REACHED 296.

            PUNJLLOYD @ 378 TGT 404, REACHED 388.

            JSW STEEL @ 1187 TGT 1242, REACHED 1200.

THIS WEEK’S RECOMMENDATIONS:

 
  • HINDALCO 192 SL 186 TGT 202-207-221
  • RENUKA SUGAR 1076 SL 1024 TGT 1109-1172.
  • DIVIS LAB 1410 SL 1355 TGT 1465-1484.
  • GTC IND 478 SL 448 TGT 513-530.
  • BPCL 424 SL 410 TGT 439-453.
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Disclaimer : The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness.

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