Archives : SELL ON EVERY RISE. - 13/06/2008.

SELL ON EVERY RISE. – 13/06/2008. 

SENSEX TARGET 14215-13779. 

Please once again we ask you to recollect what we mentioned in the last issue, that the market will collapse and will breach the level of 4496. It did breach that level on Monday morning itself and collapsed further to test 4369 on the Nifty. The Sensex did worse and broke its previous low of 14677 and touched 14645. We are in a bear market and there won’t be any respite from the Bears. Please investors would do well to hedge their portfolios and should stay away from the markets as more attractive levels will be available. Compulsive Investors should buy pharma companies as a defensive bet.

  
  • ECONOMIC FACTORS TRYING TO D-SHAPE THE MARKET. 
  1. Repo Rate HIKE:
  2. Inflation:
  3. Index of Industrial PRODUCTION:
  4. Crude oil:

  • SPICY IDEA.
  • Ranbaxy sold.
  • SENSEX:
  • NIFTY:
  • HOW TO TRADE?
  • LAST  WEEK S RECOMMENDATIONS:
  • THIS WEEK S RECOMMENDATIONS:
  • WATCH OUT FOR :


 
  • ECONOMIC FACTORS TRYING TO D-SHAPE THE MARKET.

Repo Rate HIKE:

 

To crush inflation RBI announced a hike in the Repo Rate hike of 25 basis points. The Repo Rate is at its highest since March 30, 2007. This hike will force the banks to hike interest rates and throw the burden on the head of the consumers. This will make the finance costlier and hence real estate companies and capital intensive companies will be badly affected. This hike will have negative impact on the profitability of the companies. This will lead to compromise on growth as which may negative impact on the final growth figures and GDP

 

Inflation:

Inflation figures for the week ended May 31 shot up to 8.75% v/s 8.24% last week. If this figure is not bad enough then in the next week inflation figure will include the hiked petrol and diesel prices. This will make the inflation to burst and enter double digits. This will hit the market badly. Although the market has got prepared for the upcoming inflation figures but still inflation figures may steal the next weeks show.

 Index of Industrial PRODUCTION:

The only relief in the last week were IIP figures which were above expectation came to 7% for the month of April as compared to the March figures of 3%, which gave some push to the market. To maintain this figure will be the biggest challenge because monetary tightening and fuel price hike will have direct impact on IIP figures and will lead to slowdown of industrial production.

 Crude oil:

Crude has become one of the major factors responsible for the slow down of the world economy and more importantly emerging economy like India. Crude has already touched $139 per barrel, which is badly hitting the oil marketing companies, which are counting their days to being bankrupt. This will take its toll not only on the industries but the inflationary pressure will be responsible for the collapse of the government.   
  • SPICY IDEA.

Spice Communications will be merged with Idea Cellular in a very complex deal to be executed in three steps. First, Telekom Malaysia, which holds more than 39% of Spice, will buy a stake in Idea. This will be followed by Idea buying out the Modi group's 40.8% stake in Spice and finally Spice will merge with Idea. The price of Rs 150 for each share of Idea was fixed as the Birlas wanted a premium of almost 45-50% over the scrip’s current price.

 
  • Ranbaxy sold.

In a surprising move, Ranbaxy promoters decided to sell off its entire stake in the company for Rs.10,000 crores to a Japanese company called Daiichi Sankyo, which works out to a share price of 737. This is one of the highest premiums offered in the Indian acquisition space.  This deal may prompt other Indian promoters to divest their stake at attractive valuations, instead of clinging on to emotional attachment. Watch out for pharma companies, which technically look the best on the charts.

  
  • SENSEX:

Sensex lost 383 points on a weekly basis and closed the week at 15572. But before that it breached the previous low of 14677 and made a new low of 14645. The indicators suggest further weakness. The trendline resistance is at 15771 and trendline support is at 15032-14850. When the support of 14850 is broken, the Sensex may well go on to test 14215-13779. Resistance for the week will be at 15337-15485-15573-15771. Support will be at 15032-14850-14543-14215.

  
  • NIFTY:

Nifty lost 110 points and closed the week at 4517. Nifty opened the week at 4626, which was also the high for the week. It breached it previous low and made a new low of 4369. Trendline support is at 4498-4414. Trendline Resistance is at 4627-4662-4720. Lot of call writing is visible at the strike of 4600 and 4700, which will prove difficult to surpass. If the support at 4414 is breached, then Nifty may well test 4280-4004. Beware, watch out. Next week Resistance will be at 4563-4627-4662-4720. Support will be at 4414-4369-4280.  
  • HOW TO TRADE?

Buy pharma stocks like ranbaxy, aurobindo or dr.reddy and hedge them by selling nifty futures. Or construct a bull spread for chambal Fertiliser.  
  • LAST  WEEK S RECOMMENDATIONS:
 

Inspite of such a VOLATILE market, all our recommendations achieved their TARGETS.

Even Buy Call for Ashtavinayak did superb to reach 503. AMAZING and we are REALLY PROUD OF BEING ABLE TO GUIDE OUR READERS IN THE CORRECT WAY. Three CHEERS…!!!

 SELL BHARTI 802 TGT 776-730 achieved 750.SELL DLF 518 TGT 490-460 achieved 470.SELL EDUCOMP 3501 TGT 3375-3280 achieved 3215.SELL L&T 2680 TGT 2638-2610-2551achieved 2512.SELL RIL 2238 TGT 2175-2147 achieved 2111.SELL TATA POWER 1276 TGT 1194-1115 achieved 1199.BUY SHREE ASHTAVINAYAK 459 TGT 481-490 achieved 503 !!!
 
  • THIS WEEK S RECOMMENDATIONS:
 
  •  
    • BUY AUROBINDO PHARMA 329 SL 317 TGT 346-355.
    • BUY NIIT LTD 111 SL 106 TGT 120-124.
    • BUY ORCHID CHEM 247 SL 236 TGT 262-270.
    • BUY GAIL 382 SL 373 TGT 397-402.
    • BUY GLENMARK PHARMA 710 SL 694 TGT 726-738-754.
    • BUY SPICE TELE 61 SL 58 TGT 69-74.
    • SELL SUZLON 244 SL 254 TGT 236-227-221.
  
  • WATCH OUT FOR :
 
Aurobindo Pharma 329 SL 314 TGT 346-355.  

GHCL 72 SL 66 TGT 79-82.

 

 

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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