Archives : UNCERTAINITY REIGNS SUPREME - 14/11/2008

Uncertainity Reigns Supreme - 14/11/2008.

It is said that Bull markets discounts bad news and Bear markets similarly discounts good news. This week not one, not two, but three good news on the economic front got discounted and could not help the market to recover.

  

IIP Nos. 

 

Inflation -

 

Crude Prices -

Positive Expectations For the Week.  

Rate Cut :

  

Fuel Price Cut :

SENSEX.  

NIFTY.

LAST WEEK’S RECOMMEDATIONS:

Almost all the targets were achieved with effortless ease except for K S Oil, where the stop loss was triggered. I B Real and Rajesh Exports almost reached the target. But the star of the week was TTML, which went up by astonishing 35% in just a week.!!!!! 
  • Buy Tata Tele 16 Tgt 20 REACHED 21.30.
  • Buy GMR Infra 67 Tgt 75-79 REACHED 79.
  • Buy RiiL 428 Tgt 453 REACHED 478.
  • Buy REL 559 Tgt 620 REACHED 628.
  • Buy K S Oils 42 Tgt 47 REACHED 44.25.
  • Buy Gitanjali Gems 90 Tgt 97 REACHED 99.
  • Buy Ind Bull Real 157 Tgt 167 REACHED 162.
  • Buy Rajesh Exports 30.50 Tgt 33 REACHED 32.
 If one had bought 500 shares of RiiL & REL, 2000 shares of IB REAL, 3000 shares of GITANJALI & GMR INFRA, 5000 shares of K S OIL & RAJESH EXPORTS, and 15000 shares of TTML then one could have earned profit of Rs. 2,30,750/-!!! 

THIS WEEK’S RECOMMENDATIONS:

Watch Out For:

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Uncertainity Reigns Supreme - 14/11/2008.

It is said that Bull markets discounts bad news and Bear markets similarly discounts good news. This week not one, not two, but three good news on the economic front got discounted and could not help the market to recover.

  

IIP Nos. 

The first good news, or should we say slightly lesser bad news, was the IIP nos. which came in 4.8% for sep. 2008 which was better than the measly August figure of 1.4%.

 

Inflation -

Second good news was inflation which fell sharply to a 6 month low of 8.98% for the week-ended November 1 2008, from 10.72% in the previous week. Fall in inflation was mainly due to sharp decline in fuel and commodity prices. The single digit inflation after a long time may provide fresh impetus to the RBI to have another round of Interest Rate cut. It is now necessary and even desirable, because economic activities are slowing down, which can be seen in September IIP nos.

 

Crude Prices -

Third good news was the fall in crude prices. The oil prices slip to nearly $55 a barrel as U.S. Market faced fears of severe recession. Global markets like Germany too fell in recession and China’s industrial output growth came in at its weakest in last 7 years. It shows that the financial crisis is now forcing the global economy in a painful downtrend. 

All the above 3 news had the potential to kick-off a good rally in a bull market, but this is the mother of all bear markets. So, all the 3 good news were discounted and eaten away by the bears.

Positive Expectations For the Week.  

Rate Cut :

Since the inflation has fallen very sharply and because of the slowdown in the economy one can expect RBI to provide another round rate cuts. Likely beneficiary of this will be PSU banks and infrastructure sector. UBI and BOI looks set to extend their gains.  

Fuel Price Cut :

Second good news can be fuel price cut. The crude oil has fallen from high of $147 to a low of $54 per barrel. The oil marketing companies which were bleeding because of high fuel prices which will now heave a sigh of relief as for the first time in the past one and half years they will be able to make profits in sales of petrol and diesel. One interesting technical aspect is that the crude has already corrected 61.8% from the top.

SENSEX.

Sensex opened the week at 10154, made a high of 10570, made a low of 9267, and closed the week at 9385, thus registering a weekly loss of 579 points. The Sensex made a high of 10570, before retracing back and breaking the low of 2960 and closed below that. This has reduced the strength of the Sensex. The Sensex is retracing the rise from 7697 to 10945 and the Retracement levels are 9321 and 8938.

The Trendline Support is at 9200-9103 and the Trendline Resistance is at 9433-10058-10544.

For the week ahead the Resistance is at 9558-9870-10058-10544. Support is at 9261-9103-8739.  

NIFTY.

Nifty opened the week at 2973, made a high of 3161, low of 2778, and closed the week at 2810. The weekly loss was 163 points.Nifty has formed a Bearish Engulfing Pattern on the weekly charts. The upper shadows on the weekly of this week and previous week are long, which indicates selling pressure at higher levels.

The Gann Fan line which provided the support during the previous fall at 2252, is now falling at 2288, which will act as strong support.

The Trendline Support is at 2761-2502 and the Trendline Resistance is at 2815-3046-3386.

The O.I. PCR is at 1.06. Lot of Call writing is visible at the strikes of 2900 and 3000. These levels will provide strong resistance going forward. Nifty Call at the Strike of 2500 has seen lot of open interest being added which will provide support during a fall.

For the week ahead, the Resistance is at 2867-2975-3046-3161. Support is at 2746-2629-2502-2288. 

LAST WEEK’S RECOMMEDATIONS:

Almost all the targets were achieved with effortless ease except for K S Oil, where the stop loss was triggered. I B Real and Rajesh Exports almost reached the target. But the star of the week was TTML, which went up by astonishing 35% in just a week.!!!!! 
  • Buy Tata Tele 16 Tgt 20 REACHED 21.30.
  • Buy GMR Infra 67 Tgt 75-79 REACHED 79.
  • Buy RiiL 428 Tgt 453 REACHED 478.
  • Buy REL 559 Tgt 620 REACHED 628.
  • Buy K S Oils 42 Tgt 47 REACHED 44.25.
  • Buy Gitanjali Gems 90 Tgt 97 REACHED 99.
  • Buy Ind Bull Real 157 Tgt 167 REACHED 162.
  • Buy Rajesh Exports 30.50 Tgt 33 REACHED 32.

 If one had bought 500 shares of RiiL & REL, 2000 shares of IB REAL, 3000 shares of GITANJALI & GMR INFRA, 5000 shares of K S OIL & RAJESH EXPORTS, and 15000 shares of TTML then one could have earned profit of Rs. 2,30,750/-!!! 

THIS WEEK’S RECOMMENDATIONS:

  • Sell Infosys 1213 SL 1252 Tgt 1176-1126-1104.
  • Sell Tata Chem 162 SL 169 Tgt 152-148.
  • Sell L&T 791 SL 820 Tgt 775-747.
  • Sell HCL Info 64 SL 73 Tgt 54-48.
  • Sell ABB 461 SL 480 Tgt 443-413.
  • Sell Everest Kanto 171 SL 183 Tgt 161-149.

Watch Out For: 

INFOSYS

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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