Archives : 2008 : The Year Of Extremes - 02/01/2009.
2008 : The Year of Extremes - 02/01/2009. 

If ever anyone wanted an example of how the stock market swings from one extreme to another, then the past year 2008 would be a perfect example of that. The gone year started with a bang as the Sensex made a dash to the 21000 mark, before crashing to sub-8000 levels. The market lost almost 64% of its value from the top.

 

Most traders and investors will heave a sigh of relief as they finally bid goodbye to the worst performing year of all times 2008, where the market tested both the extremes. The market mood swung from an extraordinary bullish mood to a sad and hopeless feeling. The overconfident and optimistic Bull was converted into a pessimistic and sadistic Bear. The year 2008, belonged to the Bear.

  • 2009 : What To Expect?
  • The 2nd Stimulus Package.
  • SENSEX.
  • NIFTY.
  • LAST WEEK’S RECOMMEDATIONS:

The market changed its direction after going down on Monday. But despite that, stocks like Bhel, Infosys, Bharti and TCS achieved their targets. The other stocks like Ongc, Sail and Hdfc Bank missed the target.

  • Sell BHEL 1300 Tgt was 1269 Reached 1262.
  • Sell INFOSYS 1109 Tgt was 1077 Reached 1065.
  • Sell Bharti Airtel 686 Tgt was 674 Reached 665.
  • Sell HDFC Bank 972 Tgt was 942 Reached 956.
  • Sell TCS 471 Tgt was 460 Reached 460.
  • Sell ONGC 642 Tgt was 612 Reached 627.
  • Sell SAIL 71 Tgt was 64 Reached 68. 

  • THIS WEEK’S RECOMMENDATIONS:

  • WATCH OUT FOR:
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2008 : The Year of Extremes - 02/01/2009. 

If ever anyone wanted an example of how the stock market swings from one extreme to another, then the past year 2008 would be a perfect example of that. The gone year started with a bang as the Sensex made a dash to the 21000 mark, before crashing to sub-8000 levels. The market lost almost 64% of its value from the top.

 

Most traders and investors will heave a sigh of relief as they finally bid goodbye to the worst performing year of all times 2008, where the market tested both the extremes. The market mood swung from an extraordinary bullish mood to a sad and hopeless feeling. The overconfident and optimistic Bull was converted into a pessimistic and sadistic Bear. The year 2008, belonged to the Bear.

2009 : What To Expect?

The year 2009 will certainly not be as bad as the past year 2008. The value wise correction seems to be over and if not, then not much is left. The correction is now time wise. The market has to mark time before embarking on another leg of Bull Run.

 

The rallies that will be observed in this year will be more of Bear Market rallies. These rallies will be sharp and steep, but don’t mistake them for the resumption of Bull Market. The Pull backs will be stupendous if considered from percentage return point of view. The traders can make big money, if they are nimble footed and react faster, and adopt a strict stop loss. The traders need to have good knowledge about Option strategies, in order to survive and ride the volatility in the market.

 

The Pull Back will be sharp and can test 12857-14451-16045 for the Sensex and 3820-4304-4788 for the Nifty. Effectively, unless the 16045 for the Sensex and 4788 for the Nifty is not cleared, then one safely term all rallies as Pull back Bear market rallies and not a resumption of a new Bull Market. According to the Fibonacci series the Bear market can culminate; if it tests the previous bottom or goes on to make a new bottom by Feb09 or Oct 09, and then rallies to cross the targets of 16045 for the Sensex and 4788 for the Nifty. The Sensex has strong support at 7997-6150.

The 2nd Stimulus Package.

In a coordinated effort by the government and the RBI, the second stimulus package was announced on Friday evening. With a steeply falling Inflation and rapidly slowing economy, the RBI acted positively and proactively by aggressively cutting the Repo and Reverse Repo Rate by 100 bps each. The CRR, too has been cut by 50 bps, in order to have more liquidity in the economy.

 

The economy was cash starved and was waiting for the Stimulus package to address the problem of liquidity and lower the cost of funding, which would positively impact the Infrastructure sector and Housing sector. This demand has been clearly been addressed by the stimulus package.

 

The other positive was that the government has allowed NBFCs in Infrastructure Sector to access ECBs besides removing the ceiling on the ECB. Government has also eased the External Borrowing schemes.

 

Second stimulus package has been a step in the right direction, but the question is whether this package will be enough? The answer is probably no, but the sentiment will definitely improve. The export sector expected much but seems to have not received enough. But the Banking and Infrastructure stocks will have something to cheer for the next few days.

SENSEX.

Sensex opened the week at 9318, made a high of 10070, made a low of 9162, and closed the week at 9958, thus registering a weekly gain of 630 points.

Sensex is testing the Trendline forming Inverted Head & Shoulders Breakout at 10053, any close above that will pave the way for target of 10570-10945-11214.

All indicators like MACD, RSI and ROC suggest momentum on the upside. MACD and ROC are in positive territory.

The Trendline Resistance is at 10053 and Trendline Support is at 9210-8958.

For the week ahead the Resistance is at 10053-10239-10570-10760. Support is at 9768-9631-9528-9210.

NIFTY.

Nifty opened the week at 2857, made a high of 3079, low of 2812, and closed the week at 3046. The weekly gain was 189 points.

The Nifty has closed above the 50dma. The 50dma is coinciding at the Trendline Support acting as the Demand line at 2873. Thus 2873 should not be broken.

The Nifty needs to close above the Trendline Line Resistance at 3095, for a Inverted Head & Shoulders Breakout. On Breakout, the targets will be 3240-3335-3397.

The Nifty O.I.PCR is at 1.30 suggesting bullishness in the market.

The Nifty Put of 3000 & Calls of 3300 and 3200 have added lot of Open Interest, suggesting some support at 3000 & resistance at 3200 and 3300 levels.

The Trendline Support is at 2873 and the Trendline Resistance is at 3095.

For the week ahead, the Resistance is at 3095-3161-3240-3335. Support is at 2996-2922-2873-2812.

LAST WEEK’S RECOMMEDATIONS:

The market changed its direction after going down on Monday. But despite that, stocks like Bhel, Infosys, Bharti and TCS achieved their targets. The other stocks like Ongc, Sail and Hdfc Bank missed the target. 

  • Sell BHEL 1300 Tgt was 1269 Reached 1262.
  • Sell INFOSYS 1109 Tgt was 1077 Reached 1065.
  • Sell Bharti Airtel 686 Tgt was 674 Reached 665.
  • Sell HDFC Bank 972 Tgt was 942 Reached 956.
  • Sell TCS 471 Tgt was 460 Reached 460.
  • Sell ONGC 642 Tgt was 612 Reached 627.
  • Sell SAIL 71 Tgt was 64 Reached 68.
THIS WEEK’S RECOMMENDATIONS: 
  • Buy Walchand Nagar 123 SL 116 Tgt 134-148.
  • Buy Alstom Proj 263 SL 255 Tgt 273-286-300.
  • Buy L&T 825 SL 805 Tgt 858-884-904.
  • Buy LIC Hsg 245 SL 238 Tgt 258-267.
  • Buy LITL 166 SL 158 Tgt 174-179.
  • Buy REL 629 SL 615 Tgt 660-675-702.
  • Buy Chambal Fert 41 SL 39 Tgt 44-47.

WATCH OUT FOR:

Walchand Nagar: 123 SL 116 Tgt 134 – 148.

Increase in Volume.

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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