Markets on 24-Jun-08

Nifty may see some short-lived rally today. Key support and resistances seen at 4150/4200 and at 4300/4400.
Expect volatility to continue (hence keep short targets and strict stop losses) till expiry. Hence, for intraday trades, recommend taking options positions instead of Futures. A 4300 call at 45-48 levels looks good with targets of 70/80. Keep stop loss at 35.
News based call - Orchid Chemicals may see some action with targets of 255 (238 current levels).

Follow up -2

Book full profits in nifty short at 5789 (spot) lvls.

Follow up

Book partial profits in Bank Nifty (spot at 5810). Inflation at 11.05% Way off - worse than expected.
Do not initiate any long positions. Fresh short-positions may be taken but with limited profits as market already fallen 1.85% (nifty). Fresh shorts may in initiated in Banks, real estate and auto sectors for intraday trading.

Markets on 20 June 2008

I dislike it when the market goes up sharply in a short span of time because what happened day before yesterday was a consequence of that. The nifty goes up sharply, and then major counters see profit booking as soon as the first level of resistance or thereabouts are seen. On the nifty, 4700 was key resistance and even before we could touch those levels, profit booking happened and the market fell significantly.

Today is the all-important day as far as inflation is concerned with expectations of close to double-digit inflation data coming out. Market has probably factored in 9.5%-10% inflation. Anything higher, and expect sharp fall. No positive surprises expected today.
One needs to be extremely stock specific in such a market and avoid big-ticket nifty based trades. Short position on Bank Nifty though may be a good idea at 5902 (spot) with targets of 5800 (spot levels).

Follow up -2

MUL achieved our recommended target of 765 on spot levels and we advised our clients to book profits in the MUL call.
On Infosys, stop loss was triggered.

Follow up

Book profits in Nifty call option at 149. High risk traders may paritally book profits and hold for higher targets of 155.

Markets on 17 June 2008

Market has opened today on a flat note. Key supports and resistances are placed at 4500/4530 and 4600/4650 with expectations of a bullish bias. Hence recommend, a long position in Nifty June 4500 call option at Rs123 with SL 105 for target of 148.

Stocks to go long for short-term trades are 1) Infosys (CMP 1918) with targets of 1940/1970. Keep stop loss at 1909 2) GMR Infra CMP 113 with target of 115/117 and stop loss at 111.

Maruti is rumored to be producing a competitor to Tata’s Nano. The company has been taking several measures to increase sales e.g. introduction of CNG and LPG variants for the smaller cars. And now a Maruti Nano! The stock faces stiff resistance at 732 (spot levels). Go long if it moves above 732 for targets of 765.

Markets on 13 June 2008

Today’s support resistance for Nifty seen at 4330/4440 and 4600/4650. Market continues to look bearish although a short-term rally on the nifty is not ruled out.
Among stocks that look bullish are RPL with targets of 185/190 in the short-term, IFCI with short-term targets of 63/65.
GMR Infra looks in the oversold region and may see some recovery.

Why starting your own business in Delhi is so tough

Ravi (name changed), owns a piece of (semi) residential property (the kinds where there is a grey line as to commercial or residential use) in a reasonably posh locality in New Delhi. He always wanted to do something on his own so he decided to put his experience as a Hotelier into use and in turn, use turn this extra piece of property to commercial use and opened a guest house (like several others had been doing in Delhi). Little did he realize that what he had started as an exciting new venture would turn into a nightmare for him.
After spending a lot of his precious saved money on renovation and reconstruction of the property, he opened his guesthouse. He had some corporate contacts and therefore leveraged them to get some business. The moment he had guests pouring into his guest-house, first came a police inspector.
“ Show me the records, this man and woman in room 201,…… I want to inspect”, said the inspector.
“Sir, but they are our customers. How can we disturb them?,” said the manager.
“Look, I am an authority of the law and I want to inspect to see if they are not doing any other bizness (business) here.”
“But sir……”, protested the manager.
Soon Ravi was called. Ravi spoke to a friend of his who advised him that this was the way the police harassed and asked for money. So Ravi told the manager to give the policeman some ‘hafta’ (money given as if its an SIP with returns in the form of zero harassment).
After a month, the same inspector came in and asked the manager, “ haan bhai, kya haal hai, (hey man what is up?), bizness thik chal raha hai (is your business going on OK without any trouble)?
‘Yes sir. Aap ki krupa hai (all your blessings Sir).”
“To doosara business bhi chal raha hai accha (is the other business also going on well – meaning if prostitutes were using some of the rooms regularly to conduct their business)?”
“Nahi (no) Sir, we do not encourage such business.”
“Kya? Kyon nahi encourage kaar rahe ho? Aakhir hum hain na? (what? why aren’t you encouraging such business, after all I am there!)
Ravi was smart enough to realize that if he encouraged the other kind of business, he would be a permanent slave of the inspector who would find it a good way to blackmail him.
The demands for money however, did not stop here. Ravi soon found multiple people from the police force coming in. He finally had to get a contact through a friend of a friend – a small time politician who helped in getting only one point of contact – a single guy from the police force who would be paid and they would share the booty.
This did not however stop other departments of the government from coming and harassing Ravi. One day, someone from MCD (municipal corporation of Delhi) came and objected to the plants outside his guest-house being watered as the water was ‘stagnating’ and would cause malaria. Soon Ravi found he had to pay MCD, the electricity department, and any one else who could possibly be providing any public utility.
At the end of three years, Ravi found that his guest house was unable to break even. And one of the biggest reasons was that his cash outflow as payments/forced bribes to everyone was so high, that he could barely make any money. The final blow came when the property was declared illegal and was sealed. By then he had no money left to bribe the MCD to get the property up and running the way bigger business men have done.Today, Ravi is jobless and tries to do some part time hotel management consultancy in order to earn a living. He does not know if he will ever try to get into a business again. For him the experience has been a path to hell.

Gloom and doom and lots of bearishness on outlook

Nifty continues to look bearish for today with key support and resistances placed at 4500/4550/4600 and 4730/4800. However, global cues indicate a positive opening for the market.

With crude moving from USD 124 levels to USD 127.5 levels, Cairn should see some bullish movement to meet targets of 270/280.
As mentioned yesterday, both GMR Infra and JP associates were in the oversold region and hence rose by 3% and 4% respectively from their bottoms.

RIL was still in the red despite market closing positive. RIL appears to have been oversold and if it moves up, it could see upsides of INR100 from current levels.
It is interesting to note how many market analysts are now debating if bottom fishing is indeed worth it or will we be seeing new bottoms in recent months to come. Markets were close to the Jan bottom levels yesterday before the market led a relief rally and closed 2% positive. In fact there appears to be a lot of pessimism on India and recently, one foreign brokerage (whose analysts write reasonable reports) even downgraded India from overweight to neutral.

Inflation data should be a non-event today and it is less likely that the numbers throw any surprises. Oil price hike should be reflected only in the coming weeks and inflationary expectations have already adjusted to a 9% level in the near future.

Keep away from bottom fishing in Banking stocks at the moment (unless you plan to short banknifty). Governor Reddy seems to have hinted at that they would take measures to curb inflationary pressures (potential CRR hike? other measures may be?).

All in all, too much bearishness around.

follow up

book profits in nifty short call at 4537

Market on 5 Jun 08

Today’s support and resistances are placed at 4450/4500 and 4600/4650. Since market has opened with a gap up, 4600 are good levels to short (primarily because market has been struggling to move up significantly beyond 4600) the nifty keeping stop loss at 4640 levels.
Most stocks don’t look bullish in the short-term from a technical point of view. For a long-term investor, ‘bargain’ buys should continue (though they run a risk of ‘bargain’ value becoming better!). For the short-term investor looking to go long in the cash segment, a better policy would be to wait for a definite trend to emerge once the bottom of this downtrend has been confirmed and then start buying.GMR Infra is in the oversold region (and yet never seems to have ever hit the bottom eh?). JP associates also is in the oversold region. Definitely worth buying at these levels. Maruti took a beating yesterday (expected) due to the fuel price hike. For those who are looking to enter/re-enter this stock, I would recommend waiting till it breaches its previous lows of 722.

An ode to the markets

Markets on 02Jun08

Friday was an interesting day with GDP and inflation data being released. GDP data was better than expected and therefore despite higher inflation data, markets closed on a positive note.
For Monday, GMR Infra looks bullish on charts, immediate targets of 141. JP associates looks bearish because it broke support of 214 on Friday. However, both GMR Infra and JP Associates appear to be in the oversold region. For medium/long term investors, both stocks offer good buying opportunity at current levels.
Another stock that looks extremely attractive at current levels is RPL. However, with RPL is a favorite of operators/punters so one needs to be cautious while investing.
RIL has been quite a surprise with it falling in the past two trading sessions and continues to look weak. Good levels to accumulate this stock for the long term.
Key support and resistance for today seen at 4800/4950.