Obama - The Change

Coming week is going to witness a historic occasion of Mr.Obama, swearing in as the President of United States of America. For quite some time, we have been only hearing bad news, from USA, such as recession, job losses, bankruptcies, liquidity crisis etc. This is the first good news for the world from USA after a long time not just because a person, from the community that has been exploited for centuries, is becoming the head of the most powerful country of the earth but also because he is the person who won the elections by promising a “Change”.

Week that was

Market opened negative this week because of worse than expected US labour data and indecisiveness of our government in bailing out Satyam. Further, poor results from Bank of America and the decision of Citibank to sell its own parts had a negative impact on the global markets. Many Global markets being down this week on account of recessionary fears and financial crisis were not going well with our markets.

At the same time, to the surprise of many pundits, our markets found strong support at around 9000 points for Sensex (2700 points for Nifty) thanks to the strong rumours that Ambani brothers are nearing a settlement in the KG Gas sharing issue. Further, speculations of KG gas production starting any time soon and supply of gas to NTPC helped the markets to cap the losses for the week. Reliance Pack was the star performer for the week. IT stocks did well mainly because of the positive surprise by Infosys quarterly results. Sharp fall in inflation raised fresh hopes of one more round of rate cuts. However, Realty stocks continued their downfall. Bank stocks did badly during the week despite good results because of the negative outlook on the global financial sector. FIIs were the net sellers for the week.

Week Ahead

As said earlier, Obama factor may help the markets to have a small rally in the beginning of the week. However, the gains may be limited because of the strong underlying bearish sentiments across the globe. Satyam Scandal and doubts of Corporate Governance of the Indian Companies may haunt our markets for some more time. Resumption of FII outflows may also hit the sentiments of the market. To sum up, our market is likely to be highly volatile this week with the indices moving wildly on either side.

Resistance levels are

Sensex - 9500-9600, 9900-10100,
Nifty- 2900-2930, 3000-3030

Support levels are

Sensex - 8950-9050, 8400-8500,
Nifty - 2700-2725, 2475-2525

Traders may initiate short position in case Nifty closes below 2700 levels and long position above 2700 levels on a closing basis however with strong stop loss limits.

Investors may consider investing in top Public Sector Banks and Public Sector Companies with proven credentials (in case of market fall) on a long-term basis.

Rupee is expected to weaken further against the US Dollar and move between 48.00 and 49.50 on renewed FII outflows. Its direction will depend on the factors discussed above.

Happy Week Ahead

Satyam Shivam Scandalism

Just when it appeared as if everything is all right for the New Year 2009 and the market heading for a solid recovery, Satyam Scandal spoiled the party. Sentiments of the market were totally shattered by the Satyam disclosure which is evident from the 1000 points fall in just two trading sessions. Government initiated certain measures to revive the Company after the trade hours on Friday. Hence, the market reaction for the measures will be closely followed in the next week.

Week that was

Market opened positive for the week because of stable global outlook and bullish local sentiments. Sensex hit a seven-week high and more importantly the small and midcap stocks were performing quite well. As said earlier, Satyam Scandal came as a shock to the market and the Sensex lost as many as 1000 points in no time. Breadth of the market turned extremely negative. Market started looking suspiciously many companies who are on the edge. Delay by the Central Government in initiating action against Satyam Promoters has further dampened the market sentiments. 10-month low inflation data and fall in crude oil prices did not get noticed by the market. Realty sector was the worst hit for the week followed by Consumer Goods sector and IT sector. Cement sector and Auto sector were the better performers for the week. Satyam stock was the worst hit which lost more than 86% in just one week.

Week Ahead

I expect that the arrest of the Satyam ex Chief and formation of new Board of Directors by the Government may improve the market sentiments to some extent. However, worse than expected labor data in US may not go well with the market. Resumption of FII outflows may also hit the sentiments of the market. Quarterly corporate results will be viewed hereafter with distrust only. IIP data due to be announced next week may have a limited impact unless there is a positive surprise. To sum up, market is likely to be heading downside next week unless there is any miracle.

Resistance levels are

Sensex - 9650-9750, 10200-300,
Nifty - 2940-2970, 3130-60

Support levels are

Sensex - 9100-9200, 8650-8750
Nifty - 2780-2800, 2675-2700

Traders may initiate short position in case Nifty closes below 2780 levels and long position above 2950 levels on a closing basis however with strong stop loss limits.

Investors may consider investing in top Public Sector Banks and Public Sector Companies with proven credentials in case of market fall on a long term basis.

Rupee is expected to weaken further against the US Dollar and move between 47.50 and 49.00. Its direction will depend on the factors discussed above.

Happy Week Ahead

India Resilient?

Rescue Packages announced by the Government of India and Reserve Bank of India helped our market to post significant gains during the last week despite the negative IIP growth and Rejection of “Bail-out Auto Package” by the US Senate. Global cues particularly US cues were generally negative during the last week.

Week that was

Market opened positive for the week because of rate cut announcements by RBI and the stimulus package of the central government, which included some tax relief measures and incentives for exports. Inflation falling to 8.00% and contraction in IIP has given fresh hopes of some more rate cuts by RBI and more action from government to revive the economy. Sensex and Nifty gained around 8% for the week. Realty sector was the biggest gainer during the last week on the hopes of some more rate cuts and relaxation of bank norms on lending to housing sector. Banking sector was also one of the major gainers for the week. Metal stocks went up sharply because of the strong results from Tata Steel and export relief measures announced by the government. Oil and Gas sector was also up because of the speculations that the KG gas issue may be amicably settled soon.

Week Ahead

As we expected in the previous week, Sensex closing well above 9350 points is positive news for the market. Rise in the market with strong F&O open interest is another positive factor for the market. Net FII inflows for the week has also improved the sentiments of the market. Hence we may expect that the market will be positive during the next week also. Fate of Auto Relief Package in US Congress, Federal Reserve’s decision on further rate cuts, fresh RBI/Government measures to revive our economy will impact the overall direction of the market.

Technically the Resistance levels are

Sensex - 9750-9850, 10200-300,
Nifty - 2980-3030, 3140-60
Technically support levels are

Sensex - 9350-9450, 8700-8800
Nifty - 2800-2810, 2675-2700

Traders may initiate long position at current levels and at around 9350 levels and short position around 10200 levels. Trading positions should be with strong stop loss limits.

Rupee is expected to strengthen further against the US Dollar and move between 47.50 and 49.00. Its direction will depend on the factors discussed above.

Happy Week Ahead

Will markets be stimulated?

Government of India and Reserve Bank of India have announced their stimulus packages to revive our Economy. A detailed review of the stimulus package will be made soon on the same blog. For the time being let us discuss about the direction of the markets for the coming week.

This link can be clicked for the detailed report of Government Stimulus package and this link can be clicked for the detailed RBI report.

Week that was

Though, our equity market opened positively for the week, it was not able to sustain the gains because of the negative cues coming from global markets. Global recession particularly that of United States has become a reality now. Further, negative growth of sales reported by Maruti impacted the sentiments of our market which started sinking down. At the same time, expectations on the stimulus packages, rate cut hopes, fall in inflation (8.40%) and fall in international crude prices helped the market in averting a big fall. IT stocks were the major losers for the week because of th expectations of "less order intake" on the backdrop of global recession. Metal stocks gained in a big way because of the better than expected results from Tata Steel. Banking and Real stocks were the other major gainers on the expectations of rate cuts. Power, Capital Goods and Infrastructure stocks have also gained on the expectations of government's investment in infrastructure. For the week, key indices closed with marginal losses.

Week Ahead

Sensex closing above 8900 is a positive sign for the market. We can expect that there may be small rally in the market. Technically it may face resistance at 9350, 9950 and 10200 levels and there are supports at 8350 and 7700 levels. Traders may initiate long position in case Sensex closes above 9350 levels however with a strict stop loss limits.

Auto, Banking and Real Estate stocks may be considered for trading on account of cut in interest rates. Infrastructure, Capital Goods and Power stocks may be considered on account of government stimulus package.

Indian Rupee may appreciate against US Dollar in the coming week on account of the government and RBI measures as said above.

Wish you all a Happy Week Ahead

Tomorrow Never Dies

Even though, Mumbai was attacked by the Terrorists, our Stock Markets have shown remarkable maturity and the F&O settlement was quite peaceful.

Week that was

Bailout of Citibank and Slashing of interest rates by China kept the hopes of the global markets alive. There was a very much positive movement in majority of the global markets from which our markets also took cues. There was a marginal rise in the large cap indices on a weekly basis. Sensex closed above the crucial support line of 8900 points, which gives hopes of positive trend for the next week. However, Real Estate sector was the worst hit.

Inflation continued its downward trend falling to 8.84% and GDP growth was at 7.60% raising fresh hopes that RBI may cut rates once again. Rupee had a marginal fall against USD closing at 50.12.

Week Ahead

As said earlier, there are chances of mild up-trend for our market. Sensex will have a strong support around 8650 levels and find resistance at 9350, 9650 and 10200 levels. Further direction will depend on the global cues and decision of RBI to cut the interest rates. Rupee will be range bound and consolidating around 50 levels. Rupee movement will depend on stock market trends and NDF market movements.

Happy week ahead.

Sleepless Nights

Crisis in the “Never sleeping Citibank” brought sleepless nights for the equity markets across the globe. There were speculations in the markets that Citibank was about to become bankrupt any time soon. Such speculations were not without reasons. Citibank announced that it would downsize its workforce by 53,000. Its share price crashed in US markets in the last week. Announcement by the US President elect Mr.Obama that the Head of Federal Reserve Bank of New York would be the Treasury Secretary of his cabinet brought some cheers in the market on the last day of the week.

Week that was

Our markets were showing negative trends throughout the last week except for the last day’s surge taking cues from Global markets. Major global markets were very much negative during the week and many of them hit fresh lows of the year. Official confirmation of recession in Japan and few other countries helped the bears to have a complete grip over the market.

In India, Rate cut talks and moderation of inflationary expectations did not help our markets much that closely tracked the global events. Prime Minister’s request to the corporate to cut the prices to revive the economy did not go well with the market. Even though crucial line of 8900 points was broken during the week, the last day’s last hour surge helped the Sensex to close above the line of 8900 points bringing in some hopes.

For the week, Sensex lost around 470 points (5.10%) and Nifty lost around 120 points (4.16%). Once again, the Realty sector was the worst hit followed by Banking and Metal sectors.

Crude Oil prices went below $50 during the week. CBOE Vix peaked at 80 during the week and then had a fall during the last trading session of the week.

FIIs continued to sell in Indian markets and our Forex Reserves further came down to $246 billion dollars. Inflation had fallen to 8.90% from the previous week level of 8.98%. Indian Rupee weakened further against US Dollar because of FII selling, surging import needs and NDF market arbitrage.

Week Ahead

Last day of the previous week witnessed a rise for the indices with a high F&O volume indicating that the short-term trend will be positive. Fall in CBOE Vix (US) also supports the view as the global volatility may come down in the immediate future. Even though there are fears of a possible Citibank bankruptcy, markets are now in an oversold zone and there may be short covering and bottom fishing at every lower level.

There are strong bets in our market on a possible rate cut by RBI, as there is a moderation of inflationary expectations, which may help our indices to stage a brief relief rally.

This week, Sensex may march towards 9400 levels breaking which to 9800 levels. In case of any bad news from US, the downside targets are 8400 and 7800 points.

Rupee may consolidate around 50 levels with a positive bias, as the immediate expectations on our equity markets are positive. Further direction will depend on the movements in NDF markets and Equity markets.

Investors may look into stocks of public sector banks, which may be benefited by the probable rate cut with a long-term view. Similarly, Oil Marketing Companies, which are going to be benefited by the fall in international crude prices, may also be good bets for long-term call.
Wishing you a happy week ahead.

Slope of Hope?

A classical Bear market always keeps the “Hopes of Recovery” alive by not allowing them to become a reality.

Week that was

Every thing looked fine at the start of the previous week. There was a massive stimulus package announced by China. Dollar demand across the globe had eased down. Pace of FII outflows from Indian markets had slowed down. Global cues were better. Local sentiments improved. Helped by the above factors, Sensex rallied to the levels above 10500 points at the start of the week itself.

Huge sell-off came thereafter. Sensex lost more than 1000 points from the top it formed for the week and ended with a net loss of 580 points (5.81%) for the week. Better than expected IIP numbers (4.90%) for the first half-year (2008-09) and surprise fall of Inflation rate to single digit (8.98%) failed to arrest the losses for the week. Realty Sector was the worst affected with a weekly loss of 14% followed by Capital Goods Sector.

US economic data released during the week confirmed that US is in the grip of recession. Also, there were doubts in the minds of investors regarding the continuity of support to the Wall Street after the regime change. Nasdaq lost as much as 8% and Dow Jones lost 5%. Other major Global Indices barring China also faced big correction during the week.

Rupee witnessed one more fall because of renewed demand for US Dollar. Crude Oil continued its downslide.

Week Ahead?

G-20 meeting has come out with a set of sweeping plans to revive the world economy. Efficacy of these plans is yet to be known as an outgoing US President headed the meeting and the incoming US President did not participate in the meeting.

Surge in CBOE Vix (Volatility Index) and NSE Vix indicate that there will be huge volatility in the coming week also. Technically (as we mentioned in the previous week) Sensex has already broken the important support line of 9600 points and closed well below it. Other technical indicators also point out that the downtrend may continue in the coming week also. However, with the Inflationary expectations moderating, any RBI action in bringing down the interest rates may be a positive factor for the market.

Sensex may find a technical support around 8900 points and a resistance around 10200 points. Traders may consider taking opposite position on extreme situations however with strict stop losses. Investors may consider entering into ETFs (Sensex and Nifty ETF) at the levels around 9000 points with a long-term view.

Rupee is expected to be consolidating around 50 levels and much will depend on FII action and RBI intervention.