Indian Stock Market had a very good last week, BSE Sensex rallied 937 points up 5.2% and Nifty followed it with enthusiasm and settled the week at 5654.
It was the best weekly gains for the markets since July 2009.
The climb to the upside was a smooth one as India VIX (Volatility Index) also fell to low of 20 levels, down 3.8%. the momentum on the upside was very strong on the last trading day of the week and markets finished with a healthy 2.4% gains on the major Indices. One of the main reason for market to cheer was that Indian government on Friday said it would borrow Rs 2.5 lakh crore in the first half of FY12, or 60% of its total gross requirements for the year which was lower than the market expectation.

Another reason for market turning in optimistic mode is that the legendary investor  Warren Buffett has announced that he is looking to park some long term money in Indian businesses and is looking out for good opportunity in various sector. His firm Birkshire Hathway is also interested in investing in Indian Insurance market.

The markets has found support near 5350 level on the Nifty this time is now on the verge of touching its first technical Resistance level of 5690  its 200-DMA level. Once market gives a weekly close above this level we can assume that the downtrend of market is over and we can start a fresh up-move any time.

The bull market will gain momentum once we breakout above the long term resistance line on the Nifty weekly chart as shown above.

I Will update with complete analysis of Fundamental and Technical factor weighing the Stock Markets in next few days. Have my interview for IMT-Ghaziabad lined up so i have some time constraints.

You are welcome to post comment or your queries, i will get back to you.

Thanks

Tragedy hit Japan yesterday afternoon when an Earthquake of 8.9-magnitude  struck The land of the rising sun. The epicenter was located off the Oshika Peninsula, the east coast of Tohoku, Japan. The most powerful earthquake ever in the history of  Japan has caused 30-foot high Tsunami to struck at northeast coast of the country. The U.S. Geological Survey said the quake had a moment magnitude of 9.1, revised from an earlier 8.9 estimate. More then 1000 people are feared dead as of now and many still missing. The Govt. has started the disaster management program and business activities are temporarily closed.

Govt. of Japan also declared emergency at two nuclear plants after their cooling systems failed, Prime Minister Naoto Kan ordered evacuation of over 45,000 residents living within 10-kilometer radius of the nuclear plants. According to latest media reports there is some radiation leak has happened in one of the nuclear power plant.

Business activities are halted as Global auto majors Honda, Nissan and Toyota issued statements that they have temporarily closed some of their plants in Japan.The immediate jitter caused by natural disaster in Japan in Global equity markets are over and things are looking stabilized now.

Indian Markets may continue to head towards lower levels as there are lot of technical factors are telling the same story, with 50-DMA now trading below the 200-DMA on NIFTY it is confirmed that we are in a bear grip.

Markets are not showing any kind of strength and now they are at the mercy of bears, one bad news in Global or domestic markets may send a round of panic selling into Indian markets and if 5200 on the Nifty is broken then we are heading back to 4800 mark.

My advice for Investors will be to look out for opportunities in fundamentally strong large cap stocks and buy if any panic selling occurs, traders are advised to trade on the short side with proper stop-loss and also positional traders and swing traders should purchase some OTM call options to hedge their position in case markets bounce-back.

Options traders can also look for”Put Backspread”  strategy, Sell 1 March 5600 Put and buy 2 march 5400 Put, breakeven will be at 5200 and below 5200 gains will be unlimited. Its a limited risk trade and will only stand to incur good profit if markets sold of heavily and test lower levels below 5200.

Your comments, queries and opinions are welcome.

With five consecutive days of winning streak, Indices are expected to close the week in the red today. investors are still skeptical in putting their money in the equity markets and traders are expected to book some profit from their long positions. From last Friday(11 Feb) to this Friday Nifty has gain substantial grounds from 5200 odd levels to touching 5600 in early trade today, this rally is backed  with FII’s remaining Net buyers from last few trading sessions and some Short Covering from traders, but even with this 400 points up-move in the Nifty, Investors confidence still hasn’t return.

Now going ahead, Wilders 20-Day moving Avg.  is placed at 5620, and 200-DMA is also placed at 5630 , so this level will be the first resistance Nifty will face, for market to end this down move Nifty must close above this level on weekly basis. But right now on the daily charts there is more possibility for Nifty to test the lower levels of 5450 then closing above 5650.

For Investors, remaining on the Sidelines will be the prudent advice because right now its very difficult to predict when this down move will end, For Traders according to Fibonacci Retracement  we can even touch the level of 4770 on the Nifty before making a long term bottom on the monthly Charts, But before that we have very good support coming at 5450 and then 5250 but once we break below 5250 it is expected that all hell will break loose …. see self explanatory attached Chart below ..

Another view is that by looking into daily Chart, we can see that the current correction is milder in nature because we are going down in a parallel channel, we have already touched at two points in the downward channel and not more then 4 touch points are expected ever, so we may see bottom being formed in the Nifty  in coming 2~3 Weeks.

Another technical study suggest that, according to Fibonacci Retracement, we can come down to 4770 and still remain in a bull market as, 4770 is 38.2% retracement for the whole up-move which started when the Nifty touched 2250 in Oct 2008 and ended by Nifty Touching 6340 in Nov 2010.(See the Chart Below)

Also In the Month of Jan this year, the Nifty on the monthly Chart has shown “Bearish Engulfing Pattern” which also suggest that the markets may pause their up-move for atleast few months and may trade in the range-bound manner.

Fundamentally corporate earnings are expected to grow by 15~20% range for the next financial year, and we are already trading at 16 times current year and 14 times on forward earning basis , so things are looking good till now as for the FY11, GDP is expected to grow by 8.6% year on year which is higher then 8% for last Financial year, so economy is growing at a very good pace. Only concern remains Inflation and Fiscal Situation which may become worse if crude oil starts to trade above 100$/Barrel  mark.

I will post next time few fundamentally strong investment ideas to invest in,  and keep holding SBI, Reliance, Powergrid and Bharti Airtel  in your long term portfolios, do hedge your position by Selling OTM Call option and buying a Bear Put Spread, this can be achieved by Selling Out of the money call option in the scripts which you hold in your portfolio and buy 1 At The Money Put option along with Selling 1 Out of the Money Put Option.

Well that’s it for now please pour in your comment, reply and queries, and i will get back to you.

Run.. run.. dooms day is coming, I am sure many of  you will be hearing talks and interviews going on in those blue channels, with every second analyst presenting his views which will eventually translate in to same underlying meaning.

But when things are looking the darkest, i am sure we are on the brink of a new morning.

Brokerage houses, research reports every one is talking about raising cash levels in your portfolios, My opinion is very different, the Nifty broke out from its 1 and a 1/2 year range in September when it moved above 5550 levels with great volume and vengeance . we saw a rally up to 6300 and now we are lingering back to 5700.

If we see the Markets technically, their is not much of a rosy picture out their, so traders be cautioned. my views are only for investors, traders should trade what the charts are telling, and right now charts are pointing towards 5400-5600 band, so follow the charts and use strict Stop-losses and most important of them all “Be Nimble”, swiftly getting in and out is what makes or brakes a trader. Well …. ! trading lessons.. some other time.

Technically things are not supporting what i am suggesting, so i will refrain away from posting few charts but for sure I’d like to post few things which will strengthen my view.

Markets after braking out from a very long range are not going to break down that easily, although below 5600 on Nifty, things will start to look scary and long term charts which are at least holding till now will be in question but for that to happen, we will need a catastrophic event to happen and that to should come as a surprise not after we had already fallen 500+ points from the top.

Its the hot money which is flowing out from Indian Equity Markets and its not a cause for concern, our earnings growth will be 20%+ for Nifty stocks in the Dec quarter as the result will start rolling in, in few days.

After we bottom out, there is a very strong chance that we will have a pre-Budget rally and i am quite certain that we will be at least 10% higher from here in next 3 months time frame.

For people who want to increase their portfolio exposure here are my few picks in Large Cap universe.

Reliance Industries – Structure is neutral on weekly charts, downside limited, reported strong earnings this quarter, A fundamental pick for playing The INDIA Story.

Here the stock is stuck  in  a range for last 2 years , once it break above 1150 then it will start a new long term uptrend, Long term support at 920 so it can be accumulated with a good 2 to 3 years time horizon.

My other pick which is SBI, to know more see here

SBI also declared good set of result for the DEC Quarter net profit is up 14% at Rs 2828 cr.

A good bet for uncertain time will be POWERGRID

As a unique play into power transportation, with monopolistic market Share and Funds accumulated from FPO will provide support to Capacity Expansion program.

State Bank Of India

Investment Price – 2700

Target -  3500

Stoploss -  2450

With being the largest public sector bank and having the widest branch network, SBI stands to gain from growing wealth of Indian middle -class, Its CASA ratio (Current Account and Savings Account) stood at 47.8% which is one of the best in Industry and better then any private bank in the country. On the back of growth in CASA deposits, shedding of bulk deposits and higher yield on advances will result in improvement on NIM (net interest margin). Due to strong CASA with market share gains and high fee income, SBI’s core RoEs (return on equity) have improved over the past few years and is better then other public sector banks.

The worrying factors are mainly increase in Gross and net NPAs ( Non performing assets) with higher bad debt provisions along with provisions for pension liabilities would pressurize earnings in the near term and the hike in deposit rates without a corresponding increase in lending rate would further dampen earnings but these factors are only going to affect earnings growth in short term and looking at the current price, it seems that has been discounted by the market.

SBI’s Rs 20000 crore rights issue will hit the market next year. The government holds a 59.4% stake in SBI at present and to meet the expansion program and the business development and also the forthcoming Basel III requirements which IFRS will have, there is need of capital raising for SBI to continue its growth story. And with rights issue round the corner the price of SBI should go up as institutional demand will increase.

My Technical analysis in SBI suggest that it is a good Buy candidate right now as it looks correction is over and it has reached the price from where it should bounce back. although it is trading below the important moving averages and looking a bit weak in short term but long term charts are suggesting that till it hold above the 2480 mark, it will continue to perform with the market.

Post your opinion and comments.