Outlook for Monday and Week " Sensex makes new High and closes at all time High"

"With smooth settlement of October derivatives series and roll over on 25.10.2007, SEBI's PN guidelines being in line with the draft guidelines issued on 16.10.2007, there was a sigh of relief on friday among market players, resulting in net addition of long positions in November series. Sensex touched new high ( 19276.45) on new found enthusiasm, and closed at an all time high at 19252.35, Nifty too closed at 5702.30, as the inflation data was reported to be flat at 3.07 week on week basis. FIIs were seen covering short positions heavily on 25th and 26th and their net postions are marginally down week on week basis. Domestic Institutions and retail investors were buying which have resulted in speactacular gains of over 9% on Nifty and Sensex week on week basis. Nifty futures closed at a premium of 10 points indicating bullish sentiment. It is to be seen whether Nifty too will clear the previous high of 5736.80 today or this week, in which case markets will have a rally to post 5927 on Nifty and 20538 on Sensex respectively by or before Diwali.

 

US markets closed positively on friday, on expectations of fed cutting either discount rate or interest rate in ensuing FOMC meeting on 31st October'2007. RBI comes out with credit policy on 30th October, 2007, where the stance on CRR, interest rates, and stance on inflation etc., will be revealed. Generally it is being believed that in view of capital flows stabilising, unlike previous month, hike in CRR is not expected. Markets shall continue to be volatile during this week too, till the events pass smoothly, and a mild rally can be expected upto Diwali (9th November 2007), as the Q2 results are generally in line with expectations and surprised on upside in number of cases.

 

Strategy for the Day: One can buy a straddle of 5700 on Nifty for quick returns in day trading.

Outlook for Friday

"Our markets opened firm, due to follow up buying and short covering a head of SEBI board meeting, on the derivatives settlement day, and finally closed in positive territory, with less volatility. SEBI has announced its new regulations / norms on treatment of "P Notes" with immediate effect more or less in line with draft guidelines issued earlier on 16.10.2007. Now it is law and P notes issued by sub accounts which are ODI have to be wound up in the coming 18 months, and also these type of instruments cannot be issued from immediate effect. An estimated investment under this category of US$ 34 billion, has to be swapped with other eligible players or wound up gradually, or get the entry through front door, that is by registering as FII with SEBI, for which most of the participants have already submitted a letter of intent, as directed by SEBI already. They need to file the application within a week and if their applications are cleared then they can continue to enjoy the facility.

 

US markets were volatile, due to higher oil prices, and mixed earning numbers, and on slipping new home sales data, finally closing marginally in negative territory. Inflation data shall be released at 12 noon on our economy. Markets will concentrate on the FOMC meeting scheduled on 30th & RBI credit policy on 31st now, and position accordingly. More or less major results are out and are in line with analyst's expectations. TISCO will come out with results today, the liquidity from FIIs to our markets, in view of the polilcy changes, political situation will drive the markets from now on. We feel that the volatility shall continue till 9th November, Diwali, and from then markets may stabilise a bit. Since we are already at 18800 levels on sensex, it shall be prudent to sell a portion of portfolio on rallies, where as substantial gains are made, and stay in cash to pick up the same stocks or value picks at a later date, as markets shall provide such ample opportunities, in future. Nifty futures closed at 34 points discount to the spot indicate bearish view on the markets for today.

 

Strategy for the Day: One can buy a straddle of 5550 strike price on nifty in November series and leave it till the end of series.

Outlook of Wednesday - "Largest single day gains ever on Sensex"

"Sebi chariman's clarifications, relaxations and confirmation that there is no intention to ban "P notes" as being perceived by all, cheered the market participants, and there was a huge short squeeze, coupled with buying in index stocks by fence sitters lead to a remarkable recovery and the strength in the markets was unabated through out the session thus, sensex posted largest single day gain ever, which surprised everybody. Indian markets being high beta one the movement on either side shall always be above normal compared to other markets. Satyam results were above street expectations, and the guidance is aggressive, while larger players like Infosys are conservative. Nifty futures closed at a steep premium of 15 points to the spot in october series and november series are on par, shows the optimism of players, and the confidence of FIIs expecting not serious announcements from SEBI on 25th the 'D Day'.

 

Sebi chairman's statement that they are not concerned about  regulating capital flows, and their main concern is to implement KYC norms only, and the announcement that an individual with a minimum investment of US$ 50 million can also register as FII henceforth, is quite a welcome step, announced after close of market hours, shall encourage proprietory sub account holders to also register as FII direct, reducing the anonymity from majority of the investments, which are a point of controversy and debate for the past 3 years. FII registration procedure and processes will be streamlined and hastened up as informed by the chairman, is a welcome measure, hence, the roll over of positions and investment by FIIs, overseas bodies shall continue and might increase in the days to come.

 

FM statement that the issue of 'P notes' is important to regulate the capital flows in view of strengthening of rupee is contradiction to what Sebi chairman says; However, as a regulator SEBI is bothered about KYC norms as far as the investments are through proper channels and not from unwanted persons, entities or categories. Now what steps RBI takes in consultation with Finance Ministry when the flows continue and increase in the future shall decide on the movement of the markets, as once for all the issue of "P notes" shall be put on clarity after 25th October' 2007.

 

US markets were volatile overnight, however, closed in positive territory aping the asian and european markets, however, futures point to negative indication, so our markets shall open positive and move up at the opening, and due to roll over shall be volatile, and profit booking can be expected at higher levels today, a head of expiry of October series and SEBI board meeting on tomorrow.

 

Strategy for the Day: Tomorrow's derivatives settlement should be positive over previous weeks close and as indices have closed above 5DSMA yesterday, one can buy 5250 calls on weakness and 5600 puts on rallies for quick returns. 

Outlook for Tuesday

"Our markets have opened with negative gap, following global cues, however, due to roll over of positions to next month series, traded volatile in a range, and filled the gaps intraday. While Sensex posted marginal gain after posting 4 days losses, nifty closed in negative territory at the end of the session. Nifty futures closed at a discount of 9 points, as some shorts are closed in the morning session and rolled over to November series, as discount of november series stands at 28 points.

 

SEBI chairaman had a conference call with FIIs, and clarified the stand on draft regulations, asserting that the stand is clear that in medium to long term "KYC is the key issue", though ban is not the intention. Few concessions and relaxations are given like, proprietory clients who are operating as sub accounts also can register as FIIs in the direct channel. As of now 3000 + sub accounts have to convey to SEBI whether they are intending to convert to FII withing 24 hours, and submit regular application with in a  week.25.10.2007 Board meeting will put the classification of overseas investors, guidelines for registration, norms for trading and other complainces in place releasing the new guidelines, which give maximum time of 18 months, for phasing out the present ODI which are issued by subaccounts. More or less stand of SEBI is clear now, and it is for the FIIs, Overseas players to decide how they have to deal with Indian investments.

 

In our view, genuine investors and investments which came under this ODI shall not have any problem, and comply the SEBI new guidelines and continue to invest in our markets which are giving best returns. SEBI chairman assuring overseas investors, to hasten up registration procedure, and encourage more investors to come under FII route, shall encourage more flows and invetments in the years to come.

 

UPA - Left coordination committee, as usual met and decided to put the operationalisation of the US-Indo Nuke deal onhold, and meet again on 16th November, 2007 to come out with clear view on issues of concern on the deal. None of the constituents are prepared for pulling the government and thrusting the mid term poll immediately, so this shadow boxing shall continue for some more time. Results of Indian corporates are in line with expectations, and some have come with stellar performances, thus, any weakness intraday or in the coming days, is a good opportunity for entering markets.

 

Inspite of huge volatility, Nifty has not breached septemeber closing levels, though posted lower highs and lower lows yesterday. Sensex has breached the september levels intraday, however, closed above it yesterday. Our markets shall trade in a broad range of 5000 to 5700 on nifty and 17000 to 19000 on sensex, which can be treated a consolidation phase, till 31.10.2007, by which time all the events will pass, and shall rally till 9th november, 2007 as pre diwali enthusiasm will push stocks and indices usually. Volatility wil continue for rest of the year, as we are at very high levels, and indian markets are having higher beta, which give huge gyrations.

 

Strategy for the Day: Buy 5000 calls on weakness and 5500 puts on rallies for quick returns in intra day trading.

Outlook for Monday and Week

"Our markets have reached all time highs, witnessed circuit filters on down side, and extremely volatile during the past week, as predicted, and finally closed negative on thursday & friday, inspite of sterling results from TCS, WIPRO and RELIANCE. The weekly closing  was negative with large negative breadth, after a continuous positive closings for 8 successive weeks in a row. Nifty futures closed at a discount of 22 points to the spot on friday, suggests further weekness, as the cues from US markets and other asian peers are also supporting the view.

 

This is a week where October series shall be settled on 25.10.2007, and roll overs to next series are already on. Lots of news flow is expected from today which influences the market movement, rather than the fundamentals till 02.11.2007. SEBI holds an conference call with FIIs on eliciting their views on "P-Notes" today, UPA-Left co-ordination committee meets today to decide the stand on US-Nuke deal, where once again Left parties want to ascertain their stand that it should be put on hold, till all their concerns are addressed to their satisfaction. SEBI Board meets on 25.10.2007. to finalise the draft guidelines on treatment of P Notes. All this shall bring in huge volatility in markets where indices might trade in very large band, which is not seen in the bull rally so far. It is difficult time for even professional traders to trade with stoplosses, as VAR margin requirements will be very large, and hence, value picking should be the strategy, if one has increased cash levels, as we have suggested ever since nifty crossed 5500.

 

Indices have made a short top at 19198.66 (Sensex) & 5736.80 (Nifty) on 18.10.2007 though price wise correction of 10% on indices has happened on 17.10.2007, time wise correction is still due, may take time upto 02.11.2007, by which time, all issues will be sorted out, including the FOMC meet and RBI credit policy will throw light on interest rate scenario for the year.

 

Indices have closed below 20DSMA (Sensex...17822.29 & Nifty...5230.82) on friday, is a sign of weakness, and any rallies will face resistance at 5DSMA levels (Sensex..18476.80 & Nifty...5492.81), However, long term trend is intact.

 

Support for Sensex shall be at 16900 & Nifty at 4940 for the day.

 

 

Outlook for Friday

"In a remarkable way, indices have posted new highs Nifty (5736.80) & Sensex (19198.66), and filled the downward gaps created on wednesday, when circuit filters were on and gave an indication that the worst is over' ......it was a clear 'bear trap' and the bulls were complacent till the sudden collapse of the indices by 6% in the last one hour of trade, where stop losses were triggered, and even margin calls might have accentuated the fall, which was ferocious, and unnerving all players. At the end the indices, have closed below 5DSMA, and even previous week's closing, even on adjusted basis. Reliance results have come after close of hours, which are very good, but absence of any indication of bonus/stock split, which is the demand / expectation from large number of investors, shall be a dampner of the sentiment. TCS bagging multiyear outsourcing deal worth US$1.2 billion initially enthused the investors, and weakening of rupee marginally to 39.70 on account of FII selling, being good news to technology sector and export oriented businesses, there was considerable buying in the first half of trading.

 

Crude touched US$90 now on supply concerns, and disappointing performance from Bank of America has brought US markets into negative territory for most part of the trading, while Google's stellar performance of 57% raise in profits and FMs address and clarifications to investors at Newyork, in I-Sec meeting yesterday, on the recent steps proposed on "P-Notes' treatment in SEBI's draft guidelines, where suggetions are invited till 20th October' 2007, should throw some more assurance to FIIs that the regulators in India are not banning the investment through P-note route. Nifty futures are steep discount of 32 points to spot even on adjusted basis point to huge unwinding of long positions, and creation of short positions in November series where the discount is 44 points. Inflation data shall be released around 12 noon, results of Wopro, Baja Auto and ICICI bank are due to be announced today.

 

Our Markets will continue to be volatile till the end of this settlement as large outstanding open interest positions are to be rolled over to the next month series. News flow form SEBI board meeting on 25th, FOMC meeting on 30th and RBI's Credit Policy meeting on 31st etc are important events to influence stock, sector and market movement till 02nd November 2007.

 

Strategy for the Day: Buy 5000 calls on weakness in the market and 5600 puts on rallies for quick return in day trading.

Outlook for Thursday "Third time circuit filters on Indian bourses after 10% fall at opening"

"As anticipated, our indices had opened gap down, in a minute markets fell 10% over previous day closing, when the trading is halted as circuit filters were on. At 10.30 am FM came live on media to assure confidence, and Sebi Chairman's clarification on the position of roll over of positions to next series, as we are approaching settlement of this month series on 25th October'2007, brought confidence amongst investors, domestic institutions supported the indices, as they are having high cash levels. However, the indices, though recovered most of the losses during the day, finally closed in negative territory with negative breadth, leaving the gaps unfilled. As per provisional data, FIIs were net sellers in cash market and futures market, clearly indicates that our markets might have found a short term top at 19174.45(Sensex) and 5708.35 (nifty) for this month.

 

The long term trend is still intact, in case there is follow up buying which make these tops cleared with volumes, the rally will continue, unabated, otherwise in view of roll over of derivative positions to next month series, shall keep the indices volatile till expiry, in a broad range which was fixed in yesterday trading. Nifty futures closed almost flat to the spot, October series shed 9% open interest, while November series added 26% open interest at discount of 12 points to the spot point to bearishness in short term. Investors should use rallies to book profit, reduce leveraged long positions, and increase cashlevels, as they would see better prices in future to purchase the stocks of blue chips in the days to come.

 

Strategy for the Day: Buy 5000 calls on weakness in the market and 5700 puts on rallies for quick return in day trading.

Outlook for Wednesday " Volatile days a head - SEBI cracks whip on P Notes"

"Our indices have turned quite volatile, after posting new highs, oscillated between negative and positive territory for most part of the session on tuesday, finally closed flat to marginally negative. US markets were down and closed in negative for the second day in this week on crude touching $88 per barrel, and concerns of home finance, and credit related issues.

 

"After the closure of markets, SEBI released a draft paper on "P Notes" which help flows into capital markets in India,  forming  51% of total FII flows, as at the end of 30th sept'2007, total outstanding amount invested under this category stands at whopping Rs.1,10,000 crores shall be the target of this new guidlines that may have to be phased out in the coming 18 months, in case the draft guidelines become regulation in the ensuing SEBI board meeting on 25.10.2007.

 

P notes are issued by FIIs, who raise the money (dollars) which are allowed in India also, where the identity of the investor is unknown to the regulator as of now. This has been a subject of debate among regulators, RBI and Government for the past 3 years, and the flow of 8 Billion dollars entering Indian Capital markets in the last 16 days of this month has raised lot of concern for every one, as this is hot money..(short term money)..can be withdrawn with the same speed too, causing lots of volatility and pain to investors and markets.

 

Currently FIIs are allowed a ceiling of 40% of their investment as P notes, which has to be phased out in the ensuing 18 months, as per the draft guidelines, once they come into force, and New P notes cannot be issued from immediate effect. Ofcourse SEBI invited views and suggestions from all concerned by 20th october, 2007 in view of the urgency to finalise the guidelines and frame work in 25th Board Meeting.

 

All Indian ADRs in US markets were down anywhere between 5 to 10% on knowing this news, our markets will have immediate gap down opening, as per market sources and market grapewine, if to be believed, Nifty will fall 150 points in the opening itself. If there is investor panic, we may see 10% circuit filters on the indices today! We have been advising that one should stay in cash ever since indices closed above 5250 and suggested convert stock in to cash at the rate of 25% for every raise of 100 points on nifty.

 

However, small investors who have missed the rally need not worry and sell the holdings in this situation, and if one is having cash can buy technology stocks, banking and finance and export oriented businesses, in the mayhem, if it happens, for long term holding. This times of corrections provide one time golden opportunity for building long term portfolios. One should not trade in this type of situation, as stopl osses shall be triggered in no time, resulting in certain losses only.

 

Support for the Nifty: 5550 - 5422 -5140 - 5000 & Support for the Sensex: 18800 -18215 -17525 - 17000

Outlook for Tuesday "TCS reveals stellar performance for Q2"

"Making new highs, creating records of sorts on Indian Bourses have become order of the day, with the gush of foreign flows in to blue chips and index heavy weights. Sensex opened with a positive gap and traded firm throughout the day, and due to heavy short covering, closed above 19K, for the first time ever. Nifty's performance was even better, since ONGC started and finished the rally with whopping 242.15 points gain in a single day, which itself is a record. This type of gains are seen month on month basis in the initial stages of bull market during 2003-2004; while every one is surprised of weekly gains of 250 points on nifty till recent times in the last two years, single day gain of 242.15 points suggests that there is unprecedented 'euphoria' amongst foreign investors, who feel that india story is the best in troubled times in US, and strengthening of rupee continuously is encouraging them to take advantage of double whammy of higher returns on investment in markets and also exchange trade off, which is additional bonanza for investing in indian equities...especially growth stories.

 

TCS has posted stellar results, in one of the toughest environment, now has 1,00,000 employees on rolls, and is confident of better performance in the times to come, though they do not give any guidance as policy. The body language of the management sounds confident, and should give give relief to the software sector today, which is beaten after Infosys results were announced on 11.10.2007. However, one has to be stock specific, not to be bullish on the entire sector, as problems of appreciating rupee etc., still continue to daunt the sector. US markets opened weak on 57% drop in profit from Citibank, due to write off of subprime losses during the quarter, and closed negatively. Asian markets opened weak and are trading flat to negative. Nifty Futures have closed with a premium of 18 points on adjustment, shall invite some weakness in the initial hours of trading, however, the trend remains to be up, as long as Nifty trades above 5480 for the day.

 

Strategy for the Day: Buy 5500 calls on weakness and 5700 puts on rallies for quick trading.

Outlook for Monday and Week

"Our markets rallied inspite of negative opening, touching new highs on friday, on the statement made by PM & UPA chairperson Sonia Gandhi that the government will sort out the Indo-US nuke deal irritants with the left parties, and the government will run its full term, and there is no scope for a mid term poll. However, Reliance Industries AGM, where the investors had the high expectations from the management on possible announcement / indication about the Bonus/Stock split were disappointed, thus, it attracted huge selling along with it the other reliance pack also, which were sold off on week end considerations and profit booking. FM statement that he is suprised with the pace of raising of Sensex and some times worried too, also spooked the party, and the indices closed with 2 % losses on friday, though week on week they have posted substantial gains due to the blow-out rally on Tuesday/Wednesday.

 

Tech sector  received selling due to appreciation of rupee, on huge capital flows into equity markets. US markets recovered from the losses of Thursday and posted gains on positive economic data, and also on M&A activity being expected in Technology sector. US futures point to positive as of now, and our markets will open with a gap up and rally on monday, whether they will clear highs made on friday, and rally further to post new highs, depends on the performance of Reliance Industries stock and infrastructure stocks. Volatility will be high during this week as the fight between bulls and bears intensifies, but as of now bulls continue to have upper hand as long as Sept closing of indices Nifty( 5021.35) & Sensex(17291.10) are held. The short term trend becomes negative only if these levels are breached on weekly closing basis.

 

Support for Sensex shall be 18333 and Nifty 53605 for the day.

Outlook for Friday " Infosys delivers what promised - market not amused"

"Our markets awaiting Infosys results, and market men expecting moon from the company, inspite of strong rupee appreciation, when the company delivers splendid performance, and meets guidance, the stock and the sector is beaten down by 7% yesterday. The tech sector performance brought the volatility on the bourses for quite some time, and with the help of infrastructure, Oil and Gas sector, the indices posted new highs, and closed firmly at the higher end of the trading range, due to last hour short covering. Nifty futures closed at whopping premium of 20 points confirms the euphoria among investors adding long positions, throwing the caution to winds.

 

Infosys broke below 2040 which is the trend decider level, and shall be under performer as long as rupee appreciates during this quarter, and since they have a hedge of $1.4billion at Rs.39.50, any strengthening of dollar or weakening of rupee above this level, shall be good news for the company. Long term investors can consider accumulating the stock in small quantities, on every dip, as the long term growth story of the company, sector, and Indian economy continues to be strong.

 

US markets opened strong and closed in the red at the end of the trading, on disappointing data, shall bring in volatility and a gapdown opening for our indices too today, the inflation data to be released at 12 noon holds the key for final closing for the day. However, the indices are likely to close postive for the week, as the rally in past three days gave substantial gains, and profit booking on week end considerations can be common phenomenon.

 

Strategy for the day: Buy Nifty 5300 calls on weakness and 5550 puts on rallies for quick returns in day trading. 

 

Support for Sensex shall be 18200 and Nifty 5300 for the day.

"Outlook for Thursday - Infosys Results and guidance key to Tech sector performance"

"Our markets are in such a strong bull hold that gap up openings and making new highs, creating history on volumes, prices have become order of the day since 18th sept' 2007. The performance of indices is stupendous during this week, though we thought correction might set in since the rally is 7 weeks old. Corrections have become intra day affair, as left out feeling is clearly visible in the buying support that emerges on any slight dip or weakness, intra day. The performance of oil and gas sector, Telecom and Infrastructure are responsible for the strong rally. Banking and Technology sector also joined the party lately. Though the long term trend is very much intact, we are reaching levels of 'irrational exhuberance' as prices of some stocks and sectors start discounting  the future earnings of 2009 and 2010 , while we are yet to know the Q2 performance. Investors need to have patience to wait for corrections and enter on dips in growth stories of blue chip stocks only, to avoid any capital loss in these times of contradicting clues.

 

Dow closed in negative territory, where as Nasdaq (which is tech heavy) made new high and closed in the positive territory. Infosys Q2 results, their guidance and outlook on US economy shall give an indication on the performance of tech sector in general. Rupee at 39.30/$ levels and threatening to touch 37/$ by year end, if the inflow of dollars continue at this pace, puts pressure on rupee earnings. How the company positions to face this situation, which likely to be certain, will decide the performance of the stock from here on.

 

 Infosys technically gave a break out at 2040. Long term investors can buy the stock on dips as it is the leader in sector in   small quantities. 

 

Strategy for the day: Buy Nifty 5250 calls on weakness and 5550 puts on rallies for quick returns in day trading. 

 

Support for Sensex shall be 18000 and Nifty 5250 for the day.

Outlook for Wednesday " Sensex creates History - Old records tumble"

"It was a historic day for indian markets, where indices have posted new highs, posted highest ever single day rally, registering record volumes of trading on our bourses. India's steady economic growth, during uncertain times in US and other parts of world, are making western investors to give higer valuations to our stocks and markets, and re-rating is on cards. From now on the pace of the market will certainly will fast and furious, as many other domestic players too jump the band wagon, making small and midcap stocks to post gains. So long term investors should be very careful in stock and sector selection, and stick to basic principle of investing in business not in the stock, which will go up or down, due to sentiment, liquidity etc.,

US markets also closed at all time highs, overnight after FOMC minutes are released, where expectation of further rate cut is being factored in by players by the year end, making investing in stocks attractive. Domestically both Congress and Left have postponed the evil upto 22nd October 2007, as none of the parties are ready for a snap poll, and both the fighting groups on Indo-US nuke deal issue, do not want to see them being responsible for bringing the collapse of the government, and mid term polls. Igate results will be out today, and the bigbrother Infoys results will be announced tomorrow before market hours, the guidance, outlook on US economy as the management reveals through detail discussion after wards, hold the key for performance of Tech sector in the current bull run.

Strategy for the Day: Buy 5300 straddle on Nifty (Buy Call and Put Option) & a straddle on Infosys too on a strike price 2040 at the end of the session before the event.

Support for Sensex shall be 18000 and Nifty 5260 for the day.

Outlook for Tuesday "Volatile times a head"

"Our markets opened positive taking cues from overseas markets and sensex touched new high (17982.59), and within no time selling commenced, as traders exited from long positions built in the past 15 days, due to the political crisis looming at centre, on account of tough talk by both left parties and congress party which is heading UPA lead coalition government at centre. IAEA chief is visiting India today, and shall meet PM on 11th, is the central point of disagreement between both quarters, as it would tantamount to "operationalising the Indo-Nuke deal", which is the observation by left parties. The much awaited correction has come suddenly and swiftly, as it would be the behaviour of long term bull markets, after having a spectacular rally since 18th sept' 2007. The long term trend is very much intact, and indices have found support at September monthly closings (Sensex 17291.10 & Nifty 5021.35) and closed well above these levels. Nifty futures closed at 7 points discount does not indicate much bearishness.

 

Our markets might trade in a range during this week, and take a cue from Q2 results to be announced by Infosys on 11th. Momentum stocks and small, medium cap stocks are big loosers due to huge unwinding. There may be a bounce today, since markets are down for 3rd day in a row, however, it is not the time to make big purchases. It will be a trading market for at least two weeks, by which time the results are digested by the market and how the Congress - Left imbroglio is sorted out, shall give the direction to the markets.

 

Strategy for the day: Buy 5000 calls on weakness and 5200 puts on rallies for quick returns in day trading.

 

Nifty range for the day: 5000 to 5200 & for Sensex shall be 17100 to 17777

Outlook for Monday and Week "Whether 18K will be conquered?"

"Our indices have closed in negative territory for the second consecutive day, after a dream run, and were volatile during the entire trading session. However, the indices have posted gains 'week on week basis' for the 7th consecutive week, and 8 being fibonacci number, this week shall be volatile and might close negative. Political situation is becoming hot once again and increase in prices of petrol and diesel prices is being contemplated during this week as Indian crude basket crossed US $ 75 already. Q2 results of Infosys will be announced on 11th, which will decide the fate of Technology sector, since it is quite an underperformer in 2007, inspite of indices posting new highs and other sectors posting substantial gains.

 

ECB has left the interest rates unchanged at 4%, and Meryll Lynch declares $5.5 billion losses on account of subprime lending, which shall effect 50 cents of its EPS, number of other financials to declare the position as result season unfolds in US and other parts of the world. Though India is insulated from subprime vows, our domestic political situation, brings in volatility back. Sensex might scale 18K during this week, however, headline supply might halt the rally and markets shall consolidate in a range for at least two weeks from here on, and take the direction depending on the Q2 performance and political situation. Traders and Investors need to be cautious, and book profits at every rise of 100 points on nifty onwards and increase cash levels, for re-entering at lower levels, as and when markets take correction course. Power Grid listed with hepty premium as predicted; traded and closed above 100 giving 100% returns on the investment in a shorter period of less than one month. One can add this stock to the portfolio on dips, it is the leader in market capitalization in the power sector, and a monopoly in the business of power distribution, and infrastructure.

 

Strategy for the Day: Buy 5300 puts on ralllies and 5000 calls on weakness for quick profits and to capture the volatility premiums.

 

Since the indices are in an unchartered territory, resistances cannot be predicted, only supports to be observed, whether held or breached to know and ride the trend which is up now on:

 

Support for Nifty shall be 5100-5000-4940- 4880-4760-4678-4648-4564-4530 and for Sensex shall be17480-17160-16876-16500-16135-15950-15870-15555

Outlook for Friday - Power Grid lists today

"Our indices opened gapdown, taking global cues in their stride, and were volatile during the entire session, finally Nifty closed almost flat, where as Sensex posted minor losses after a dream run for 10 days, registering whopping 2342.61 points raise from 18th sept'2007 onwards unabated. We indicated that the correction is around corner in yesterday's posting and the confirmation of the same shall be known by today's trading, volumes and closing. One needs to be very cautious, in adding stocks at this juncture, as singals of impending correction are visible, the political situation, strengthening of rupee and measures to be initiated by RBI, Infosys results to be released on 11th are some important events / cues to be taken care off.

Though there is a serious requirement for CRR hike for sucking the liquidity in the system, Finance Ministry and RBI chose to raise the MSS limit from Rs.1,50,000 crores to Rs.2,00,000 crores, to face the gushing inflow of US dollars, in to capital markets. Banks are finding quite difficult to increase the credit portfolio, and are seeking reduction in interest rate from RBI, as they cannot reduce the interest rate on deposit rates at the current juncture, when capital markets are so strong, there may be diversion of funds by investors, as returns are instantaneous and quick now a days in capital markets. Inflation data shall be released at 12 noon, and week end profit booking might keep the indices in a trading range for the day.

Nifty Futures closed at a premium of 5 points to the spot yesterday, indicating positive bias, however, initiation of short position around 5250 levels may not be ruled out. Nifty might trade in a range of 5000 to 5265 and consolidate before the next move.

Since the indices are in an unchartered territory, resistances cannot be predicted, only supports to be observed, whether held or breached to know and ride the trend which is up now on:

Support for Nifty shall be 5100-5000-4940- 4880-4760-4678-4648-4564-4530 and for Sensex shall be17480-17160-16876-16500-16135-15950-15870-15555

Outlook for Thursday - "Too much Too fast! - Be Cautious"

Our indices have opened with huge gap up, as predicted and went on to post record gains in minutes, due to all round enthusiasm, euphoria and exhuberance, from all players, as if the "stocks will not be available from next moment onwards". Post sunoutage trading due to weakness in Hangseng indices, and US futures indicating negative trend, profit booking set in which brought running correction, and at one time it was threatening that the indices might close negative for the day. However, inflow of dollars from possibly new FIIs, the indices received support at 5 DSMA and the short covering in the last hour of trading, helped indices to post substantial gains at the end of the trading. Before Fed meet on 18th Sept '07 many analysts were doubting whether 5000 on nifty and 17000 on Sensex would be reached by December end; now we find that these levels are not only surpassed with great ease, and are offering support in case of dips on profit booking. Nifty futures closed at 5 points discount to spot on adjustment basis at the end of the session.

 

US markets opened weak and traded in negative territory overnight and closed negatively. Asian markets have opened negative and this might induce our markets to open negatively too, However, Volatility shall be very high, so one can start selling 25% of the portfolio on every rise of 100 points on Nifty from now on, increase cash levels, as the rally has completed 11 sessions, unabated, setting up of correction is overdue either from today or tomorrow is inevitable. So adding fresh long positions at these highlevels should be avoided. Trading in this high volatile markets, can hurt badly, as the stoplosses gets triggered, much quickly to the disadvantage of players.

 

"Power Grid Corporation Of India" will be listed on the exchanges today, which is offered at Rs.52/- might open and trade with substantial premium, as the power sector is very hot and leading the bull run for the past one week. Opening might be above Rs.100/- and investors who got allotment can hold the stock, inspite of huge returns it is offering on listing, as all other stocks in the sector, have run up too much too fast already.

 

Strategy for the Day: One can construct Bear spread on Nifty by going long on 5250 put and selling 5050 put in current series, when nifty touches 5250 and trades above it, and hold till the end of series for good returns. It requires a margin of Rs.45000/- approximately.

 

Since the indices are in an unchartered territory, resistances cannot be predicted, only supports to be observed, whether held or breached to know and ride the trend which is up now on:

 

Short term support for Nifty shall be 5050-4940- 4880-4760-4678-4648-4564-4530-4480 and for Sensex shall be17260-17000-16876-16500-16135-15950-15870-15600-15485

 

Outlook for Wednesday

"Our markets were closed on account of "Gandhi Jayanthi" yesterday, while all Asian markets rallied on account of strong close of US markets on monday night. On 01.10.2007, our markets were volatile, made new highs and profit booking at higher level, in view of a holiday on 02.10.2007, came down at the end of the trading, although closed in positive territory, at new high closings. Nifty futures closed almost flat on monday, indicating indecisiveness on the trend.

 

Markets shall open positive today, taking monday strong closing of US markets initially, however, profit booking shall bring volatility in the markets from today onwards. Political crisis in karnataka state, Supreme Court's indiction of CM, Tamilnadu on defying the instructions to call off Bandh on 01.10.2007, Left-UPA co-ordination meeting scheduled for 05th where the issue of US-Nuke deal will occupy the top priority, are again bringing the political situation murky. Automobile companies sales numbers for September are encouraging, Steel prices are increased by manufactures, and cement companies are likely to increase the prices shortly, shall influence the momentum in these sectors.

 

In Our view, markets should consolidate around 5000 level for some time, may be till 11th october, when Infosys results will be announced, and take a direction from there on, depending on the performance, guidance and outlook for the sector. However, any weakness, below 4980 is a good buying opportunity in performing blue chip stocks, with medium term outlook, hence, keeping 10 to 15% cash levels shall provide great opportunity for building valuable portfolio for good returns.

 

Since the indices are in an unchartered territory, resistances cannot be predicted, only supports to be observed, whether held or breached to know and ride the trend which is up now on:

 

Short term support for Nifty shall be 5000-4940- 4880-4760-4678-4648-4564-4530-4480 and for Sensex shall be17160-17000-16876-16500-16135-15950-15870-15600-15485

Outlook for October - Q2 Results hold the key to mood and sentiment

"September month was a historic one for our indices, which have posted substantial gains month on month basis, and people who stuck to basics of sticking to value investing in uncertain times, are substantially rewarded, when the sentiment changed to positive, with markets friendly Fed cut of 50 basis points on 18th. Our indices have posted gains since then, uninterupted till the month end, recording new highs, after breaching old highs, every day, surprising most of the analysts. How the markets perfrom?  from now on is the key question in every person minds since we are already at all time highs!

 

October month has the following key events to influence the markets mood, sentiment and trend; UPA-Left party co-ordination committee meets on 5th, on Indo-Nuke deal pursuation issue; Infosys Technologies comes out with its performance for Q2, Dividend and outlook for the next quarter or may be for full year on 11th; Infosys Management's outlook on the technology sector going forward, in the light of rupee appreciation, probable US Slowdown and how it will or may affect the company and sector in general will be heard, analysed with great detail by all global investors too, as the sector is clear under performer on our bourses, by a great margin, inspite of the overaall indices making substantial gains. FOMC meet on 30th and RBI's Credit policy are the next major events which would influence the performance of rate sensitive sectors like, banking, finance, automobiles and fmcg;

 

Strategy for the Month: One can construct a bull spread by buying 5000 call and selling 5200 calls in current series, to ride the upward movement, with minimum investment of Rs.45,000/- Break even level shall be 5100 as of 29.09.2007 closing prices. Investment will give 10% return on capital employed if the market settles at 5200 or more; maximum loss could be Rs.5000/- which is the net premium paid in case nifty trades and closes below 5000 during the month.

 

Since the indices are in an unchartered territory, resistances cannot be predicted, only supports to be observed, whether held or breached to know and ride the trend which is up now on:

 

Short term support for Nifty shall be 5000-4940- 4880-4760-4678-4648-4564-4530-4480 and for Sensex shall be17160-17000-16876-16500-16135-15950-15870-15600-15485