Infosys performance and guidance indicates a road block, which invited the profit booking!

Infosys performance for 2008-09 is in line with expectations of the street, despite uncertainity all around, huge volatility in exchange rates during last year. A cautious guidance from the company was also expected by analysts, since the management is always conservative about their performance. It is the reading between lines on the post results announcement by management on the future for tech sector etc., kept the mood 'cautious'. First time, infy also reports strain on margins, due to increasing costs, and vendors looking for cost cutting. This is a double effect on the top line as well as bottom line of the market leader in the sector. 2009 year shall be challenging for all economies and companies, cost cutting, re-organisation, financial prudence etc., will be looked at by all.

 

Technically 3500 proved to be selling point either for profit booking or bear hammering, as indicated in my previous posting, since 200DSMA also is hit in the strong rally witnessed for the past 5 weeks. What will happen from here on is again the question in the minds of investors and traders. The answer is quite simple. Markets need to consolidate in the range of 3000 to 3500 for some time at least election results and government formation in India happens by 3rd week of May' 2009, with huge volatility, as idle cash is chasing beaten down stocks, as long term funds have started building up portfolios and weak hands and traders exiting booking profit.

 

The volume on the bourses crossing One lakh crores of rupees for two consecutive days, is a good sign of return of more participants, and larger moves on either side will be seen, as the fight from long term bulls and short term bears intensifies. Satyam Computers moving into the hands of Tech Mahindra is good news for the company, sector and government too, which will boost the confidence of investors in Indian stocks, as while the wrong doers are punished quickly, the innocents are protected by government of India sent an excellent message to long term investors world wide.

 

I wish to discuss few stocks from now on for long term port folio building in the next posting, since the markets seemed to have found a bottom in the immediate short term.

 

Happy investing and trading! 

200DSMA will offer stiff resistance to the current rally! Time to book profit!

The current rally in stock markets in India and world over are 5 weeks old, the indices are approaching 200 DSMAs, where stiff resistance will be encountered. DFIs have become sellers already in our markets marginally. It is not a bad idea for positional traders to exist the stocks at least 50% at current levels, if one has entered markets few weeks ago or around the crucial levels of 10000(Sensex) and 3000(Nifty) suggested in the last posting. The strategy of straddle also is in profit.

 

The first phase of election campaign has come to an end by yesterday evening. Infosys results and reading on tech sector will be available today during market hours. Flat guidance also will be welcomed by market players. Any negative guidance or indications during the interaction with analysts will certainly affect the sentiment. Remember that Tech Sector is the largest employment creator for Indian Economy, and forex earner too. The period from now on till the election results are out by third week of May, 2009 and formation of government at the centre will be influencing the markets, where huge volatility can be expected.

 

Only professional traders can take advantage with strict stop loss in place. However, any deep fall in prices of Blue chip stocks shall not be missed for long term portfolio builders, as this might be the last opportunity, before markets consolidate and move up again once the government policy is clear some time before end of July, 2009 where full year budget shall be placed before parliament.

 

Happy trading!