My take on the Indian Financial Markets - Sensex and Nifty blogs

Think Again! Are you a Trader or an Investor?

2008-02-16T18:05:00.002+05:30

While following Stock tips, a common mistake an Investor tends to make is buy trading stocks that have a specific target and period in which it will be acheived. This is exactly what a trader does, so inspite of being an investor, you tend to buy into trading stocks. An Investor buys stocks and remains invested for a minimum period of a year, so you do not end up paying Capital gains on the profits.To understand a trader better, let me list down the types of Trading which are mainly differentiated by the timeframe involved.

Swing Trading

This is the method which allows trading of tradable swings, up and down. The length of time the trade is held could be from 3 to 4, days to a couple of weeks.

Position Trading

This is used by traders who tend to hold trades over multiple swings, not ending their trades on intermittent corrections. They could be holding trades anywhere from a couple of weeks to many months.

Day Trading

Day Traders trade within the course of a day. They generally do not carry overnight positions. This is one of the most difficult forms of trading to master.

Technical Analysis is a tool used by a trader using which he constantly looks for cues from charts and Setup opportunities.

An Investor buys Stocks which are fundamentally strong and the long term prospect of the company looks good. The following information is generatlly used by an Investor to determine the fundamentals of a company:

Track record of Company and Management
Balance Sheet and Quarterly results
Order pipeline and future prospects of the Sector/Company

If you want to make short-term investments in the Stock market, ensure you maintain a separate trading portfolio and track these stocks regularly. So next time you go out to buy a Stock, ensure you know the exact reason for purchase and understand the risks involved with it. If you want to make a longterm investment, do not follow Stock tips and buy into trading stocks which are volatile and more liquid.

Dow Jones Index has crucial support at 12000

2008-02-06T19:08:00.001+05:30

Over the past month, Global markets have been driven by the behaviour of Dow Jones and Nasdaq. Dow Jones has a very crucial support level at 12000 and it is currently trading very close to those levels. The next few sessions would be very crucial for Global markets as if this crucial support level is broken, going ahead, I would have a very bearish view.

The last time, Dow touched 12000 was on 22nd January after which it rebounded quickly to higher levels. It was during that period, Asian markets also tumbled and Indian markets hit the lower circuit. Unfortunately, the FTSE index is very choppy and trading flat. Government data on fourth-quarter productivity is scheduled to arrive at 8:30 a.m. EST, and could calm economic jitters somewhat if results come in as expected.

After yesterdays weak session, apparently investors are positive for a higher open as Disney results have beaten street expectations. Let's wait and watch for today's session which will give us all important cues for tomorrows trade.

Following Global Markets, Nifty crosses 5400 - What strategy next?

2008-02-04T23:38:00.001+05:30

After last week, US markets put up their strongest performance of the past 5 years, all Asian indices were up and Indian markets followed on the Global cues. Both Nifty and Sensex managed to cross psychological resistance barriers of 5400 and 18500 respectively. The question now to ask ourselves is whether this was an opportunity to book some profits and unwind positions or do we expect the rally to continue further?

Global Factor: The fact remains that we are still closely aligned with the global markets. As the FTSE index opened today, we could see the markets coming under pressure and coming off the days high. Inspite of the news that US factories report a rise in orders for December, US markets cashed in profits and are currently trading in negative.
Union Budget uncertainities: With the Budget around the corner, investors would want to wait and trade cautiously, and till then also hope that the global picture improves. There were some statements which indicate the budget may benefit the banking sector, Finance Minister said the UPA Government was “concerned” that a large section of the people were not part of the financial system. Over 50% of the people in the country have no bank accounts and do not deposit money or borrow from the banks. He plans to take measures which would help multiplying the reach of banks. The UPA Government also hinted that by the next fiscal year, skill development plan is to extend training facilities to 10 mn people a month, up from 2.5 mn a year at present.
Poor Volumes: The markets are still trading at lower volumes, which are not even 60% of the old volumes. Traders and retail investors still seem to be cautious and are waiting for markets to be more stable.
Stocks up on news: Today Reliance Communication(+12.26%) was the Top gainer on Nifty, after the company announced that its subsidiary, Reliance Infratel, will go public, BPCL was up as Government decided to hike fuel prices. ONGC which at a point was +5.23%, gave up most of the gains to close at +0.63. NTPC, which at point was +5.45%, closed in negative. The other heavyweights like Reliance, ICICI Bank were just up by more than 1%. Clearly, this was a case of specific stock purchasing, which cannot sustain a rally to higher levels.
Derviatives: The Nifty Feb futures are still trading at a discount of about 9 points.
Liquidity Factor: Reliance Power will list on 11th February. Most of the refunds from Primary markets would have happened by now and liquidity factor which was thought to be one reasons for thin volumes should get restored.

Keeping the above points in mind, I would still be cautious and book profits at higher levels. This week would be very crucial in determining whether liquidity was the main factor for the Stocks meltdown and bring back gains, or global factors continue to loom over the market.

Tip / Strategy for traders to hedge their portfolio:

Profit by leveraging the Nifty Futures and Options Setup - Secrets revealed

2008-02-03T13:30:00.001+05:30

In the recent stock market crash, we have seen so many traders loose all their money in Futures and Options. Like Udayan says, "Stock Future is not a toy but a time bomb in the hands of an expert". An expert Futures trader keeps looking for loopholes (price differences in the premium spread) to make quick money and does not get into naked positions, i.e. one can profit if the market swings either ways or atleast the losses are minimised. Today I shall share one such setup which is applicable to the current rangebound scenario.

The NSE India website provides you with latest prices of all the contracts; the following link displays the prices of all the Nifty Options contract. I prefer to trade mostly on Nifty contracts as they are actively traded and even easy to get rid off.

Link: NIFTY Options contracts

Entering the Position

The Underlying value of the February Nifty Options is 5315 and we still have 18 trading sessions before settlement.
We have a view that the makets are rangebound between 5100 and 5400 with a downward bias, so one can risk writing a CALL Option at Strike Price 5400. The last traded price for Strike Price 5400 is Rs. 211.00

Exiting the position

We can be faced with the following scenarios :

We will start loosing money on the above position only if Nifty crosses 5611, so we are covered for 211 points above. To secure ourselves, strategy would be to 'BUY' Nifty futures only if the trigger price of 5550 is reached.
Lets assume the rangebound scenario extends further uptill the next week, we will be able to buy and square-off the position at half the price.
If the market never crosses 5400 before the settlement period, we pocket the entire premium.
The most tricky scenario would be if markets bounces back to levels of 6000. It becomes all the more important that mechanically, we get into the Futures position at the right time, say when Nifty is around 5550, with a Stop loss of 5400.

The above setup works very well in a rangebound scenario, like the one Indian markets are currently stuck in. I would advice one to first understand Futures and Options very well, rehearse all of these scenarios with examples, experiment with small values and then take up positions.

Disclaimer: Please trade in these positions at your own risks. I do not guarantee that these setups will always work and you need to excercise the right caution.

Nifty UP by 3.5%, February Series starts with a Bang

2008-02-02T16:17:00.001+05:30

Last week, a lot of news has been absorbed by the Indian markets, like the RBI anouncement, Fed rate cuts, results posted by companies but the new month has begun with a positive note, the Nifty closing 3.5% higher today. Analysing the current trends, volumes and behaviour of the markets, there are lot of interesting observations to make:

Surprisingly, IT stocks which were non-performers for a long period lead the rally with CNX IT index up by 6.15%, Infosys was up by 6.37%. The results of IT companies have been average; Infosys net profits for the quarter ending December 2007 grew by 23.8%. When stocks of IT companies were on the rise, P/E ratio of this industry was around 35. I have never seen Infosys quoting a P/E below 25. In the past year, fundamentally good stocks like Infosys have been beaten such that now it is quoting at a modest P/E of 22. This sector currently possesses risks as it is highly dependent on the US economy and it deals with exports and maintenance of software. It was encouraging to see companies like Microsoft and Google still posting excellent results, probably indicating that there is still a lot in offer for other companies too. Keeping in mind the current valuations and growth of this sector, I would now 'BUY' IT stocks, but one should not expect anything more than just modest returns.
The CNX Midcap closed flat with stocks like Punj Lloyd still getting beaten up by 9%. In the past year, lot of these companies have had a dream run and they were now expected to post decent results. The numbers posted by a lot of Small and Mid cap companies were below expectations and many of them even reporting losses in this quarter. After a massive correction, investors generally bank on large cap companies backed by strong fundamentals and now with the performance of Mid cap being poor does not help the confidence. A lot of selective buying was happening with a few stocks like 'Hotel Leela' up by 14%; they apparently reported a net profit of 54% for quarter ending December 2007. This stock almost corrected upto 45% and now looking at the valuations looks to be a good 'BUY' at these levels.
Nifty Feb futures closed at a premium of about 6 points, being the most actively traded contract. Also interestingly 38324 call contracts of Nifty of strike price 6050 were traded. The statistics on the derivatives front clearly indicate a positive sentiment. Apart from the Nifty and the entire Reliance pack, the only other actively traded contract was ICICI Bank.
There is one stock which needs special mention because it has been least impacted by all the corrections and is still trading strong near its 52-week high and thats HDFC. It has just announced a reduction of 25 bps in their home loan rates and the stock was up by 5.66%.
Future Capital had a decent listing at 1044 against its issue price of 765 and closed at 908.

The above cues do indicate a positive bias, but one needs to be cautious as a lot of uncertainities still need to unfold like the Union Budget, FII flows, liquidity factors and on the technical side crossing the 5400+ barrier. I will be closely tracking these happenings and keep you all posted.

Fed does it again

2008-01-31T01:05:00.001+05:30

The Federal reserve cuts interest rates again by half a point. This should boost up the moral of the investors and we can definitely expect the markets to rally tomorrow. This should also be a signal for Dr. Reddy to again review the RBI interest rates as such a differential cannot co-exists!

The Nifty has formed a resistance at 5400+ levels and if it manages to break those levels tomorrow, it might bring back the bulls in action. As I type this post, I can see the Dow and Nasdaq only heading northwards. One cannot ask for more from the Fed, a One and quarter points cut in about a couple of weeks duration.

Fingers crossed with the budgets coming soom, I am bullish again on the Indian markets. What are your views? Please leave your comments.

Credit Policy impact on your Stocks

2008-01-29T22:55:00.001+05:30

The eagerly awaited outcome of Credit Policy review was out today and RBI Governor Dr. Y.V. Reddy has kept all the key rates unchanged. How does it affect you and your portfolio? To understand the Credit Policy better, let me list down the key rates and what they actually mean:

Bank Rate

Bank Rate is the rate at which banks borrow from RBI. A cut in the bank rate could mean a reduction in fixed-income instruments, for instance, it will lower the rates of Fixed Deposits.

Reverse Repo and Repo Rate

The reverse repo rate is the rate at which banks park their short-term excess liquidity with the RBI, while the repo rate is the rate at which the RBI pumps in short-term liquidity into the system. The repo rate has a direct bearing on the overnight or the call money market; this is the market where banks and primary dealers borrow money for one day to, typically, 14 days.

CRR Rate

Indian banks are required to hold a certain proportion of their deposits as cash. In reality they don’t hold these as cash with themselves, but with Reserve Bank of India (RBI), which is as good as holding cash. This ratio (what part of the total deposits is to be held as cash) is stipulated by the RBI and is known as the CRR, the cash reserve ratio. When a bank’s deposits increase by Rs100, and if the cash reserve ratio is 10, banks will hold Rs10 with the RBI and lend Rs 90. The higher this ratio, the lower is the amount that banks can lend out. This makes the CRR an instrument in the hands of a central bank through which it can control the amount by which banks lend.

Change in the above rates could impact you in the following ways:

The interest rate on your fixed deposit or on your home loan are all likely to move up if the reverse repo rate is raised.
Increase in Reverse Repo rate could also have an impact on NAV of Debt Funds if they are invested in Government Securities.
Interest Rate also have an immediate impact on the following Sectors:
- Banking
- Real Estate
- Automobiles
- Exports

Today against the expectations of many Analysts, interest rates have been kept unchanged. Banking, Real Estate and Auto Stocks which rallied yesterday gave up all their gains. This is just a short-term sentiment and going ahead banking sectors do look very attractive.

Building your Stocks Portfolio - Part II

2008-01-28T19:52:00.001+05:30

Continuing from the previous post, let me take you through a practical example where a middle class investor has rupees 100,000 to invest. With a little reading and research on which sectors are performing well, supportive Government policies and seeing where our country is heading, I would identify the following sectors to be invested in:

No	Sector
1	Banking/Finance
2	Engineering/Capital Goods
3	Infrastructure/Construction

Keeping in mind that the investor would want to liquidate the money in 2-3 years and is an average risk taker, I would atleast recommend 60% of the amount in Large caps which have been performing very well over the past years. Following would be my recommendation:

Stock Name	Amount to be invested
Larsen & Toubro	30,000
HDFC	30,000
JP Associates	25,000
GMR Infrastructure	15,000

Subject to Market conditions, the above portfolio is certain to give you decent gains. A common mistake which we make is while investing new money, we follow Stock tips blindly and the above composition of sectors and risk ratio goes for a toss.

Hope the posts on "Building your Stocks Portfolio have been helpful; if you have any queries, please leave a comment and I shall try and answer them to the best of my knowledge.

Building your Stocks Portfolio - Part I

2008-01-27T18:11:00.001+05:30

In simple terms, a portfolio consists of stocks one has invested in and it helps one track its progress and returns. The aim of every portfolio is to achieve maximum returns or atleast perform better than the Index. There are various factors which determine the risk of the portfolio but one key rule to remember is

shorter the duration of investment, more riskier it gets.

The foundation of a portfolio should be built on Blue-chip stocks which are fundamentally good stocks/sectors and one should remain invested in it atleast for a duration of 2-3 years. To start off, let me list down some key factors one should bear in mind while building ones portfolio:

Identifying Sectors

It is very important to understand how companies in every sector operate and what global factors can impact its growth. Take the example of Infosys which is a company operating in the IT sector which until 2006, was one of India's top performing stocks. In the past couple of years, IT companies have hardly managed to give any returns to its investor. This sector mainly thrives on exports and with the Rupee strengthening against the Dollar, most of export companies have to face negative consequences. Government policies, demand-supply, competition, etc. are some of the other major factors which determines sectorial growth. Keeping India's growth story in mind, I am counting on the following sectors to perform well - Banking, Engineering, Infrastructure and Finance.

Risk Profiling

Based on the market capitalisation, companies are termed as Mid-Caps or Large-Caps. Companies with larger market captalisation are traded in higher volumes and are less volatile compared to Mid-Caps. Investing in Mid-caps could mean higher gains, but when market conditions aren't favourable, they tend to loose gains very quickly. Blue-chip companies with large market capitalisation are generally safe bets as they have a strong order pipeline and would not vanish soon. Therefore company fundamentals and the period of investments should be kept in mind while profiling the risk of a portfolio. I would advice atleast 60% of investments in Blue-chip companies which have a good order pipeline.

Selecting the Scripts

Once we have identified the sectors, we can start fishing for the right scripts for the portfolio. Selecting scripts in itself is quite an extensive subject, but following are some important factors to keep in mind:

P/E Ratio of the Script Vs Sector average
Good Management and Track record
Strong order pipeline and execution capabilities

Common Mistakes

Finally before concluding this post, I would like to list down few common mistakes which an investor tends to make and should be careful:

Do not follow Stock tips blindly; generally by the time a tip reaches you, the cost difference may already have been factored-in. As the saying goes,

Buy on Rumours - Sell on News
Don't try and Time the market, but rather be patient with your investments.
Over time, we tend to buy a lot of short-term investments which skew the portfolio towards a specific sector or increase the risk by buying too much of Mid-Caps.

To understand the above theory better, in tomorrow's post, I will take you through a practical example in which we'll build a portfolio for a middle class investor.

Re-visit your Investment triangle

2008-01-25T12:15:00.002+05:30

After my post-graduation, I started my first job with a very modest salary. I hardly knew the art of investments and had to pay income taxes, later realised, it could have actually been my savings. I was told that insurance is a way to save taxes and that was where I made the first investment.

Like me, very few youngsters at that age aren’t aware of the investment triangle and where to invest money idling in the bank. We are all aware of the modes of investments but don’t know which should be given preference and how much amount should one be investing in each of these instruments.

Lets list down the important aspects one should be aware off before investing in any of these instruments:

1) Liquidity

2) Percentage of returns

3) Purpose

4) Cost of carry/maintenance

5) Risk factors

Depending on the persons age and risk profile, investment triangle for every person would vary, so lets take an example of a person who is termed as a middle class investor. The following investment profile can be customized as per the persons risk and could be made more aggressive.

Insurance policy: Start of your first investment with an Life Insurance Policy. There is no point in going over-board with this instrument as its purpose is only to save taxes and protect your dependents. A policy with a premium of 25-50K should be sufficient for a middle class investor. One can also opt for a money back policy which gives returns after every 5 years.

Public Provident Fund (PPF): PPF is a very popular tax savings instrument and one could invest upto a maximum of 70,000/- per annum. 8% per annum credited in account on 31st March every year calculated on the minimum balance between 5th day and end of the month.

Fixed Deposits: With the stock markets making new highs everyday, this advice might sound a little boring, but Fixed deposits give a very solid foundation to your investment triangle. I would advice about 5-10% of your entire investments in bank deposits.

Property: Invest in a property and save taxes on your housing loan.The purpose is to build an asset so there is no point in going over-board with property investments; during crisis, it is the most difficult asset to liquidate and bail you out.

Liquid Funds: A good strategy is to sweep excess money idling in your bank account into liquid funds. They generally give you returns of about 7% per annum and can be liquidated in T+1 days.

Mutual Funds/ULIP (Unit-linked Insurance policy): Build your Mutual Fund portfolio. Initially, ensure that it is well-diversified and not skewed with sector specific funds. Once the above foundation is laid, MF’s can constitute about 50% of your portfolio.

Stocks: Start off by investing in Blue-chip stocks with a long-term view. Stocks portfolio can constitute about 20-30% of your finances.

Derivatives: One needs to take expert advice before venturing into this instrument. At times, leveraging the pinnacle of the triangle with derivatives could give the required push to your portfolio. We can discuss strategies and hedging with Options in a different portfolio.

The current downtrend of the stock markets is an opportunity to revisit investments plans and re-organise your portfolio.

Asian markets rebound on Fed rate cut

2008-01-25T12:15:00.001+05:30

The Fed announcement has definitely come as a relief for all the investors. Today, Nifty closed above 5200, which is about 304 points up. Interest rate cuts in the United States makes emerging markets more attractive for Foreign investors. In the near term, it may try and address the crisis situation but it does not help the longer cause of inflation worries. Going ahead, we can see the rupee getting stronger against the dollar which is not very good for sectors which thrive on exports. The IT industry has already seen tough times and going ahead things aren’t going to get any better.

But is the Indian economy really dependent on the US? One may really want to see the positive side of the story, which can be determined by the internal demand within the country. India as a nation is still growing in sectors like infrastructure, power, automation, agriculture, technology, telecom and we are far-away from other matured economies.Going ahead, these sectors definitely look attractive.

Another important factor an investor needs to be aware while investing into a stock is the Shareholding Pattern. In times of crisis, it would be a good strategy to invest in promoter compaines.

As I write this post, US markets still seem to be reeling under pressure which is not very good news.

Fed Slashes Interest Rate 75 Basis Points

2008-01-23T01:16:00.000+05:30

This is just what the doctor ordered :) Weren't we all speculating for another crash for the hird consequetive session? Something un-natural cannot last for long whichever way it may swing. Well, but I guess most of the damage has already been done!

In the short-term perspective, things don't look too bright anyways; one thing which we need to tell ourselves is there is no fast way of earning money! The Stock market crash aka Tsunami has made a lot of people poorer and will scare a lot of retail investors away from the market. This does not drive away the potentials which the equity market offers but just that people don't want to understand the fundamentals behind the whole thing.

Going forward, I'm really excited about the prospect which the Indian markets would present and sure that this will bring about sanity in the Indian markets. This situation reminds me about year 2000 which was the DOT COM boom when every small venture wanted to float a DOT COM, but did each of them sustain the tide and time to come?

we have to learn to be disciplined is spelled out loud. With the Fed announcing a rate cut of 75 bps, let's hope that the markets rally and sanity is restored again. This is good enough for the FII's to be participants in the Indian markets.

The brokers and brokerage houses have already faced the brunt wherein the stocks of lots of retail investors were automatically sold off by the system. This is definitely going to take its toll on the economy, Just keep watching this space ahead!

Bad beginning - Markets plunge!

2008-01-21T13:20:00.000+05:30

As I write this post, seems market is going to hit the lower circuit and close!!

The damage has already been done. Over the past weeks, (virtual) profits which were accumulated over months has just wiped out!!

This was always expected and as a speculator you wonder whether the worst is over or there is more pain to come?

Well, for an investor (long-term view, someone like me would not liquidate these positions for the next decade) this shouldn’t be worrying at all because the long-term growth story for India is still in-tact!

It is definitely a cause of concern for short-term investments and traders; not to mention, even I have made substantial losses in derivatives and short-term positions. At this moment, markets look-like going either ways and would list down a few points which may help us to come to a conclusion (?):

Bearish sentiments:

1) US Crisis seems to be worsening day-by-day and global cues are very negative.

2) Panic amongst retail/institutional investors.

3) Liquidity crunch due to Primary market.

4) Over-valuation of stocks.

Bullish sentiments:

1) Good results posted by companies.

2) Budget round the corner?

The golden question is when investors/traders book profits/losses and remain in cash, where do they invest it in? At some point, it needs to be re-invested in the markets again :)

Free-fall and corrections explained (for dummies)!!

2008-01-20T00:25:00.000+05:30

An Index consists of top companies from various sectors. The most regularly quoted market indexes are broad-base indexes comprised of the stocks of large companies listed on a nation's largest stock exchanges, such as the American Dow Jones Industrial Average and S&P 500 Index, the British FTSE 100, the French CAC 40, the German DAX, the Japanese Nikkei 225, the Indian Sensex and the Hong Kong Hang Seng Index. The movement of these Index stocks determines the Index value, which in-turn influences the sentiments of investors and traders.

A Stock index of a country, in a way, reflects the growth story of a country. The returns Nifty has given in the past few years are as follows:

Jan-Dec 2007: markets closed at 6,138 with returns of 54.76% for the year
Jan-Dec 2006: markets closed at 3,966 with returns of 39.84% for the year
Jan-Dec 2005: markets closed at 2,836 with returns of 36.34% for the year
Jan-Dec 2004: markets closed at 2,080 with returns of 10.69% for the year

The aim of every portfolio or MF is to beat the index of else one would just remain invested in the index to earn the above modest gains.

The above data ofcourse has good and bad times factored in :) There are times when sentiments are negative and markets go into a bearish mode, the situations which can lead to this can be discussed in a different post. Corrections generally happen when valuations of stocks are over-stretched. This happens when there is too much of euphoria and over buying happens, also a situation when people burn their money with stock tips :) When a market goes into a correction mode, bears take charge which sets in panic. Retailers and institutions get into a rush to un-wind positions which creates an im-balance in the supply-demand. Sudden falling prices also triggeer stop-losses set by retail investors and traders. Cash-Future arbitragers make some money as Futures start trading in discount.

What is a pull-back then? Investors who cover their long position during a free-fall want to re-enter again at lower levels which seem appropriate. This generally brings about spikes and at times a pull-back to appropriate levels, but buying which happens again is stock specific as this gives institutions and funds to re-structure their portfolio!

Defying all expectations, Nifty dives to 5705.

2008-01-19T12:30:00.000+05:30

Just a few days ago what seemed to be a raging bull market, in a few sessions has given up all the gains, i.e. the dynamics of the Stock market. Now what is more interesting that one also expects the market to rise back with the same momentum. In all, if one was a good astrologer, there is millions to be made out of these sideways movements.

For an investor, this is not good news because all his profits (virtual) which had been accumulated over months has disappeared in minutes. What we need to tell ourselves is that the bull market has raised peoples expectations and made them more greedy. We used to be satisfied with monet growing at a modest 10% per annum but these days we want it to grow atleast by 20%! So even with all these wild swings, the stock market has always delivered more than 20%, even if you are just invested in the Index, so really why should we be that disappointed?

Smartly, I sold off Sterlite and re-invested the same money in RNRL. Not that I believe in the growth story of that company but when you have a short-term target, one needs to invest in a trader's favourite stock :)

This has been a week to forget and let's hope the coming week is better and does bring back some of those gains back in the portfolio!

Hang Seng and Nikkei rebound to the GREEN.

2008-01-18T13:44:00.000+05:30

Do you think Indian markets can remain in the RED when other indices have smartly rebounded to close in positive territory? I'm very positive that NIFTY will close in positive today. I'm expecting a smart re-bound from these levels. Traders are cautiously watching the opening of FTSE. As I write this blog, FTSE opens about half a percent in red, but shouldn't be worrying us!

Trying a pull-back act...but resistance at 5900+

2008-01-18T13:04:00.000+05:30

The Nifty did try a smart recovery but had to again loose out on the momentum; the Asian markets have seemed to have recovered some ground. The Nikkei has actually closed in the GREEN. I have decided to sell of Sterlite and pick up RANBAXY. As I placed an order at 372, on the next refresh it was about 3% UP and now trading at 382! I have an option for it to correct a little or just go with the momentum, a tough situation when you are really looking for a short term gain! RANBAXY is quite a fundamentally strong share and one should ideally go long on it. I still remember my grandmother showing me her RANBAXY share certificates :)

Today is the day to pick up SUZLON as from Monday it will be trading with a face value of Re. 2/- Well, one can be certain this counter will not close in negative today, so an interesting setup stock for the short-term.

Nifty sheds all gains to close at 5913.

2008-01-17T23:07:00.000+05:30

This was the most expensive coffee I've ever had. At around 2:00 PM, the Nifty was above 6000 which was about a percent high. Profit booking on the peaks continued for the third consecutive day! Unfortunately even the Q3 results of Reliance could not cheer the markets. Infact Reliance closed about 3% in the red. I am happy with the move L&T has had today. Currently my trading positions look like below:

* Jan Nifty Futures 100@5922
* Reliance Options Strike 3050@90.50
* HDFC Options Strike 3000@70.00
* L&T Options Strike 4000@150.00

In the cash segment, I've picked up Sterlite abd Appolo tyres. The exit from Sterlite should be after about 5-10 percent run up. We can go a bit longer with Appolo tyres.

I'm still bullish and waiting for a pull back to about 6050 with Reliance, HDFC and L&T leading the pack!! That would be the icing on the cake :)

Unfortunately looking ahead tomorrow, the global situation doesn't seemed to have improved much; Europe is more than half a percent down and US markets are still in pain. I can only expect a late pull back in Nasdaq to the GREEN! I'm happy to see Sterlite ADR in the Green :)

Let's hope atleast tomorrow we close above 6000 otherwise 5800 could be soon on the cards.