Midcaps Outperform But Nifty Flat - Is It Signal For Sell Off?

Some things are not adding up in Indian markets. Markets are flat with almost a negative bias. Yet the midcaps are performing well. That does not portend well.

Throughout the trading session there was a sense of indecisiveness in indices. Little gains accrued during continued buying in the first half of trading was sold into in the later half. Tug-of-war between bulls and bears was there for all to see, with no clear winner. As a result indices ended absolutely flat.

But the good news is that midcaps performed well and ended the day with some decent gains. That would come as relief for traders in that genre.

Only point of concern is that midcaps are generally the last to rally in a bull run. Does that mean we are at  the end of a bull run starting from 6900 to 7700 in Nifty? That will surely be the case if Nifty does not close near 7700 in next 2/3 trading sessions.

Now let us update the status of 19 long positions that we are holding :-

TATAPOWER : Bought at 62.5, Closed at 65.9
JINDALSTEL : Bought at 62.5, Closed at 66.75

INDIACEM: Bought 87, Closed 91.8
RPOWER: Bought 50, Closed 49.4
IOB : Bought 30,Closed 29.45

ALBK: Bought 57,Closed 54.25

IDBI: Bought 71,Closed 67.1

PNB: Bought 87,Closed 81.85

SBI: Bought 195,Closed 184.25
UCOBANK: Bought 40,Closed 38.25
CANBK: Bought 194,Closed 183

KTKBANK: Bought 104,Closed 103.9

SYNDIBANK: Bought 67,Closed 66.6

BANKINDIA: Bought 98,Closed 91.2

ORIENTBANK: Bought 94,Closed 87.3
UNIONBANK: Bought 134,Closed 125.8
ANDHRABANK : Bought at 53, Closed at 51.95

HEXAWARE :  Bought at 268, Closed at 248.65

BANKBARODA : Bought at 150, Closed at 143.95

Profit Booking Continues - RBI Wants Banks Cleaned

Another bout of profit booking was witnessed in Indian markets. Serious damage was being inflicted on scrips in a secular manner. Traders on the long side had no place to hide.

What can be said of Raghuram Rajan, our RBI Governor of immense knowledge and experience!! He claims that he wants to restore the health of the banking sector.

Imagine after the banks have incurred loss of $ 120 billion in bad and troubled loans, today he wakes up and gives a clarion call for clean up drive in Indian Bank? Bah!!

What was Raghuram Rajan doing in his entire tenure when the banks were splurging away tax payers money in bad loans with little or no collateral? As a watchdog of Banking sector, why was RBI snoring till date? No red-flagging, no regulatory action - just free for all. In such scenario do we need a regulatory behemoth named RBI or just our finance ministry coupled with a mint should suffice? Point to ponder!

Anyway the status of our long positions are as under :-

CANBK : Bought at 194, Closed at 181.5
JINDALSTEL : Bought at 62.5, Closed at 60.15
INDIACEM : Bought at 87, Closed at 87.
RPOWER : Bought at 50, Closed at 48.75
IOB : Bought at 30, Closed at 29.1

UNIONBANK : Bought at 134, Closed at 125

ANDHRABANK : Bought at 53, Closed at 50.95

BANKINDIA : Bought at 98, Closed at 90.95

ORIENTBANK : Bought at 94, Closed at 86

SYNDIBANK : Bought at 67, Closed at 66.05

HEXAWARE :  Bought at 268, Closed at 251.5

BANKBARODA : Bought at 150, Closed at 143.4

KTKBANK   :  Bought at 104, Closed at 101.9

UCOBANK  :  Bought at 40, Closed at 37.55

ALBK    :  Bought at 57, Closed at 52.95

IDBI      :  Bought at 71, Closed at 67.4

PNB       : Bought at 87, Closed at 80.9

SBI    :  Bought at 195, Closed at 182.8

Today Tatapower entered our recommended buy price and was bought at 64. Tatapower closed at 64.1

Indian Markets End Flat - Are We Out of the Woods Yet?

Today Indian markets closed absolutely flat. It just mirrored its Asian peers. So the question that begs an answer is whether we are out of the woods yet.

I must admit that those who are long in markets are not out of danger unless Nifty closes above 7700.

But the good news is that Nifty seem to be taking support at 7600.

We have long positions in 18 scrips and so there is enough reason to be worried.Present status of these long positions is as under :-

CANBK : Bought at 194, Closed at 184.7
JINDALSTEL : Bought at 62.5, Closed at 62.3
INDIACEM : Bought at 87, Closed at 89.
RPOWER : Bought at 50, Closed at 49.25
IOB : Bought at 30, Closed at 29.1

UNIONBANK : Bought at 134, Closed at 127

ANDHRABANK : Bought at 53, Closed at 52.1

BANKINDIA : Bought at 98, Closed at 92.55

ORIENTBANK : Bought at 94, Closed at 88.15

SYNDIBANK : Bought at 67, Closed at 67.3

HEXAWARE :  Bought at 268, Closed at 256.9

BANKBARODA : Bought at 150, Closed at 144

KTKBANK   :  Bought at 104, Closed at 102.8

UCOBANK  :  Bought at 40, Closed at 37.75

ALBK    :  Bought at 57, Closed at 53.85

IDBI      :  Bought at 71, Closed at 66.9

PNB       : Bought at 87, Closed at 81.55

SBI    :  Bought at 195, Closed at 183.9

But the most worrisome situation is the gruesome way J&K Police have beaten up peacefully demonstrating students of NIIT Srinagar. We should all hang our heads in shame. It can only happen in India that you get beaten up mercilessly by State administration for chanting slogans for the nation. 

Markets Witness Mayhem - Update on Buy Positions

On 05 Apr 2016 there was mayhem in Indian markets. Markets cried murder when RBI cut rate by only 25 bps, when the least that was expected was 50 bps.

That said let us now see what happened to ten buy recommendations which could not be bought in previous trading session as mentioned in this post.

These 10 scrips drifted down as markets slid into deep red.. And the slide allowed them to come into buy zone as recommended in this post. Here is the list:-

CANBK : Bought at 194, Closed at 185.5
JINDALSTEL : Bought at 62.5, Closed at 60.25
INDIACEM : Bought at 87, Closed at 84.4
RPOWER : Bought at 50, Closed at 48.85
UNIONBANK : Bought at 134, Closed at 129
ANDHRABANK : Bought at 53, Closed at 52
BANKINDIA : Bought at 98, Closed at 93.55
ORIENTBANK : Bought at 94, Closed at 89.55
SYNDIBANK : Bought at 67, Closed at 67.5
TATAPOWER : Buy price not obtained in trade today

However ten scrips which we bought in previous trading session as mentioned in this post were simply hammered in trade. They fell off as if from a precipice. 

Do not worry. All we need to do is watch for a bounce in markets in next trading session. The manner in which the markets rebound will determine the targets for these buy positions. 

I shall keep you updated on the situation 

The only bright spot has been L&TFH Apr futures. We bought it in previous trading session at 65 and the target was 70 .Check it out in this post. In this trading session the given target was achieved.

So profit made from one lot of 8000 shares of L&TFH Apr Futures is ( 70 - 65 = 5 ) X 8000 = Rs 40000/-

RBI Cuts Rate - But Was It Enough?

Phew! What a grueling day in market today!! It has been a sea of red. Financials have been butchered with bears taking a firm grip.

Reason was simple and clear. Markets were expecting a 50 bps cut in repo rate but Raghuram Rajan delivered only 25 bps cut. This despite the fact that our Fin Minister himself had publicly indicated that he expected a 50 bps cut in repo rate from the Central Bank.

Nonetheless, why such despondency was witnessed in markets today? After all a rate cut was given by RBI and some liquidity measures were initiated. Why should a rate cut, however small, impact the markets so negatively?

I think the reason is that market participants wanted to send a message to Raghuram Rajan. And the message is that they do not appreciate his negative approach to growth.

To be frank, RBI Governor's actions have always been suspect, as if he is totally against growth in India. Take the instance of present situation as it exists in Indian economy. By his own admission today, RBI Governor is seeing consumer inflation at 5%, which is fairly pleasant as inflation goes. If inflation is under control, then it is high time to address the growth of economy which is in doldrums.

For kick-starting growth in Indian economy, we need job creation. Jobs can be created if industry goes into capex drive, meaning that capital expenditure has to be resorted to by industry captains to build extra capacity. Building extra capacity will require fresh jobs, which in turn will boost domestic consumption, thereby inviting more job creation and thus sending Indian economy into a virtuous path of positive growth spiral.

How is it so difficult for Raghuram Rajan, an economist of world renown, to understand? And when situation is so conducive from inflation side, it is simple to drive growth by substantially lowering rates. Industry has to be incentivized by lower rates so that they can borrow funds from banks and create extra capacity through capital expenditure.

This is what the markets had expected form RBI Governor and did not get. 25 bps rate cut is next to nothing. In fact some market watchers were expecting 100 bps, but 50 bps was the rock bottom expectation. Even after Finance Minister publicly hinting at 50 bps, Raghuram Rajan just could not care less for growth in Indian economy. This is at a time when Govt has done everything possible for fiscal consolidation.

Wonder who exactly is Raghuram Rajan working for? India's growth has suffered a lot at Raghuram Rajan's hands. As his term comes to an end this September, we hope to get a more positive RBI Governor to guide India with proactive monetary policies.