PERILOUS OVERHANG IN MARKET : RETAIL INVESTORS BEWARE

Two-month-long-run in the markets around the globe has been spectacular to say the least. Lets take a bow to that. Uncertainties have been brushed aside with utter disdain and Bulls have demonstrated amply as to who the boss was. We have had a situation where Bulls have scorned all negative news and pooh-poohed even swine flu panic. What we need to remind ourselves is the fact that all this has been achieved while nothing materially had changed on ground as far as present global financial crisis is concerned. Hence the need to take a bow!

Though we have all been pleasantly surprised, but what unnerves me a trifle is that there seems to be a concerted effort right across the world markets to give a "Short Squeeze" to Bears. And the effort has been as if a global cartel was at work. Isn't that a little scary?

Not to be daunted by such feelings, here I am taking up cudgels on behalf of retail investors to fight and win against big fishes of the market. Above 3150 Nifty was expected to reach 3450 which I had mentioned in my 31 Jan 09 post titled "Stock Market Bottom- Revelations". Nifty has been around this level for the past fortnight and closed at 3474 on 29 Apr 09. I would still maintain that from this level there has to be a decent profit taking by big fishes. No amount of good news can propel Nifty higher. So here is the time for retail investors to book profits and not think of higher Nifty levels.

If Dow is our guiding light then I must confess that even Dow has become exhausted. From relentless northwards march, Dow needs to take a breather. On 01 May 09 Dow closed at 8212. Even if Dow has to move up from here, which in itself is a remote possibility, it has to first cool down to 7600. Cartels galore cannot possibly engineer postulates of Dow Theory to fail, something which have stood the test of time. One of the postulates reminds us that manipulations can be effected for short term only.

The outlook for the US market for next week is uncertain with a negative bias. Take a peek at some of the important pointers to US economic health vitals:-

• On 02 May 09 Warren Buffet, Chairman of Berkshire Hathaway, refused to repurchase shares of his company because in his wisdom the company's shares are not yet trading "demonstrably lower than intrinsic value".


• Mother of all present US economic woes is the Jobs Report which will be out this Friday. The only way you can kick start the US economy is by increasing consumer spending since 70% of its GDP is linked back to consumer. And consumer spending is linked back to jobs. The report on Friday is expected to show slower decline but turn around is still nowhere in sight.


• Thursday, a day earlier than Jobs Report, will unfold the critical report on US Govt's Supervisory Capital Assessment Program, aka "Stress Test" imposed on 19 major banks. One can expect severe shocks here since last week media reports indicated that Bank of America and Citigroup had capital shortfalls.


• Coming Wednesday market can get wind on private-sector employment from ADP . On Tuesday, the Institute of Supply Management will report its April index for the service sector. On Monday, data on pending home sales for March will be made public. And on all these fronts uncertainty looms large.


• As if all these uncertainties were not enough for the coming week, we will also have Ben Bernanke testifying before Congress and you can wonder your way to high heaven about its outcome.
  

Where does all this leave the retail investor in India? The situation demands that we show some more patience before buying. Those making profit from their portfolio should consider to make their positions lighter. And if you are the brave hearted kind, do stop by to buy some good put options. I shall also be recommending some put options in a subsequent post. However for buying in cash segment I can only recommend that you take a deep breath and hold on to your purse for some more time. Nifty has to at least test 3150 again before any further move up is feasible. In the meantime you can look up the Link List in my blog for some really good reading material. You will not be disappointed.

BUYING OPPORTUNITIES Apr 2009 : TEXTILE SECTOR INDIA

Textile sector has been hard hit like many other sectors. However in the recent pullbacks some of them like Century Textiles have performed reasonably well. This has been done in the absence of any major positive news flow for the sector. Now the grapevine has it that this sector is on the threshold of receiving impetus through some good news. That calls for taking serious note of this sector and that's exactly what we shall do in the succeeding paragraphs.

Alok Industries

From low of 11.55 on 23 Mar 2009 Alok Industries has touched a high of 13.2 on 30 Mar 2009 and closed at 12.5 on 31 Mar 2009. One can safely buy this scrip at the present level of 12.5 since the downside risk is limited and upside reward will be enormous if positive environment makes smart money flow into this scrip. However after buying at 12.5 it will be prudent to book profit once at 15.5. This would enable a retail investor to collect money from the table and be ready to again enter the scrip after it corrects itself.

Arvind Ltd

Arvind Ltd dipped to a low of 10.35 on 06 Mar 2009 and from there has sailed almost effortlessly to a high of 14.2 on 30 Mar 2009. It has performed much better than Alok Industries from its low. However now it should take a breather and cool down to around 12.5. So one should look to buy Arvind Ltd not before 12.5. At the same time one shouldn't be surprised to find this scrip to be trading again at 11 if the sector doesn't receive good news impetus.

Century Textiles

From a low of 145 on 24 Feb 2009, Century Textiles has had a good run up to its high of 225.8 on 31 Mar 2009. For a retail investor there is no point in buying it at the present level. If the scrip corrects from here, as it seems so from various indicators, then buy not before 185.

AFTERMATH OF GLOBAL SLOWDOWN

Have you ever realised that man remains generous and accommodating to his fellow beings only till the time he himself is well-heeled? Basically affluence is the breeding ground for magnanimity and philanthropy. And since nations are guided by men, you can expect similar behaviour from all nations. But what happens when nations themselves are ravaged by depredations of recession and economic collapse? In order to seek answer to this question we need to logically predict the turn of events from the symptoms as visible today.

The first thing that this truly global recession will bring about is trade wars. It still hasn't started in full scale but the writing is on the wall. World Bank has recently announced that 17 countries from G20 have already taken some protectionist measures against foreign competition to survive the recession. World Trade Organisation report has confirmed last week that there has been significant slippage towards protectionism from richest countries.

As the global economic crisis deepens, the shadow of trade war will lengthen. No wonder trade is likely to be main topic at the G20 Meet on 02 Apr 2009 in London. G20 Meet is bound to issue out strong statements against protectionism but will the G20 nations themselves abide by the rule book of WTO in their own countries? Haven't most of them already committed the crime as World Bank and WTO reports suggest? Good intentions alone cannot help nations to work against trade barriers. Local politics and question of survival of politicians will push nations towards trade conflicts. Once trade barriers are in place we shall see replay of scenes from Great Depression of 1930's. It is commonly believed that passage of Smoot-Hawley Tariff in the USA brought the global economy down then. Will it be different this time around? I wonder.

If trade war rages on a global scale, world trade will come to a grinding halt. In fact now itself, without any significant trade conflict, global demand has collapsed. WTO has forecast that global trade, as measured by volume, will decline by 9% this year. Such a devastating fall has not been seen in the last 60 years. And this decline is not attributed to trade conflicts. Just imagine what will happen to global trade once trade wars are declared by nations!!!

Time is running out for world leaders who wish to avoid global catastrophe. Leaders of G20 nations have their last chance on 02 Apr 2009 when they meet to alleviate this global crisis. Whether they establish $100 billion fund to lubricate global trade finance as suggested by World Bank or use other innovative ideas, they must be utterly sincere in implementation and enforcement of the same. Like it or not, brutal truth is that today the world depends on leaders of G20 nations to steer it away from Global Depression.

TAKING STOCK - BUY RECOMMENDATIONS OF FEB/MAR 2009

Archana Debanath
24 Mar 2009

It just occurred to me that in this blog site I had started giving buy recommendations for retail investors in different stocks across various sectors from 25 Feb 2009 onwards. Today it is exactly one month since then, and that calls for some stock taking to evaluate the efficacy of my recommendations. For me it is basically an exercise to know whether I have been able to successfully guide the retail investor in an otherwise baffling market. For me it is judgement day today because as I plead my case before you, it is for you to pass the judgement. We shall evaluate post by post and in each post we shall investigate the performance of all scrips mentioned therein. Lets begin the proceedings!

Indian Markets Feb 2009 : Public Banking Sector - Buying Opportunities
This post was published on 25 Feb 2009 and gave out buying recommendations in five PSU banks as per details given below:-

1. State Bank of India(SBIN). On 25 Feb 2009 SBIN closed at 1037 and I had recommended a buy at 920 for a gain of Rs 80/90. SBIN touched a low of 891.5 on 09 Mar 2009 and recorded a high of 1085 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of nearly 10% in one month in this scrip.
   
   
2. PNB. On 25 Feb 2009 PNB closed at 341.4 and I had recommended a buy at 338 for a gain of Rs 35. PNB touched a low of 286 on 06 Mar 2009 and recorded a high of 382 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of more than 10% in one month in this scrip.
   
   
3. Bank of Baroda. On 25 Feb 2009 Bank of Baroda closed at 216.9 and I had recommended a buy at 198 for a gain of Rs 25/30. Bank of Baroda touched a low of 180.2 on 09 Mar 2009 and recorded a high of 239.4 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of more than 15% in one month in this scrip.
   
   
4. Syndicate Bank. On 25 Feb 2009 Syndicate Bank closed at 51.25 and I had recommended a buy at 47 for booking quick profit. Syndicate Bank touched a low of 37.5 on 12 Mar 2009 and recorded a high of 50.35 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of nearly 7% in one month in this scrip.
   
   
5. IDBI. On 25 Feb 2009 IDBI closed at 49.4 and I had recommended a buy at 40. IDBI touched a low of 39.5 on 12 Mar 2009 and recorded a high of 47.95 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of nearly 20% in one month in this scrip.

Indian Markets Feb 2009 : Pvt Banking Sector - Buying Opportunities
This post was published on 25 Feb 2009 and gave out buying recommendations in five Pvt Sector banks as per details given below:-

1. ICICI Bank. On 25 Feb 2009 ICICI Bank closed at 340.6 and I had recommended a buy at 300 for a gain of Rs 50/60. ICICI Bank touched a low of 252.3 on 06 Mar 2009 and recorded a high of 373.8 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of 20% in one month in this scrip.
   
   
2. HDFC Bank. On 25 Feb 2009 HDFC Bank closed at 864.3 and I had recommended a buy at 800 for a gain of Rs 70/80. HDFC Bank touched a low of 774 on 06 Mar 2009 and recorded a high of 974 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of 10% in one month in this scrip.
   
   
3. Kotak Bank. On 25 Feb 2009 Kotak Bank closed at 253.3 and I had recommended a buy at 225. Kotak Bank touched a low of 208 on 06 Mar 2009 and recorded a high of 290 today i.e. 24 Mar 2009. Going by my recommendations an investor could have locked in a profit of more than 28% in one month in this scrip.
   
   
4. Axis Bank. Recommended buy target not reached.
   
   
5. IndusInd Bank. Recommended buy target not reached.

Indian Markets Mar 2009 : IT Sector - Buying Opportunities
This post was published on 01 Mar 2009 and gave out buying recommendations for five IT companies. However recommended buy targets were not achieved.

Indian Markets Mar 2009 : Auto Sector - Buying Opportunities
This post was published on 02 Mar 2009 and gave out buying recommendations in five Auto companies as per details given below:-

1. Tata Motors. On 02 Mar 2009 Tata Motors closed at 145.6 whereas I had recommended a buy at 145 and a sell at 200 to book profit. Tata Motors touched a low of 135.2 on 06 Mar 2009 and recorded a high of 183.9 on 19 Mar 2009. A retail investor still stands to gain about 12 % from this trade even at the closing price of 162.4 today i.e. 24 Mar 2009.
   
   
2. Maruti. Buy target not reached.
   
   
3. M&M. On 02 Mar 2009 M&M closed at 319.9 while I had recommended a buy at 319 and a sell at 400. M&M touched a low of 306.6 on 06 Mar 2009 and recorded a high of 392.5 today i.e. 24 Mar 2009. A retail investor stands to gain about 17 % from this trade even at the closing price of 374.7 today.
   
   
4. Hero Honda. Buy target not reached.
   
   
5. TVS Motor. On 02 Mar 2009 TVS Motor closed at 19.9 whereas I had recommended a buy at 19.35 and a sell at 25 to book profits. However the scrip touched a low of 18.6 on 03 Mar 2009 and a high of 22.25 on 16 Mar 2009. A retail investor still doesn't stand to lose anything from this trade even at the closing price of 20.15 today i.e. 24 Mar 2009.

Blog posts published on 09 Mar 2009 were on stocks from Infrastructure , Realty and Cement Sectors viz IVRCL Infra, GMR Infra, DLF, Unitech, ACC and Ambuja Cement. Recommended buy targets for all these scrips have not been reached yet.

Finally it is for you to decide whether I have stood by the interest of retail investors or not. Buying levels for 26 scrips were given, out of which 15 scrips have still not reached the recommended buying levels. But all scrips which reached my recommended buying levels have given 10% to 20% profit in one month. No scrip has given any loss which is what satisfies me most because all said, today a retail investor is in no position to withstand the jolt of even one bad trade. Being conservative in buying approach is the name of the game. Hence 'no trade' is much better than a losing trade, since 'no trade' does not snatch away your hard earned money from you.

I have submitted my case before you. Now it is for you to pass the judgement!!

Dow Jones - Expected Movement Mar 2009

Dow Jones is witnessing a very interesting period for traders. It had achieved its bottom target of 6460 in the first week of Mar 2009 and had to move up minimum by 38.2%. That meant a gain of 780 points from the low of 6460. In other words it should have reached minimum up to 7240, which it did. In fact on 18 Mar 2009 it touched the level of 7550. In short Dow has achieved its target and qualifies for a fall. The fall should take Dow back to its lower level of 6460 or thereabouts in a fortnight. However, if the fall is very sharp then downward slide may take Dow to the band between 5950 - 5780.

Expected Nifty Movement

Since other world markets including the Indian markets rose piggy back on American markets, the down hill journey is expected to be no different. Nifty will also witness its share of selling in coming days and will be eager to tumble down to at least 2550 level. The only saving grace will be if it takes some support at 2700 and bounces back again to 2850. But in the short term Nifty is bound to be back trading at 2550 level. Traders can make merry with this kind of situation. But a word of caution for traders : just see to it that Nifty doesn't breach 2500 on a closing basis. If that happens then be prepared for a blood bath!