Market Outlook 13th Oct 2008

Rocking last market outlook Nifty target almost attained. UNITECH, EDUCOMP and MOSERBEAR shorts rocked. 3600 put given on SMS(JOIN by Sending JOIN WarrenStocks to 99801 99801) became multibagger .

Remember a number of persons were pridicting the fall but but but …. When is Important

Global stock markets crashed this week on fears the ongoing financial crisis will lead to a deep and prolonged recession. Most bourses lost between 15-20% of their value as the Dow finished at levels last seen in 2003. At the end of Friday’s session, the Dow stood at 8451 while the S&P closed at 899. The New York indices bounced off key support levels (8000/840) during Friday’s trading and thus prevented a full-blown market panic. While there was no single day decline that warranted the term "crash", it’s clear that these markets capitulated this week.

Markets will now attempt to form some kind of bottom over the coming weeks through a process of rally, failed rally, and retesting of the the Oct 10 intraday lows. This week looks mixed at best as the early part of the week may see more downside

As predicted, India’s markets got clobbered last week as the Sensex shed 16% and Nifty posted a 14% loss as the credit freeze went global. The Sensex closed at 10,527 while the Nifty ended Friday at 3279. I’m not optimistic about prospects this week since Mercury’s direct station occurs in fairly close tense aspect with the NSE’s natal Saturn. This will make rallies fizzle fairly quickly and give more courage to those who are shorting the market. I think some intraday trades below 10k/3100 is quite possible although I do not expect any kind of massive decline here. By Friday, we’ll probably be modest lower from current levels.

NIFTY levels : above 3138 it can see 3540-3811-3927 below that 2633 sure

Stocks For Trading:

  • Hindalco

  • Sesa Goa

  • Tisco

  • ICICIBANK – One can GO LONG with SL 340

  • SBI

Investment Pick-Yes even in these times because these times are best for Investment:—>>Spicejet(14 rs) and DCB(28 rs)(buy from profits made in 3600 put and forget you will mint money)

 

 

We are paying for rich nations’ mistake: FM

 

Warning that developing countries “will suffer for no fault of theirs” from the recession visible in the US and the West, India on Sunday asked the World Bank to play a bigger role to ensure financial resources for emerging economies.
    “The crisis will necessarily impact upon the global availability of the financial resources for development…A global recession will sharply contract the demand for exports of many developing countries, adversely affecting the growth prospects. The developing countries would suffer for no faults of theirs,” finance minister
P Chidambaram said in a statement. “They (developing economies) did not cause the contagion. Many are not equipped to face the consequences. We need a global effort, particularly in countries with developed capital markets, to review financial oversight and regulatory mechanisms,” he said. Arguing that sufficient attention has not been paid at this year’s meeting towards millennium development goals, Chidambaram said, the countries were most vulnerable to the food and fuel price increase are those who would most likely miss the target. — PTI 

Great Indian bailout planned for markets

Great Indian bailout planned for markets  

Cheaper Credit, More Funds For AAA Companies

With liquidity becoming the immediate priority of the government, it is looking at a slew of measures to make more funds available to the credit market and there are strong indications that banks may be nudged to lend to companies with good credit track records.
    Official sources told STOI that a further cut in the cash reserve ratio (CRR), a reduction in interest rates, a ‘ban’ on reverse repo are some of the options being looked at to augment liquidity, while a ban on short selling is being considered as a way of curbing bearish sentiments in the markets.
    It is also learnt that a proposal to dilute mark-to-market norms for banks is being seriously considered. Such a step, which has already been taken in the US, essentially allows banks to pretend that their assets have the same value at which they were bought rather than the current market value. Thus, they are able to avoid providing for the losses that would accrue if they actually valued them at current levels.
    In addition to these measures, banks might be informally told that they should lend to corporates with AAA ratings. This is because of the fear that restoring liquidity to banks will serve little purpose if they continue to remain wary of lending.
    In the aftermath of the global financial meltdown, banks and financial institutions have turned ultra-conservative in lending. “What purpose would it serve if the banks remain tight-fisted,’’ said a bank functionary monitoring the tight credit situation.

    The cut in CRR would effectively mean that banks need to maintain a smaller proportion of their reserves with the RBI, thus releasing more funds for them to lend. Similarly, the central bank foregoing the option of reverse repo would mean that it will not soak up money from the banks by borrowings, which again would leave them with more loanable funds.
    While these two measures are aimed at boosting liquidity, the proposal to cut interest rates is aimed at making credit available at reasonable rates for corporates. RBI had successively hiked interest rates as inflation rose and though price rise remains an important concern for the government with elections looming, there is now a strong view in the government to focus on restoring liquidity right now.
    The government also feels the need to address the volatility in markets. Hence, the idea of banning short selling. Short selling, in which investors sell shares without possessing them, is already banned in the US, Italy and China to check the market downslide.

 ON THE ANVIL

  • Banks to be goaded to lend to AAA-rated companies so that their expansion plans don’t get stymied
  • RBI to stop using reverse repo to mop up funds from banking system
  • CRR could be cut further to add to banks’ liquidity
  • Interest rates might be reduced to make credit cheaper
  • Mark-to-market norms might be diluted to help banks avoid loss provisioning
  • Short-selling in stock market could be banned to curb bearish sentiments

Rich nations roll out five-point rescue plan

The United States and six of the world’s other richest nations agreed on Friday on a five-point plan to rescue the financial industry.
    The G-7 nations agreed that the enormity of the crisis called for a global response, US President George W Bush said after the talks.
    He also warned individual nations against taking action that could hurt others. It has been a disastrous week for markets around the world, a week that has seen trillions wiped off the value of shares.
    The plan, among other suggestions, asks nations to take decisive action and use all available tools to prevent “important’’ institutions from failing; unfreeze credit and money markets and ensure that banks and other institutions have broad access to liquidity and funding; and ensure that banks can raise enough capital from public and private sources to re-establish confidence and kickstart lending to individuals and businesses.
    Treasury officials said the US might embark on direct injection of capital into banks in the next two weeks. But Bush cautioned that results would take time. “The benefits will not be realised overnight,’’ he said.
    The discussions focused on the growing likelihood that the US and major European countries would have to partially nationalise their banking systems. Such a step would have been unlikely in many countries even a week ago, but the swiftness of events is forcing officials to throw out decades of conventional wisdom about how free markets should operate.

Market Outlook 08 Oct 2008

We are in Recession and we need to accept that, its not a normal bear phase its recession but remember one point always – rallies of a bear market are far more intense than normal and can eat up all yours Stop Losses of shorts the same as corrections of a bull market
  • Nifty Resistance At 3630 next 3818 can come, Support At 3536 Next target 3133

  • Short Unitech sl 112 (discloser: our paid members already shorted at higher levels) target 88-82

  • Short Educomp target 2200 short term

  • Moserbaer can crash 30-40% in short term

Last Session overview 

Today’s movement in the Nifty was not totally unexpected. It was to be expected that the P-notes issue being eased and the CRR slash would lend a helping hand to the Nifty, which did happen because the Nifty opened with an upward gap of about 125 points. But the overall sentiment being negative, it was also to be expected that the market would eventually lose its way and come down, and that also did happen because at one point during the day the Nifty was down by as much as 50 points. But a final surge that lasted about an hour and a half took the Nifty back up to make it close with a gain of 4 points, thus making a doji for the day. (A doji, as explained in all previous newsletters, is a day where the opening price and the closing price is the same or is very close to each other. Such a candle has a non existent body but has a lower shadow and an upper shadow, the exception being gravestone dojis and dragonfly dojis where one of the shadows is also missing.) The BSE Sensex, not having the luxury of having 50 stocks in its composition and not having gainers like National Aluminium, Reliance Power, SAIL, Tata Communications and Zee Entertainment, closed about 106 points in the red.

World markets continue to be negative. Asian markets remained weak, European markets were, more or less, flat but the American and Latin American markets continue to trouble us. The Dow Jones, at the time of writing, was trading 290 points in the red while the Nasdaq Composite was almost 75 points down. Crude oil was trading at almost the same levels – $88 a barrel while the rupee versus the dollar is now touching almost 48. Gold continued to remain good – after a jump of $33 an ounce yesterday, it has gained another $24 today, obviously as demand for a safe haven increased and on speculation that the central banks may slash interest rates.