Union Budget saves the Day

Markets cheers Union Budget 2010. Positive news from the Finance Minister helped the markets rally. Pranab Mukherjee gave positives views on reducing Fiscal deficit and Inflation. Petroleum Minister Murli Deora announced hike in petrol and diesel prices too. Rs.2.67/ltr & Rs.2.58/ltr resp have been increased. Fiscal Deficit will be reduced slowly.

For the Aam Adami Tax slab have been in favour. For income upto Rs 1.60 lakh, there will be no tax while there will be 10% tad for income between Rs 1.60 lakh to Rs 5 lakh; 20% tax for income between Rs 5 lakh to Rs 8 lakh and for income above Rs 8 lakh, there will be tax of 30%.

Global markets corrected for most of the week. Jobless claim in US continue to grow. Analyst claimed that the claim will decline this week, but the outcome was totally different. From the 4.74 lacs in the last week, it has roused to 4.96 lacs. Euro nation continued to face cash cruch. Euro against Rupee have been declining since last few days, which shall have some negative impact on the IT firms which derive most of the revenues from the Euro countries.

Sharp rally in the Banking, Auto and Metals lead the surge in the market. Increase in excise duty by 2% across the board on expected lines. Stocks have already factored in a 2% increase.

Some of the Key highlights of the Budget 2010:

* Increase in excise duty by 2% across the board on expected lines. Stocks have already factored in a 2% increase.

* GST and DTC implementation by April 2011

* MAT increased to 18% vs 15%

* RBI mulling banking license for private & NBFC players.

* Excise on Cigars, Cigarettes to go up.

* Service Tax retained at 10%.

* Surcharge for cos reduced from 10% to 7.5%.

* Excise duty on CFL halved to 4%
* Central Excise duty on LED lights cut to 4%

* Increase Excise duty on all non smoking Tobacco

* Defence spending at Rs 1.47 lakh Cr

* Rs 61000 cr for Rural Infra Development

All together the Budget 2010 was good. Better then the expectation in the market. There were both negatives and positives in the budget. Real Estate stocks crashed in the late hours due to the additional tax levied on the construction.

Rail Budget announced this week also was pretty good. Vision 2020, some of the announcement were as
*Setting up an aggressive target of 1000 km lines next year and 25000 kms in next 10 yrs.

* More money to improve passenger amenities

* 52 long distance express trains

* National high speed rail Authority proposed to plan high speed rail corridor

* Double decker coaches to be introduced in two trains each from Delhi and Kolkata.

*

Rolls for the month were pretty low. Nifty rollover declined to 68% to March series. The rolls were lower compared to last month. Markets for the most the week remained flat. On back of better than expected Budget markets rallied. Sensex rallied almost 400 points on the last day of the week but closed just 175 points at 16429. Nifty triggered the 5000 points levels but failed to close above the same. Nifty closed up 62 points at 4922. Decisive breakout above the 5015 levels will only take the Nifty to the next level of 5200 levels, till that time markets will remain volatile. Select stock movement will be there.

Based on the Budget 2010 some stocks which looks good are.

SBI, UCO bank, Central Bank of India, Tata Motors, Idfc, Ifci, Rel capital, Rel Power, Adani Power, Moser Baer, XL tele, Educomp, Everon, Suzlon, Opto Circuit, Titan,

Yesterdays gain in the markets lead most of the markets men to change their view to Bullish trend, but Bears have proved that this time they wont leave it so early. On every rise they tend to short the markets. Creating new Short positions as soon as the Nifty approached 4800 mark. After 4 months of hard sell, Nifty tanked below the 4800 levels. Markets opened in green. But within now time sinked in the red. Markets were very volatile trought out the day. Nifty in the intraday for twice tried to stabalise above the 4800 mark, but the Bears had their days. Nifty closed down 35 points at 4757. Sensex tanked 120 points to close at 15922.

Markets opened up marginally lower, but within an hours time bounced back. For most of the day markets remained in the positive zone. Nifty this time gave a breakout above the 4800 mark, but failed to close above the same, as the volumes were dry in the mkt as compared to yesterday. Nifty closed with positive gains up 32.25 points at 4792.65. Sensex rosed above 16000 mark. Sensex gained more than 100 points to close 16042. Short covering in the IT stocks were seen. But Nifty once again faced resistance at 4800 levels.
Technically speaking the last 3 days trading pattern in the Nifty chart has been within the Intrady day that was made on the 05th Feb 2010, when the markets closed dowb below 4800 mark after almost 3 months. Nifty yesterday almost took support at its 200DMA. Cross over of 4800 mark with decisive volumes have to be there, for the markets to trend upside.

After the huge sell off last Thrusday & Friday, markets bounced back marginally. With an extra day to the trade on Saturday, markets did not showed any improvement. Today on the start of the week, markets opened strong, but slide down nearly 200 points. Nifty slide down below 4700 levels. Post lunch markets did pull back. From the low of nearly 200 points Sensex rallied covering all its lost points and within few minutes it was up by almost 100 points. But Nifty failed to break its strong resistance level at 4800 levels. In the early hours of the trade, Nifty futures was trading at discount, but post lunch session, short covering lead Nifty future trade at a premium to Nifty spot. In the last 4 months Nifty had good strong support at 4800 levels. Now for the first time Nifty fell below 4800 mark. It seems so that 4800 levels to crossover will be certainly difficult. 2 days consecutive close above the same will decide the trend. Till that time, markets will surely be under pressure.

Nifty intrad day chart had made a DOJI pattern at the lower end. Tomorrow's pattern will decide the trend. Either side movement can be there. As the Nifty has recovered from its Oversold zone, we might some pull back. As mentioned in my earlier blog also that Nifty below 4700 levels, will slide down to 4666 levels. Nifty made a low of 4675, almost at the levels given. Nifty will continue to have support at 4666 levels. Nifty is almost near to its 200DMA i.e 4657.

Blood spill all over the Street

Yes, finally the Indian markets have seen some healthy correction. It was a long wait for the Bear’s to get in to the controlling power. Markets men which were really bullish about the markets in the month of Jan 2010, might have really lost money, big time. But the readers of Informed Investors and this column definitely have been saved from this carnage. This writer from the start of this Year had been continuously informing the markets are heavy and in the near future we can witness some serious correction.

It was also informed in the past the markets are trading at a very high PE around 24, which is almost at the same when the markets were at its all time high. And its too risky to trade at these levels. Since then the markets are falling the markets now are trading at a PE of nearly 20.

Global markets too corrected heavily in the current week. Things were looking good till mid of Jan; however the lending restrictions in China sparked worries about the Global economic recovery, knocking down equity markets around the world. Besides merging markets, developed markets like US & Europe were down. US markets fell on back of declining in retail sales, disappointment in Corporate Earnings, rise in jobless data & Obama’s proposed new restrictions on banks. Jobless data in Europe is also on rise. Housing market has not improved much and is exerting a negative impact on the wealth of households. Furthermore, high debt-servicing to disposable income ratios rule out the possibility of leveraged consumption, especially in the US. All these suggest that consumer spend in developed countries is likely to remain weak.

Last week CRR have been increased, some more and same kind of modification in the credit policy will be done in near future. Budgeting expectation this year are not extraordinary.

Technically speaking Nifty had broken down below its support level of 4800 levels. We have seen that the Nifty in the month of Nov 2009 topped out at 5185 levels and starting correcting to make a low of 4806, but bounced back again to make double top at 5185 levels again. But pulled back again to make a high of 5300 mark. Which is an again big resistance level (marked in the chart). This was also mentioned way back before everyone. Markets set on to the sell mode from there onwards. In the last week, Nifty fell down to make a low below 4800 level but bounced back the very next day. On Wednesday, when the Nifty bounced back to make a high of 4949. And closed at 4931.85, that till also I had mentioned in my blog that the Nifty will not sustain at the high levels.

Finally the Nifty is down below the 4800 mark. Nifty for the week closed at 4713 after making an intraday low of 4692. Nifty opened with the gap below the trend line. This trendline I had drawn long time back. (Kindly check my previous articles also). www.technicalsvishaldangaich.blogspot.com

In the last article I had mentioned that the Nifty will bounce back but will not sustain. Nifty from 4860 levels bounced back to face resistance 4950 levels. From then the markets are on the sell mode. Nifty will continue to fall to find support at 4660-4608 levels. Nifty will find stiff resistance at 4800 levels. Check out for the MACD chart pattern. RSI is almost near the oversold zone.

FII’s continue to press their sell button. In last 3 weeks FII’s sold stocks Net worth Rs.11,500Cr.

Last weeks’ call

BUY HDFC with SL of 2306. made a high of 2526

Short HUL Below 251. with Sl of 255 made a low of 227.

This week’s call

Sell ABB below 778. SL of 790.

Sell Baja Auto below 1670. SL of 1680.

Sell Bharti Airtel below 300. SL of

Sell Carin below 252.

Short DLF with SL of 312.

One more time, it proved to be unlucky.

Yeah, markets lost all almost all its yesterdays gain. Even after such a splendid recovery seen a day before, markets could sustain at the high levels. Markets men again pressed the Panic button as soon as the Nifty nearly reached 4950 levels. As mentioned in the earlier blog ( even after yesterdays 300 points rally) that the Nifty will face super resistance power at 4950 levels. This time Bulls seems to be in no mode to press the BUY button. This time its seems there will be no stoppage for the Indian markets. This time the Bears may finally lead the Nifty fall below the 4800 mark, which considered to be a good support.
Nifty will fall down to 4700-4660 levels...
RSI in the recent past have broken all its support levels. MACD in the past have already given the negative divergence and the same was also informed to the readers of this blog.

Nifty closed below its 100 DMA on 27th Jan 2010. Nifty for the last 4 days have taken support at 4800 levels. Nifty on Jan 29 made a low of 4766 but closed at 4882 as it was trading below its lower Bollinger line. Yesterday Nifty made a high of 4951. Nifty slipped down after facing resistance at 4950 levels and closed down nearly 100 points at 4830. Nifty made a low of 4814. Since the last 4 days Nifty had taken support at the trendline i.e. 4800.
Markets bounced back sharply after witnessing some serious correction yesterday on back of strong Global markets. Nifty today made a high of 4949 but failed to close above the same. Nifty will continue to face resistance at the same. Close above the same will rake the Nifty to 5008-5035 levels, but that looks to be some what difficult. Selling pressure for some time has been cooled down, but may again attract at higher levels. 4800-4950 levels have to be seen. If Nifty again starts falling then this time it will surely break the 4800 levels.

Once again 4800 in the Nifty seems to have given a good support. Nifty of the past 3 days have been trading near the 400 mark. On 28 the Jan Nifty closed in positive zone, breaking the downtrend, with marginal gains. In the Chart we can clearly see that the DOJI pattern has been made on the first day. Then again at the lower levels, a small HAMMER like pattern is been made on the 2 consecutive days. Today Nifty closed at 4915 levels. Nifty will continue to face resistance at 4940 levels. Up move above the same will be decided, when the Nifty close above the same.

As mentioned in my last article that the markets will bounce back in this week, as it was trading below the lower Bollinger band and the RSI was also below the oversold zone.

BUY Apollo Tyre above 58

Short Ambuja Cement below 100.50

BUY Bharat FOrge above 278

Sell Cairn with tgt of 254

Short REl Cap below

Markets closed Negative with record volumes on expiry date

Last of the expiry date Markets were amused with the volumes. Volumes in the Markets were at its peak making a record in the history of the Indian markets. Total Volumes crossed Rs1.92L Crs. F&O contributed Rs.1.66L Crs.

In just 3 trading days in the week and the 1 more left, markets witnessed severe volatility. Nifty lost nearly 3.5% wow basis. As mentioned in my last article that we might see some more correction and close below 5000 levels will take the Nifty to the next level of 4944-4850 levels. Nifty made a low of 4825 and closed at 4868. Selling was seen across the board as all the sectoral indices ended lower. The top losers were the BSE Realty, Metal, Auto and Bankex indices. Bear waited for this for a long time and finally its here.

Global Markets too corrected for most in the week. US markets corrected on the week housing sale numbers and rising unemployment numbers. Obama has indicated that he will create more jobs to control the unemployment rate. Obama has also indicated US companies to restrict exposure to the Chinese markets. Last week the Chinese Government increased the Interest rate. Indian Economy is too showing strong GDP & IIP growth. Inflation still remains the main cause for the Indian Government. Still the there is no increase in the interest rate. According to me there should be increase in Interest rate and there can be steps taken ahead for the removal of stimulus package. But I am not sure when that will come, but surely it will be done in near future.

A fundamental of the Country and the Company is very much important for any stock market to run successfully. Many seems to be turning too Bearish on the Indian markets. Fundamentals of any companies are the first and the foremost thing that has to be seen, but technicals give the proper buying and the Selling price of the particular script. The reason behind writing about this is, Indian markets are not fundamentally week now. GDP & the IIP growth are accelerating. Indian markets have bounced back sharply in the last 1 year. I had talked about PE at which the Indian markets were trading. Few articles I had clearly mentioned that the Nifty and the Sensex is trading at a PE of almost 24, which was as similar to the PE at the peak of the markets. So in the short time the Markets have triggered the Sell buttons, just because the Indian stock markets seems to be slightly over priced.

Nifty for the first time after the Month of November closed below the lower band of the Bollinger Bands. Whenever this is down, we can expect some pull back rally. Nifty on 28th Jan 2010 closed marginally higher at 4868 levels after making a high of 4929. In the past also it has been seen that the 4800 levels acts as a good resistance and support. Nifty may find the same support this time also. Nifty close below the same will take the Nifty to the next level to 4600 levels. Nifty closed the 100DMA. Nifty may bounce back to face resistance at 4954-5000 levels. RSI has fallen down to the oversold zone. Nifty will find support at the trendline. A clear Head and Shoulder pattern had been formed in the RSI pattern in the last week that too triggered the sell off. Markets might bounce back in the coming week, but no major position is advice.

On the last day of the week Markets opened by strong even after the carnage seen a day before. But slipped in the red zone in the post lunch session. Wewap selling in the end too lead some volatility in the market. Huge short were rolls in the current month with record volumes in the history of Indian markets.

In just 2 days of the week FII remained Net seller to the tune of Rs3200 Crs. But DII were buyers of Rs.2190Crs.

Last week calls Update
Short ICICI Bank below 834 SL 840. Low of 780 was made
Short PNB below 900 SL 915. Low of 850 was made
BUY Tech mahindra above 1137 SL 1125. Could not trigger the buy price of 1137.

This week’s call
Buy DLF above 3 with SL of 317.
BUY HDFC with SL of 2306.
Short HUL Below 251. with Sl of 255.