Sat: 22nd Oct 2011

Markets big biggies have declared their result for quarter July-Sep 2011. Mukesh Ambani lead Reliance Ind reported on Sat a 15.80% yoy growth in net profit for the second quarter of financial year 2011.

Hdfc Ltd reported a 20% increase in Net profit for the quarter ended Sep 2011, aided by the strong growth rate. That means that the demand for home loans has been steady and has not been affected by rising interest rates of high property prices.

Tcs posted slightly lower than expected rise in quarterly net profit to 14.7%.
Better-than-expected results by IT bellwether Infosys (which posted a 11 per cent increase in net profit to touch Rs 1,906 crore in Q2 FY12), overshadowed disappointing IIP numbers and took the Indian benchmark indices surge last week.

China GDP growth eased slightly in the third quartet to its slowest pace since the second quarter of 2009. Gross domestic product rose 9.1 percent in the third quarter from a year ago, moderating from the second quarter's 9.5 percent. It was slightly below market forecasts for a 9.2 percent expansion. China's inflation, albeit easing, eased to 6.1 percent in September, close to near three-year highs of 6.5 percent in July and well over Beijing's 2011 target of 4 percent.

France is among euro-region sovereigns likely to be downgraded in a stressed economic scenario, according to Standard & Poor's. The sovereign ratings of Spain, Italy, Ireland and Portugal would also be reduced by another one or two levels in either of New York-based S&P's two stress scenarios, the ratings firm said in a report dated today. These assume low economic growth and a double-dip recession in the first set of circumstances, and add an interest-rate shock to the recession in the second.

Rupee falls to 50 against US dollar for the first time since May 2009.

Indices shrink nearly 1.75% in a week. Tcs tanked nearly 8%, Hcl tech 6%, Rel Infra 6.2%, Lnt, Hindalco & Sesagoa 6%. Cairn fell 14% and Jain irrigation 12%. On the other side Hdfc bk gained 3%, Maruti despite the strike gained 6%, Sbi 5%, Axis BK 3%, Coal India 2%. On back of the F1 circuit for the first time in India, JP Infra is being in the race. It gained almost 26% in a single week. Moser baer closed up 24%. Arshiya Intl gained 18% in the small cap and the mid cap group. Raymond was up 15%, Patni 14%, Kpit Cummins 11% & Hero Moto gained 3%.

Technically our markets are trading in a broad range. Nifty is trading in a broad range of 5200 and 4750 levels. If we look at a broader range than the Nifty is trading in a island pattern with the top of 5200 and low of 4750 levels. Either ways breakout will only decide the further path for the Nifty. In the weekly chart Nifty seems to be on the verge of breakout on the upside. MACD may give positive divergence within some days.

Markets have been very stock specific now a days. Arbitragers and Speculators gets on the stock which are newly listed or whose quarterly results a re out. There is not much to talk about the Indian markets as off now, as we are mostly following the international markets.

Sun: 09th Oct 2011

Italy’s rating was cut by Moody’s Investors service for the first time in almost two decades. Its been lowered from A2 to Aa2 with a negative outlook. They also said that all the European countries with ratings below the top mark AAA may face downgrades as many euro-area governments are facing “ a profound loss “ in investor confidence as policy makers have failed to stop debt-crisis contagion.

Moody’s also downgraded the SBI bank financial strength rating to D+ from C-. As a result of the lower BCA, the Hybrid debt rating was downgraded to Ba3(hyb) from Ba2(hyb). On Wednesday all the banks were the worst effected and so as the market.

Rupee dropped below 49 vs $ after data showed the current account deficit widened and concerns about the global economic outlook curbed demand for emerging market assets. Overseas investors trimmed their holdings of Indian equities by $626 million in the week.

Food Inflation index rose to 9.41% and the fuel price index climbed 14.69% in the year to Sep 24.

Markets continued with its volatility. With 4 trading session in a week. Indices closed down 1-1.5% with a sharp bounce back on the last day of the trading session. Sensex bounced back 440 points and Nifty 137 points.

Last week I had mentioned about the trendline, which on break will surely create panic in the markets. Nifty on Monday opened with a deep gap down. The panic selling continued for 3 continuous days. FII’s sold nearly Rs.3KCr in the Indian markets within these 3 days. Nifty once again made a low of 4728 and bounced back on the last trading session and closed at 4888. The last time the same scenario was seen when the Nifty made a low of 4720 on 26^th Aug 2011, and from there onwards Nifty once again changed its trend and recovered sharply to make a high of 5169 in just few session. The same situation is not promised this time. As this is the second time it has come to 4720 levels. Break below this will surely take the nifty to 4600 levels.

If the nifty make a double bottom and bounces back then rally should stop at 4911-4970 levels. As I have mentioned in my last article also that the Indian markets are bound to see high volatility. Last time we had discussed about the MACD which was suppose to give negative divergence. And that did happen this week.

FII’s continued selling. They sold stocks worth Rs.3500Cr from 30^th Sep to 05^th Sep. DII’s bought stocks worth Rs.1600cr.

Last weeks call

Sell Adani Ent close below 523 SL 531. Made a low of 447.

Buy Asian paint above 3170. SL 3154. Did not trigger the price

Sell Axisbank below 1030 SL 1039. Made a low of 945.

Sell Hero corp below 1940 SL 1946. Made a low of 1904.

Sell Hdil below 95 SL 97. made a low of 89.

Sell IDBI with SL of 103.75. Made a low of 94.45.

Call for the week

Buy Asian paint above 3170

Buy JP Ass above 75 Sl 72.50

Don’t worry we are not going anywhere.

With inflation so high, no stopping on banks increasing interest rates, unstoppable scams, instability in Indian governments, depreciating rupee, downgrades by most of the FII’s, how we can think the Indian markets are going to out perform the Global markets. We are not going to gain from this rally. Either I should say that we are not going to see any major uptrend from here. Year 2011 was one of the most highly volatile years; next year seems to be more volatile than ever.

US will take a lot of time to recover from recession, Europe sitting on the pile of debts, many countries have been declared bankrupt. In this scenario how can we expect the Indian markets to attract FII inflows? In the quarter ended Sep, Indian markets lost almost 12-15%.

For the week Indian equities closed down in red. Nifty and Sensex both closed down in the range of 1.5-2.0%. IT index lost 5.7% and metal 4.5%. In the gainers were Ranbaxy 9%, Dlf 11%, Infy 8%, JP Ass 19%, Educomp 17%, Jindal Saw 14%, Tata Motors 6.5%, Hcl 6%, Ambuja Cement 12.5%, Financial tech 11%. On the loosers side ADAG lead the pack. Relcap lost 22%, Relinfra 13%, Rcom10%. Ster closed down by 8%, Axis bank 7%, IFCI 19%, IRB 12%.Pantaloon was one of the major stock which lost heavily, it closed down 32%. Opto circuit and Jubilant lost 17% each. Abb and Lnt lost 7-6%.

Technically speaking we had one of the worst trading week this year. The markets were highly volatile. Last weeks close suggested that we might see some bounce back as a perfect Doji pattern was made. But the selling mode continued on the first day of the week also but the same have been absorbed on the very next day when the markets recovered. Every next day of opposite to the previous days close. Nifty found it difficult to close above its 20DMA. And finally on the last day of the trading week close below its 23.60% retracement levels. If nifty closes below the trendline then we may see another round of correction which may take the Nifty below 4800 levels also. MACD is almost on the verge of giving negative divergence. The three parallel indicates that if nifty pulls back then it has to trade in that range. Otherwise the fall could be seen in the Indian markets.

Call for the week

Sell Adani Ent close below 523 SL 531.

Buy Asian paint above 3170. SL 3154.

Sell Axisbank below 1030 SL 1039.

Sell Hero corp below 1940 SL 1946.

Sell Hdil below 95 SL 97.

Sell IDBI with SL of 103.75