Nifty Heading towards 4450.

The Central bank does not have enough resource to halt the depreciating Rupee. This could be a major blow to the Oil companies. Oil importers rushed to buy US dollars to keep their plants running. It is estimated that they require more than $200 million a day. The currency has now depreciated almost 17% since Jan this year and is among the worst performing currencies. On Tuesday Rupee made a low of 52.73.

There’s more pain in store for the rate cyclical, given that the interest rate cycle is not turning around anytime soon. But within the rate sensitive sectors, real estate is probably the worst hit. In the second quarter, 14 listed real estate companies posted a mere 3.1 per cent year-on-year growth in revenues but a 22.7 per cent fall in profits, says Edelweiss Financial Services. Rising input costs and interest burden are the main culprits.

Given that the chances of interest rates, margin pressures and debt levels are unlikely to abate in the second half of this year, most analysts continue to remain underweight on the sector. Only companies with strong balance sheets and exposure to high visibility rental assets are expected to do well.

The Total net Debt of atleast 11 real estate is estimated at Rs.40k Cr. FCCB issued and the pledged shares by the companies which are due in 2012 is estimated more that Rs1.1Lac Cr. Now that’s too much… Companies in power, IT, Infra and Pharma sectors have seen higher levels of pledging. More than 15 companies have pledged 90% plus of their holding. The higher the pledging the higher the risk of loosing the control on the company. More that 100 companies have pledged 50% plus of their holdings. As per the reports companies like Ganesh Benzoplast, XL Energy, Guj Pipavav, Raj Oil, Tata Coffee, Spentex Ind are some of the companies who have pledged their entire stake to raise funds. Companies like Spice Jet, GUj Nre Coke, United Spirits, Gati, Raj Oil, Birla Power Solutions, Western India Shipyard, Gati, Gayatri Projects, GTL, Koutons and Edserv are some of the companies where its promoter group has pledged 85-99% of their equity. And almost all these stocks have fallen in the range of 5-50% since the beginning of Nov. Next will be the FCCB redemption which is lined up in the coming year.

Rupee had fallen to its all time high.

Portugal’s credit rating was downgraded to junk status this week. S&P informed that Japan’s Finances are getting worse and worse every day, every second.

Technically speaking, Indian markets are in a bad shape. It is clearly seen in the chart that the Nifty had made a top at the Trendline 1 in last year Nov, then in Dec, after Mar 2011, June 2011 and the fallen apart. Till the time the above trendline is not broken, markets are not going to have any upward movement. Since last 2-3 months, I have constantly be telling about the negative sentiments in the India. FII have turned Net sellers, Banks have been downgraded, Real Estate companies are unable to push up the sales etc etc…

In my last few articles, I have continuously talking about the 4750-4800 levels and its importance and strength. But now it seems so the all I said talked was real. Now the Nifty may plunge to 4450-4400 levels. Break Below that can take the Nifty further. But as of now, we will not discuss about the same, but that does not mean the below levels will not come. Many of them did not believe about the present levels also but they have been achieved.

If we take the Fibonacci retracement levels from the high of 5743(7^th July 11) and a low of 4720(26^th Aug 11) levels. But now the close of 4710 is below 4720 levels. Nifty have taken major support at Trend line 2 also but the same have been broken this time. Now the support comes at 4500 levels. On Wednesday Nifty close below the 4720 levels but bounced back to close above the same. Fridays close is below the 4720 levels. In my last article also I had mentioned that the Nifty can break below 4800 levels and close lower.

We can see a clear breakdown in the Nifty chart. Nifty may break down till 4450 levels or even further, as the only support is now at 4450 levels.

Almost there are 16000 levels.

Rupee made a new low this week against Dollar. Rupee hit a 32 month low and its almost near its all time low. RBI has indicated that it will be difficult to boost Rupee at this juncture.

Rising Fuel price have made a dent in the Airlines companies in India. Air India has been in trouble since a long time and has been surviving on the government funds. Now King Fisher Airlines have also pulled up his hands, and now seeking government intervention.

Fuel Prices have cooled off for the first time since Jan 2009 and also for the first time since the automobile fuel was decontrolled in June Last year. The price has been cut by Rs.2+. The Oil Marketing companies informed that the cut was possible only after the softening of the International crude prices.

In the last three months Indian markets lost the most over the last 7 sessions. The market sentiment also dented by the Euro zone debt crisis and its impact on the global economy and the financial system.

FII have bought equities worth about $663 million so far this year sharply below from $29Bn they invested in 2010.

Investors believe that the Indian growth will be well below the 8.5% this year.

Indian markets have fallen like a pack of cards. Nifty and Sensex lost slightly above 5% in a single week. Midcap Index lost 7% and Small Cap 9%, Reality 11%, Capital Goods 10%, Metal Index 8%, Bankex lost 5%, Oil & Gas 10%, Auto 7%, & IT 2%

There is endless number of stocks which lost more than 5%. JP Associates, Bhel, Relcap, Mnm, Sail, Rcom, Sesagoa, Siemens, Jsw Energy, Arvin, Crompton, Maruti, RPower, Relinace Infra, & Dlf lost in the range of 10-20% in a single week. Some of the midcap stocks have fallen down so much that they are now counted in the small cap. Kwality Dairy fell 49%, Suajan 36%.

Margin call pressure has really taken a toll on some of the stocks. Pipavav Doc lost 34%. The companies pledged shares amounts to 95%. There was rumours floating in the market that there were selling in the pledged shares and some naked shorts created by some brokers. Educomp lost 23%. Suzlon lost 31% and 2.5% reduction in the promoters stake, Adani Ent lost 27%. IFCI 24%, Ivrcl 21. Redemption of FCCBs of many companies are lined up in 2012. The sharp correction in the share price of the stock prices has made it hard for the companies to convert the FCCBs into shares.

Most of the frontline stocks hit their 52 week low. Stocks like Tata Steel, Sesagoa, Axis Bank, Maruti, Hindalco made their new 52 week low.

After a worst ever week for KFA last week, It gained more than 20% this week. FDI involment in the retail sector was good news for the stocks like Pantaloon. Amar raja batteries after its results have gained 6%. Cipla gained 9% while Patni after its delisting news closed up with a gain of 23%.

Nifty made a low of 4837. In the past also we have seen Nifty taking a support at 4800 levels and turned back. But according to me this time the 4800 levels could be broken and could go beyond the recent low also.

Sun 13th Nov: Is the day really Auspicious???

Astrologers betting big on this date. 11.11.11 is a date which is seen once in a century. Bets from the release of movies to Indian Actress Aishwarya Rai Bachan’s delivery have been played on this date. But what about the Indian equity investors. How did they feel? How many of them were lucky on the brousers.

But this week was surely bad for most of the Investors as the Indian rupee falling past 50 per dollar, making it more difficult for the country like Indian which have huge and huge of imports. Rupee hit a low of Rs.50.35 on Friday and the carnage can continue past Rs.51 if RBI does not intervene in the Forex Market and the Eurozone issues does not resolve. Oil refineries companies feel more heat, as their recovery on Oil is not improving and on top of that Rupee depreciating. Banking stocks have been trashed after the Moody’s downgrade. Long commodity traders have surely had a good time when Gold neared its all time high of Rs.29000.

Inflation numbers not ready to come down even after increasing in the lending rates. To add to the worst IIP growth for September Month came at 1.9% vs 4.1% in Aug.

Yields on two year and ten year Italian bonds rose above 7%.With the debt burden of about E1.9 trillion, its seems, Italy is considered too difficult to bail out. In case of default, Europe will surely come to a stop and slip into recession. World is in a greater danger than it was in 2000 or 2008. The debt of US and European countries are ever growing. Printing more and more money is not going to solve the problem. It will add to the issue of Inflation which will sky rocket and would get worse and worse.

Smaller trading week seems to have kept the traders out of the market. Last week also markets corrected 1.5% and the carnage continued this week too. Nifty and Sensex lost another 2.5% this week. Few days back most of the operators or traders had turned bullish as Nifty neared 5400 levels. But the bears again got control of the markets. There was no positive trigger for the markets to surge higher. Small cap and Midcap indices closed down more than 3%.

Most of the Indices closed in red. Bank Nifty tumbled down 6%, Power sector corrected 2.5%, Automobile 1%, Oil & Gas 1.4%, Metals 5%. HUL continued its upward movement and closed higher by 5%, TCS, Wipro& Hero Motor 3%, Cairn India 2.5%.

Global markets corrected heavily on Wednesday on back of worsening Euro crisis. Indian markets continued to face the threat from rising rupee, rising Inflation and bad IIP numbers. Indian markets corrected another 2.5%. Nifty closed at 5169 and Sensex at 17193. As mentioned in the earlier article that the Nifty will face resistance at 5350 – 5400 levels. Nifty face resistance at its 61.8% retracement levels. Nifty corrected and broke the 50% level also and finally took support at 38.2% level. Nifty made a low of 5142 but closed a little higher at 5169.

Nifty below 5112 levels can come down to 5050 levels. On the higher side Nifty will face resistance at 5250 levels.

Last weeks call
Buy BOI above 346. SL 341. Did not trigger the price

Sell Bpcl below 622 SL 625 tgt 614. Made a low of 545.

Sell Corp Bank SL 407. Made a low of 403

Sat: 07th Nov. Indian markets feel the pinch

After the failure of the Euro talks. Global markets tanked. Indian followed the suite. Indian markets corrected nearly 1.25%.

Most of the Global Markets corrected almost 5% on Tuesday after the Euro Zone agreement to rescue Greece and keep the sovereign Debt crisis from spreading was upended following the decision of the Greek Prime minister to go for a public ballot on the bailout package. Indian markets also lost over 1% on Tuesday. MF Global filled for bankruptcy this week and there were reports that Credit Suisse shedding another 3% of its workforce.

Technically Nifty seems to have found a big resistance at 5335 levels. Where the Fibonacci Retracement levels comes. If the take the high of 5944 and low of 4720, the 50% retracement levels comes to 5335 levels (marked in the chart).

Nifty and Sensex closed down 1.5%. Tata motor closed down 9%, Sterlite 7%, Icici Bank & Sail 5%, Mnm 6%. Tata Steel 3.5%, Coal India and DrReddy closed down 3% & 4%. The gainers list in the frontline stocks are little less. Hul gained 8%, Rpower & Rcom both climbed 4% each. Sesagoa & Bhel 2% each. SBI 3%. In the Essar Port gained 26%, All Bank 16%, Havells 15%, Pvp venture 35%, Kpr Mill 24%, Pvr cinemas 22%.

Once again Nifty is nearing its over bought position. Indian markets are now a days seems to follow the global trend. Nifty will find resistance at 5400 levels. As everyone knows that the nifty faces strong resistance at 5400 levels, so there is nothing much to say about the same. But we need to think about the sustainability above 5400 levels. In the short run the markets have surely come off but I still have a doubt about the market as the way I had in the past. As I have talked about the same in the previous articles also about the inflation, rising fuel price, falling real estate prices, government issues etc, etc. So keeping all those in mind I still don’t have faith in the India markets. It is still not the right time to invest in the markets.

US unemployment data at 9% as compared to 9%. Seems to be a good news for the International market. But there has been steep drop in Industrial order from 1.5% to 4.3%.

This weeks call

Buy BOI above 346. SL 341.

Sell Bpcl below 622 SL 625 tgt 614.

Sell Corp Bank SL 407.