Black Friday for Indian share markets

Black Friday arrived for stock market investors. I gave red signals in the last column about unliquidated derivatives, unsustainable valuations, drop in earnings and euphoria among new investors. All these are clear signals for a heavy correction. FIIs are the most dangerous people for the Indian markets. Unlike mutual funds, they don’t sit on their investments in difficult times. They just sell their shares and go to another country for better options. But this correction is good for fresh investments and real investors.
Courtesy: NASDAQ.

Index Movements:


1. NSE Nifty:
CMP: 4619.
Target: 4560 and lower. Nifty will lose around 80 points and follow their global markets.

2. BSE Sensex:
CMP: 15776.
Target: 15530 and lower. Today we will see bloodbath in the market due to heavy selling from panic investors.


Advice for Investors:



This is the day everyone is waiting for. We will get wonderful opportunities for entering into good stocks. This selling is mainly due to withdrawal of funds by FIIs and new investors who invested heavily in the recent days by giving a damn to the valuations. Investors who invested in value stocks should not sell their holdings. If you read the balance sheets of Real estate companies like DLF and Unitech, you will know the underlying seriousness and the danger in their accounting practises. SEBI should monitor these companies and the value of their land banks. I can’t understand the rationality behind investments in high valued stocks like DLF, TV 18, Divis Labs, ABB, GMR Infra, Kotak Mahindra Bank etc. Even though these are good stocks, valuations are unreasonable and unsustainable.

Global markets:


Heavy selling was seen in all the global markets with 2-5% loss in various indices. Recent rise in the global markets is due to high liquidity and entering of new investors who lack basic knowledge about stock markets.


Stock of the day: Shree Renuka Sugars with high risk.

Sector of the day:

1. Sugar Companies – Exports relief. Be careful before taking exposure as market sentiment may spoil the moment.

2. Oil Refining Companies - Declining crude prices, Rupee appreciation, Petrol-diesel price hike rumours make BPCL and HPCL as hot stocks but with risk.


Significant views:


1. If Inflation data is lower than expected, late buying will be seen in Banking stocks and vice versa.


Positive stock news:


1. Subex Azure announced wonderful results. 381% rise in net profit.
2. Teledata posted wonderful results.
3. ABB announced wonderful results with 51% rise in net profit. Use today’s correction to take fresh exposure.
4. 500% rise in Q3 net profit of MRF while Dena Bank net profit rose by 201%.
5. Tata Motors is the front runner for Rover and Jaguar.
6. Maruti announced better than expected results with 35% surge in net profit.
7. Bharti Airtel Q1 net profit rose by 100% while Tata Power announced 51% rise in net profit.
8. Ranbaxy regained number one slot after the recent quarterly results.


Negative stock news:


1. Indian companies are announcing worst results among the last 5 quarters. Rupee appreciation saved some companies by increasing other income.
2. Punjab Tractors posted decline in net profit by 81%.
3. Bisleri selling is not true.


Best stocks for Day Traders:


1. Sell Reliance.
CMP: 1941.
Target: 1892.

2. Sell Infosys, Wipro TCS and Satyam.
3. Sell DLF and Unitech.
4. Sell Divis Labs.
5. Sell GMR Infra.
6. Sell SBI.
7. Sell HDIL.
8. Buy HPCL and BPCL with risk.


Please share your views on Indian stocks and my analysis.