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.

Black Friday for Indian share market investors

D-Day finally arrived. Indian stock markets will be suffered huge losses and will see a panic selling from investors on black Friday. Nifty will fall below the final support point that exists at 4090 and BSE Sensex may lose 300-400 points. Long term investors can buy sound stocks at attractive price after the heavy fall. Though fall in markets is bad, it is good for long term investors.

Sentiment: Indian investors will see second biggest crash of 2007. All the global markets have suffered huge losses especially Dow Jones and Japan and Taiwan markets.

Sector of the day: IT and Sugar shares will be in lime light due to Government decision to allow sugar mills to retain central excise for 3 years from 2007 July.

Good signs:
1. Inflation is under control and it will be around 5%. Stocks may bounce back in the afternoon session due to inflation data or over correction.
2. Dollar may gain on weak currency.

Stock of the Day: Patni computers.

My stocks:

Enter into these stocks after the crash. Risk taking investors can take future positions in good stocks.

1. Sterlite India Industries.
2. Hindustan construction company (HCC)-Medium term.
3. Ispat industries – Long term.
4. Mahindra and Mahindra- short-medium term.
5. Idea Cellular.
6. Reliance Communications.
7. Patni Computers.
8. Cambridge Solutions.
9. Tata Chemicals.
10. Suzlon Energy.
11. Aurobindo Pharma and Glenmark Pharma.
12. AIA Engineering.
13. Alok Industries.

Significant stock news:

1. Textile sector will get relief package from government within a week or so. Take short term bet on textile stocks.
2. Tamilnadu petrochemicals- short-medium term with some risk.

Stock advice:

1. Mahindra and Mahindra will be going to rise in short term due to lack of options in auto sector.
2. I don’t believe in this Hindalco rise. It is a clear sign of herd mentality and I can’t understand why investors always fell in the trap of operators.
3. Risk taking investors can take short position in Tata tea.

Positive stock News:

1. Tantia construction received $1.8 billion order.
2. Patni computers will continue to rise on stake sale.
3. HCC got contract from Tata Steel.
4. Biocon signed MOU with an Australian University.
5. ONGC Board approved Rs 1200 crore investment to develop oss-shore fields in Mumbai high. 6. Mahindra and Mahindra is in acquisition mood in Italy.
7. Marico industries in restructuring mood and good bet for medium term.
8. Biotech industry touched $2 billion revenue in 2006-07 financial year.
9. Cambridge solutions is a good bet for short term.

Negative stock news:

1. Idea and Spice telecom called off merger deal. Invest in Spice IPO.
2. Tata motors decreased car production by 20% and delayed launch for India. Closely watch Tata motors, it may available at attractive value by mid July.
3. Negative momentum in Auto stocks will continue for another 10-15 days.
4. Hindalco will lose more around 7-10%.
5. Hindustan Zinc will suffer losses due to fall in Zinc prices.
6. Oil refining stocks will lose yesterday’s gains.

Day traders should stay away from Indian markets. Today is black Friday.

Please share your comments on my stock recommendations and analysis. Please share your views.

Indian stock markets will crash on black Friday

Today is going to be black Friday for Indian equity investors. Negative triggers will propel Share Markets and investors into panic state. US economy growth concerns will add fuel to the fire. All the global markets and Asian markets suffered heavy losses.

Negative triggers:

1. US economy concerns. Growth may slow down.
2. Fall in Asian Markets and US markets. European shares fell yesterday.
3. Uttar Pradesh election results and Congress dismal performance.
4. All the Indian ADRs suffered heavy losses yesterday.
5. Increase in crude price.
6. Decrease in metal prices.

Significant Events:

1. Inflation rate. It may be around 5.7%
2. Teledata gained yesterday after the battering for the last 10 days. In my opinion, it is still a safe bet for long term investors.
3. Bajaj Auto to consider demerger on May 17.

Advice for Day Traders:

1. If any good stock suffers more than expected loss in early trade, trade in that stock to get good returns in the afternoon recovery.
2. Infosys may gain due to weakening rupee.

Best Stock picks for the Day Traders: (Invest at your own risk)

1. Asian Paints:
CMP: 782
Target: 791
Stop Loss: 770
Wonderful Q4 performance. Net profit trebled due to increase in sales. Sales rose almost 30% in Q4.

2. Moser Baer:
CMP: 372
Target: 379
Stop Loss: 364
It acquired rights for 700 movies.

3. Infosys:
CMP: 1974
Target: 1996
Stop Loss: 1955
Rise in Dollar against rupee.

4. Reliance Communication: (With high Risk)
CMP: 464
Target: 470
Stop Loss: 458
Reliance Communications sold 1 million handsets within one week of Rs. 777 mobile launch.

5. Maruti Udyog- Government sold its stake in Maruti.
6. Larsen& Toubro - It may bid for Bofors.
7. IT Stocks may gain due to rupee fall against Dollar

Stay Away from following stocks:

1. Today is black Friday. It is better to stay away from Indian share markets.
2. Metal Stocks: Copper fell on 3rd consecutive day.
3. Stay away from Finolex Cables. Worst results.
4. Stay away from Hero Honda.