Is there any method in this madness?

Indian stock markets along with global markets are witnessing most volatile intra-day sessions in the recent days. Investors are repeating same mistakes by investing in weak stocks when fundamentals and valuations are big worrying points. Investors ignored the negative implications of credit policy on Indian companies in the yesterday session. Volatility will continue in the coming sessions.

Global Cues:

1. US markets lost 146 points after trading in the positive zone in the early session. Crude is in the $ 77-78 zone. Asian stocks are following their global peers.

Market Movements: All the global markets are in negative zone.

1. BSE Sensex:
CMP: 15,550.
Target: 15,330.

2. NSE Nifty:
CMP: 4528.
Target: 4465.

Stock of the Day:

1. Everonn Systems – It will list around Rs 450-500 and may cross Rs 550. Long term prospects are good for this stock but may be volatile in short term.

Significant views on Economy and Stock Markets:

1. RBI Credit policy will be misfired. Instead of decreasing liquidity, it may increase liquidity and also impact balance sheets of companies. Investors will realise the negative impact of credit policy within a short term. Volatility will continue in markets.

2. It will be difficult to keep Rupee above 40 against dollar. Rupee appreciation will continue in the long term. If RBI tries to keep rupee above 40, there will be negative implications due to rise in inflation. No government wants this situation just before elections. IT Midcaps and Textile stocks will be affected.

3. Hindustan Sanitary ware is a contra pick for long term investors while Meghamani Organics is a safe best for long term investors.

4. One investor asked me about Jain Studios. Don’t concentrate on such penny stocks without fundamentals and growth prospects. One should buy stocks with either strong fundamentals or better growth prospects. There will be no buyers for such stocks if markets go into bearish zone.
5. Sectors like food processing, Electronic hardware, Hotel and leather companies will get more sops in the coming budget – Finance Minister.

6. Q1 Results – Decrease in sales growth but increase in profits growth compared to recent quarters. Decrease in growth is a worry.

7. There will be no hope for Sugar, Textiles and Midcap-IT companies in the medium term except Government sops.

Positive Stock News:

1. Imerys may acquire ACE Refractories.
2. Satyam got big orders from FIFA. Satyam is getting more orders from Europe in the recent days.

Negative Stock news:

1. RBI hiked CRR by 0.5%.

Best stocks for Day Traders:

1. Satyam Computers.
CMP: 480.
Target: 485

2. Everonn Systems.
Target: 550.

3. Sell BHEL and L&T.

4. Sell DLF.
5. Sell Tata Steel and Hindalco.

Things I can’t understand:

1. How can the good showing by companies like L&T and Reliance will change the fortunes of bad companies? Why investors are buying these companies?

2. Why BHEL is rising despite poor results?

3. Why banking stocks rose despite credit policy effect?

4. Is there any change in fundamentals between 550 points crash and 290 points rise?

5. Is there any change in US subprime market worries?

6. Are investors watching the poor results by Indian companies in the recent quarters in the most sectors?

7. Can Investors understand the crude price rise on Inflation?

8. Why RBI announced worst credit policy ignoring major problems? Is it a stop gap policy?

9. Why RBI doesn’t allow rupee appreciation despite benefits to common man like fall in inflation and benefits to balance sheets of most companies except exporters?

10. Why investors can’t wait for the settle down of this volatility?

Is there any method in this madness? Please share your views.

Black Tuesday-Stay away from Indian Stock markets

Indian stock markets may lose heavily due to RBI measures to tighten inflation, bad news from global markets and unrealistic surge in the past 7 trading sessions. Black Mondays are common in Stock markets, but black Tuesdays are rare. Today we will see heavy selling from panic investors. Markets may lose around 400 points today. Day traders should stay away from markets today. Long term investors may buy some good stocks at low valuations in the afternoon session like Idea cellular.

News of the Day: The Reserve Bank said year-on- year inflation was higher at 5.7 per cent at the end of fiscal 2006-07, indicating more measures to tighten its credit policy to be announced on Tuesday.

Ceat and Bhrat Shipyard may gain today due to unexpected losses yesteraday.

Global Markets: All the global markets suffered heavy losses. This is a bad news for the Indian markets also. Indian ADRs were also suffered yesterday.

Positive news:

1. Idea cellular is on track to touch one billion dollar mark. This is a stock for medium-long term investors.
2. Matsushita Electric Works (MEW) of Japan, owners of the National and Panasonic brands, has acquired 80 per cent equity stake in the privately held Anchor Electricals for Rs 2,000 crore.
3. Adlabs Films is entering into distribution of non-Indian movies.
4. TATA Motors is launching "ACE" into Nepal market.

Bank stocks, Auto Stocks and construction stocks may available at low values in the coming weeks.

Stock Market guide for Monday- 23 April, 2007

Most of the magazines and News papers are predicting upward turn for Indian Stock markets. But, in my opinion, Markets may see downturn due to uncontrolled inflation, RBI measures in credit policy, bad news from China on rate hike. BSE Sensex may lose around 100-150 points today.

Guide for Day traders:
Stay away from initial trading as Markets may lose heavily due to selling pressure on inflation concerns.

Warning News: Reserve Bank of India may raise CRR in its annual credit policy on April 24. It will be a severe blow to Banking, Real Estate, Auto and finance stocks.

News of note:
Public sector bank’s home loan growth is slowing down.
RBI may increase rates once again to curb inflation.
Inflation again crossed 6%.

Monday Stocks for the Day Traders:
1. Ranbaxy will invest $20 million in its European subsidiary.
2. Shipyard, now under construction at Mangalore, proposed to create facility for building ships upto one lakh tonnes capacity instead of the original plan for fabricating upto 60,000 tonnes capacity ships.
3. Zee Entertainment Enterprises Limited (ZEEL) reported a 33 per cent jump in consolidated net profit at Rs 69 crore in the fourth quarter of FY 07 over the year-ago period.
4. Copper prices rose once again. Watch out Hindalco and Sterilite.
5. Praj industries are on global acquisition spree.
6. Alok industries tied up with Peacock Alley.

Negative News:
1. Stay away from auto and Banking stocks as they may lose heavily.
2. Titan Industries reported 18.5 per cent dip in net profit at Rs 30.32 crore for the fourth quarter ended March 31, as against Rs 37.21 crore for the same quarter a year ago.

Economic Times stocks of the week:
Matrix Laboratories and Cairn India, UTI Bank, ACC and Ashok Leyland.

ICICI Direct’s stock of the week:
I Gate global solutions.

My favourite sectors for future growth:
Shipping and Power
Accumulate Teledata. It may touch 200-300 within one year.
Concentrate on Mid Cap stocks.

Day traders guide for Indian Stock market – April 12, 2007

Today is going to be another worst day for markets. BSE Sensex and NSE Nifty may lose heavily due to bad news from global markets and warnings from RBI and IMF. Markets may lose around 200 points.

IMF and RBI issued warnings to the investors about the effects of rising inflation and rapid credit growth. As per IMF report, investors may not be giving sufficient weight to downside risks leaving markets vulnerable to the possibility of a shock. The risks are being amplified by the increased linkages across financial products and markets

Statement of the Day: Inflation may touch 7% - RBI Governor.
News of the day: The International Monetary Fund (IMF) has forecast that Indian economy will grow at 7.8 per cent in 2008.

Global Markets:

Global markets lost heavily due to concerns about rate hike, rising inflation and slow down in US economy. Japanese market is the worst sufferer. All the Indian ADRs lost marginally.
Crude oil price: It rises due to unexpected decline in Gasoline supply.

IFCI and TCS will rise while Sesa Goa will lose.

Stocks for Day traders:

Ranbaxy and GAIL are some positives stocks.
Reliance Capital entered into online trading through flat fee structure.
Pantaloon and ITC tie up for food segment.
Ballarpur industries will announce results today.
Reliance Communication and Sun TV ink pact for mobile content.
Blue Dart plans to spend Rs 220 million in South.

Stocks to be avoided today:

Exports of textile products to the US were declined by over 3% in dollar terms during January 2007, as compared to the corresponding month a year ago.
Stay away from Idea and Bharti Airtel due to decrease in subscriber additions.
Car sales hit 13 month low – Stay away from Maruti.
Novartis may stop further investments in India.
Gujarat Ambuja Cements Ltd’s (Rs.107.85, Sell) March shipments have fallen by 4.5%.