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.

Unpredictable markets-news based trading

Indian stocks are moving in unpredictable ways with momentum is concentrated on few select stocks. One thing is sure correction due within a short period. Investors may take long positions in blue chips after the correction. Risk taking investors may buy stocks like EID Parry, Wire and Wireless, FDC Pharma, Berger paints and Rajashree sugars.

Stock advice: Don’t believe in the rumours of Hindalco and IDEA take overs.

Sector of the day: Sugar. IT Shares will be in reckoning if Dollar appreciates against rupee.

Market sentiment: Unpredictable markets. Forget index. Concentrate on select stocks.

Significant news:

1. Government will create 3 million tonnes of sugar buffer stocks to check fall in prices.
2. Aircel, Spice and Idea may merge to form a new entity. Invest in Idea for medium term. Target- Rs 145.

Positive Stock news:

1. Unitech received nod for establishment of IT SEZs at Greater Noida and Kolkata.
2. Cement companies like ACC and Gujarat Ambuja announced increase in sales.
3. Sterlite ADS will be listen in Mid June.
4. Parsvnath launched Rs 6 billion township.
5. ONGC bought stake in 3 Brazilian blocks.
6. JSW steel posted 36% jump in crude steel production.
7. Fortis appointed new medical team at Escorts heart institute.
8. Bajaj will launch LPG bike soon.

Negative stock news:

1. Bombay high court rejected Reliance Energy plea on MTHL.

Best Indian stocks for day traders:

1. Mount Everest: Open offer to buy a further 20% stake by Tata Tea at Rs 140.
2. Idea Cellular:
3. Sterlite:
4. GAIL: (with risk).
5. JSW Steel:
6. MTNL:
7. Shree Renuka sugars.
8. NIIT Tech: (Closely watch rupee value).

Stocks to watch out:

1. ONGC.
2. Parsvnath developers.
3. Fortis healthcare.

Please share your stock views.

Volatility will continue in Indian stock markets

Indian stock markets will continue their volatile run with action is concentrated on few large caps and mainly in Mid caps. Inflation control is positive news while growing deficit between imports and exports is a major concern. Arrival of monsoons and GDP growth is a positive trigger while rupee appreciation is a major concern. Even though Chinese markets were crashed 2 times in the recent months, Indian markets are sustaining their high valuations.

This week will provide vital clues regarding market movements either upwards or downwards.
Market sentiment: Bullish/ Volatile. Asian markets are in positive zone while US markets are in uncertain zone.

Rumour of the week:

1. Idea cellular finalised deal to buy out Spice telecom for about Rs 25,000 crore.
2. Ban on sugar exports may lift due to decreased sugar production in European markets.

Trend setting news:

Following companies will split their stocks to increase liquidity in their counters.
Apollo Tyres, City Union Bank, Sun TV, Divis Labs, Everest Kanto, Ruchi Soya, ABB, Bharat Seats and Easun Reyrolle. Some of these stocks will gain due to this news.

Significant News:
1. Indian Pharma companies can continue to use trial data of MNC Pharma companies.
2. ZEE’s Indian Cricket League (ICL) is in copy right troubles. Zee stock may feel the heat.
3. Rupee may continue to appreciate in the coming weeks due to FII inflows in DLF IPO and ICICI Bank IPO. RBI may not intervene.
4. Tata Steel integration with Corus is faster than expected.

Stock of the Week:

1. Shree Renuka sugars.

Best Stock picks for Day Traders:

1. Rain Calcining: It acquired US based CII Carbon.
CMP: 35.5
Target: 37 and 38
Stop Loss: 34

2. Mount Everest: Open offer.

3. Cipla: Positive momentum and MOU with Malaysian company.
CMP: 223.7
Target: 226
Stop Loss: 220

4. HCL Tech: $200 million outsourcing deal rumours.
CMP: 345
Target: 349
Stop loss: 341

5. SAIL:
CMP: 138.6
Target: 141
Stop Loss: 136

6. Shree Renuka Sugars: (Risk for day and safe for week)
CMP: 639
Target: 656
Stop Loss: 604

7. Neyveli Lignite Corporation: Good results.
CMP: 65.6
Target: 67
Stop loss: 64.3

8. Tata Steel: Faster integration with Corus.

Stocks to watch out:

1. Advanta India.
2. VIP.
3. UTI bank.
4. Nocil.
5. Mahindra and Mahindra.
6. Tech Mahindra.
7. Fortis healthcare.

Markets are in consolidation stage. Trade cautiously.

Analysis on Indian Stock Markets

Indian stock markets may continue their volatile runs with investors are hoping for correction. My advice for long term investors is stay away from markets for another month. Day traders and short-term investors may gain if they concentrated on good stocks like Reliance Capital.

Though stocks like Reliance Industries, Welspun Gujarat, Jindal Saw, Sail and JSW Steel are good stocks with strong fundamentals, they are near lifetime high values. I don’t prefer such stocks as there is a scope for little rise and high fall.

Why Indian share Markets will move upward?

1. Political uncertainty was over. UPA Government will complete its full term.
2. Inflation is under control. There may be no change in interest rates.
3. There may not be noticeable slow down in Indian economy.
4. Telecom sector is continuing its dream run.
5. There will be huge investments in capital goods and power sector.

Why Indian stock markets may move downwards?

1. Investors may book profits on the upside.
2. Real estate bubble may burst at any time.
3. High P/E of many blue chip stocks. Companies may not continue their dream run.
4. Foreign investors may move away from Indian markets.
5. Metal prices may fall at any time.

Hot stock picks and their movements:

1. Teledata:

Though it is a good long term bet, this stock is experiencing too many fluctuations. It may again touch 80-90 and then will fall to 50-60 mark within a short span.

2. Reliance Petro:

This is getting attention from institutional investors. It may touch 100-110 within 5-7 trading sessions and then fall back to 80-85 level.

3. IFCI:

This is a fundamentally sound stock with medium term bet. It may touch 60-65 and will return back to 50.

Sugar Stocks:

Stay away from this sector at least 4-6 months. Recent rise in these stocks lacks fundamental reason. Sugar prices are falling in open markets. This trend may continue in the upcoming 4-6 months.