Are you ready for another May crash?

Media and Analysts are already started commenting about new highs and bullish trend. I don’t buy into their views. I am suspecting another “May Crash” in the coming days due to unreasonable valuations. Investors should stay away from markets in these volatile times while traders and operators continue to play their games.

Strategy: Closely watch Rupee value, Metal prices, Crude price and Inflation rate. Rupee appreciation is enough to crash the markets. Foreign investors may book profits at any time.

My thoughts on the Indian share markets:

1. Stock markets rose in the recent sessions without any significant positive news. More hype behind this rise than substance.

2. Investors are just following herd mentality. They bought IT stocks yesterday (even though rupee is appreciating). This is a dangerous sign. There will be heavy panic selling on negative news. E.g., Bajaj Auto yesterday.

3. Can SBI, SAIL, TV 18, JSW Steel and Reliance Industries justify their valuations in the next 2 quarters?

4. Except Reliance Capital, other high rising stocks may fall by more than 10% in this month.

5. Why Banking index rose on March 16 and fell on March 17?

6. Why sugar stocks are rising intermittently even though sugar prices are at all time low?

7. Why Real-Estate stocks are suddenly rising?

Use your common sense before investing in stock markets. In my opinion, markets will soon touch 12,000-12,500 mark.

About Teledata:

Yesterday, one reader asked me about the prospects of Teledata.

My opinion: Teledata rose too much within a short span of time. Not even a single mutual fund is holding this stock. It means markets have still suspicion about its future. It is a pure traders stock. Short term Investors with high risk appetite can enter into this stock at this level.

Market Trend:

Investors will book profits today and yesterday’s top gainers will suffer heavy losses today. Rupee appreciation and crude price rise will spoil the sentiment of the markets. All the global markets are trading negatively due to fall in metal prices and rise in crude price.

Positive News of the day:

1. The government has decided to allow states to acquire land for SEZ projects on behalf of private developers as long as owners sell their land voluntarily.

It is better for investors and traders to stay away from the stock markets today.

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.

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.