Market Observations and Thoughts :

Crude no more seems a consideration for market moves like before as it has already gone below and achieved a tgt of 85 which was our consistent view so no more updates on it unless something unusual comes in.

Gold :
Gold technically had been seeing good resistance around 920 + zones and has taken a quick beating as money seems to be coming out of it. On the lower side 815-820 is an important range zone if it breaks could lead to 780 also.


The glossary of economics,inter-relations, coupling is just getting huge in size .

Can CRR cuts of 50 and 150 bps be followed by a repo rate cut ?? , Crude staying below 80s for months impact GDP ?? , Inflation to dip quickly by next year , Lower GDP growth targets , Are IIP nos conclusive, MFs ,Pension Funds , long term stable FIIs waiting for stability to pump money, Low delivery volumes but high M2M settlements in FNO why so , Futures still not settled by delivery in India , Bailout for Airlines and other industries , Real estate market to see a major meltdown and freebies already given, FD rates will soon peak make some for long term etc etc ... Long list for India.

US ,UK , Europe , IMF to take unusual steps to increase liqudity , unfreeze credit , Inter-Bank rates zooming can they be cooled of , collateral damage to be insured , capital injections in return of equity , Shorting malpractices found , De-leveraging of high positions in Gold to pull out cash , Scams to be found etc etc Longer list for world .

Randomn Sunday Thoughts :

The markets have tanked heavily in the last one week and suddenly there are many economists who are predicting an economic depression and some who prefer a 12-18 months recession. I am not a good judge of economics though but the view of Sept/Oct to see all skeletons out was biased with technicals and we have seen that happen to an extent more then what we thought. I do read a bit on global economic views but all the time the economist come out with excellent views but timing dont seem to match with market movements and appear prophetic in hindsight. 2006-2007 saw lot of critics of credit scenario and the boom is over but we saw the market continue to boom to get over months or a year later and then came the slowdown. Crude was a blockbuster at 120-140s with tgts of 250 and super spikes which actually got finished at 150 as per price and at 80-100s tgts of 50 as demand drop came up so maybe a demand drop is almost getting over .

Now suddenly am reading a lot of economists speaking on recession is in place and a recovery may take 12-18 months but not many give a starting point so havent understood when the rough weather ends. Can we say that the recession in market prices is almost over as the lag or early view by economists seen historically. But we may see effects of the slowddown in the industry , economy , jobs and other scenarios as generally markets factor in things before they happen. Although we are not looking from a depression point of view coz i havent seen it in my lifetime and neither know anything about it so cant discuss on it or whether we should even think about it. But yes in a slowdown or recession the best way to stay comfortable to live prudently, make contigency provisions and be ready for some temporary consequences like job layoffs, salary cuts or other difficulties which may or may not be seen but precaution helps.

Markets are a great indicator of the economic scenario is what i feel. Just looking back when markets corrected in Jan we saw corporates like ICICI and others cut bonuses , promotions in March later on further drops we saw mid cap IT cos go on a layoff mode and pink slips. So at a further correction now can we see salary cuts, layoffs in other industries, lesser job options ?? ( things to ponder on )to stabilize the over growth of opportunities we had before and then we can embark on much better times after this normalization and faster if India gets a much softer landing into this rough weather .

Although such a scenario could be beneficial for IT cos and other Manpower businesses with high attrition rate as that may slowdown and man power costs may get in control to stem business downfall. Also historically in such normalizations we do see better and bigger growth opportunities i remember in 2001-2003 IT engineers saw huge probs in job opportunities and placements ( engineering time personal experience of seniors ). But later we saw super-placements in 2004-2008. Can this cycle happen for MBAs/CAs or some other professions who got high growth ?? coz of financial boom and see a little dip then bigger growth ?? ( things to ponder on) .

All above thoughts are randomn thoughts which just came out without adequate research and could be highly amateurish and may not be conclusive enough....

Sensex Technical View :
The preferred technical view that Sensex may take a bounce back from 10900-11500 has not gone in tandem with market moves. The next important technical levels are 9700-9500 which is the 61.8% correction which was a scenario taken in case there is much more selling seen and possibly we could give a bounce before going there. Sensex has touched 10200 almost and needs to be seen whether it goes to 9500-9700 or lower zones or gives a bounce from here and then consolidate at lower levels. On the long term charts 8799 the low made around 2006 and 2600 on Nifty are of supreme importance for the long term bull run. Continue to watch these levels and reactions.Once we see a bottom formation or hints of it we can cover views on how recovery periods were historically.

Although the timing of buying must have not been appropriate at 11k-12k levels, but as being repeated we have confined our investments to 50-60 % max which does leave us a good scope to buy on lower side in bargains or reduce investments at bounce backs for more comfort. Many stocks picked up would be down 10-30 % from acquisition pricce as buying has been looked in a staggered manner,small lots and we still do have some more apetite to buy and have strictly avoided real estate , pvt banks, capital goods in our preferred stocks and the selected ones do have the more chances of participating well in any bounce backs.

Majority of the value erosion has been seen in Real estate down 80-95 % , Pvt Banks and Capital goods have also seen major erosions. I have been very strict on avoiding these as these stocks may take lot of time to even give decent bounce backs and in real estate stocks total value erosion. In other stocks invested at sub 13k levels investors maybe seeing notional losses for the partial quantities but these stocks have good chances of coming back in stable times. But in real estate stocks the risk is going the 2000-2003 IT way. But high risk investors can take a risk buy 3-5 stocks of real estate companies like DLF,HDIL,Unitech,JP Associates etc at 15-5 % of peak slowly as somehow i feel these companies remain in business in next 2-4 years at least one or two may end up giving such returns to sidetrack losses of those who dont , and yes it will require patience and Risk....

Market strategy and Thoughts :
Global cues are pointing way down with Dow Jones almost 670 points gives a real blow to market opening and impacts which may only be stopped by some regulatory intervention which can come during the day or before and it would be better if it doesnt come as any CRR cut , FED cut has only fuelled further selling.
NOW WHAT TO DO :
This is a very tough call to take. Luckily after January there might not be any leverage players so all one has is stocks on money. Although there could be many scenarios with govt interventions, announcements which may change the course of the day.
So there could be two possibilities out here :
1) Sensex holds above 10740 .
This is the most important recent low around 10740 and say 10500 which is another level but in panics no level comes into play. If this holds up for the day then a short term bottom has been formed and markets could head for a bounce. Strategy in this case would be to wait and watch and not buy or sell and let markets stabilize over the next few days
2) Sensex panics and goes to 9500-9700.
Continuing with the global panic starting in US and DOw Jones touching sub 9k levels, Sensex sees a panic and market breaks the lower zone of 10500-10750 then the index could touch the lower freeze level at 10200 and which would imply another touch to 9700-9500 in worst case.
Now this could be an extremely panicky situation and the first thing that comes to mind would be sell but mark my WORDS here i dont expect markets to correct beyond 8800 or say 9500 on a closing or even intra basis as of now. So in such a scenario will it be wise to sell at sub or very close to 10k levels well the answer is a BIG NO. So can we buy at 9500-with the 30 -40 % cash left the answer is obviously YES many stocks would be at irrational levels and if u dont have the guts to do so then dont sell at that price at least be patient over a week or next few weeks and let markets rationalize and stabilize.
" INVESTORS DONT SELL IN LOSS THEY SELL IN PANICS " \
" Many investments become LONG TERM coz PRICES have dropped, BUT SUPERLATIVE Gaining Long term investments are created by buying when SENTIMENTS have DROPPED "
CHEERS !!! HAPPY INVESTING...

Sensex Technical View :
Technically Sensex is making lows almost lower to the channel support and on a simple terms yes its highly oversold but still bearish. Now lets try to simplify it through some technical points .
1) 30 % dip
January the panic month saw a dip of 27.7 % . In July markets fell around 29.4% at 12500. Now in October we have made a low of 10750 which is almost 31 % . So as per previous observation the markets have already fallen as before and a very sharp corrective bounce should be round the corner.
2) Channel and Trendlines.
As we see in the chart there are two lines taking different points. One comes to around 11200-11500 and other at 10500. Also on Dollex charts indices are very close to the support line. Technically markets have not closed below this line even in major panics. If it closes below 10500 then the only sensible technical level is 9700.
3) Indicators
RSI , MACD and many other indicators are almost close to Jan levels which had seen lower ckts. In such a scenario it can be said that markets are getting into highly oversold panic levels.After such a panic scenario the bounce back could be very sharp.
4) Fibonacci Levels
The important fibonacci levels for the entire bull run is at 11900 and 9700 out of which 11900 is broken and implies we may very well head towards 9700 as the next major stop and the most important level for a change of structural long term bull market is 8799 which is a decider over next whole year.
After taking a clear exit calls at 18900/17500/16700/16100 we have been going with a strategy of buying in declines to sell on corrective bear rallies. Earlier we bought at 14k-12.5k to get back to cash at 15k +. Right now the decision to start buying slowly frm 12.5k to 11k seems we had started a bit earlier and only thing which gives a lil comfort is 50-60 % exposure taken and rest cash be kept on hold which should now wait only and let markets stabilize. Lots of stocks might have corrected 20 % lower from starting prices or quoting at those levels below acquisition price.
Technically all indicators, analysis points to an end of the correction at 10500-11200 but at the same time few days back it seemed 11200-11900 should hold so cant really say whether we will stop at 10740 or not but it seems 9700 zone is the most important zone as its the 61 % correction to watch in case there is a whole round panic coming over in global and indian indices.
Earlier in my previous post about the Big debate where in it was presented that 11900 or 9700 which could be the bottom zone for the market. My assumption that Sept/Oct may see an economic peak does seem to be right but the extent of it and the panic which i expected could take us to 11900 + - few hundred points seems to has gone wrong as the panic seen in markets has been much much more then i expected. So the debate seems to have turned in favour of 9700 !!!
Here in another attached view which i had was even if we have to go to 9700 the technical implication would be a low around 11900-11200 which would be 30 % dip and then a bounce of 20-24 % which may take us to 13500 and then we may see whether market breaks the low made around 11200-11900 and then we may take a call whether markets are headed for 9700 odd or not . So technically if we break the low around 10740 or say 10500 in coming days then we could very well head to 9700 odd levels. Also 8799 is the level which should hold over any panic and I HAVE pure belief that we are not going below coz thats a major level for the INDIA STORY which is still the best over next 3-5 -8 years....

Sensex Technical View :
Sensex has made a low around 11500 which is close to the support zone on the lower side of the channel. The channel is roughly around 11200-11500 as shown in the chart few days back. Technically the indices are in oversold zones , channel support and ideally should give a bounce back in near term. Also as seen previously markets have given sharp bounce backs after 27-29 % erosion in prices and we are almost getting into that area. Shorting should be avoided near to 11200 roundabouts and one can look to buy 3800/3900 calls as pure risk on dips to those levels .

Market Observations and Thoughts :

Its very difficult to stay composed in such conditions for a trader or investor but the only way to invest in these markets is to go staggered /slow in small lots and continue to maintain decent cash levels too even when things look so cheap, undervalued and tempting levels. Although technically the best way to buy is only on a turnaround and which may take a lot of time to come and value investing is a different story altogether and much more difficult too in current conditions.
As a matter of discipline investors should not commit more then 50-60 % even at 11200-11500 so that risk is lesser and decent cash levels could be utilized in panis or in a comfortable environment. Buying should be done 10-15% of intended qty at one price and then buy on further 10% falls in particular stocks.

Randomn Thoughts :

RBI,SEBI,FED,SEC all the policy makers are suddenly coming out with statements about liquidity concerns and measures. In the real terms its more of a reactionary measure then a precautionary one which doesnot help much.

Although the measures would have led to 5 % jump in seconds in better times are now suddenly seeing the news being sold into. Well coz majority of the measures are not to boost the money markets but to stop them from causing more damage.

I would expect CRR cuts followed by a repo rate cut soon . Fed may start cutting rate with an adhoc one possibly but it may be too late. Financial markets are under-pressure not because companies are going bust but the money and liquidity is not present so things may take much time to settle and consolidate. Suddenly inflation,crude, commodity,food is out of the picture ! as now its more of a financial mess!! and less of macro-economics. The month of October would be very crucial as lot of economic policy decisions may be taken !!.



Dow Jones :

Although the index made an interesting pullback from 9500 levels and giving a decent close but has not complemented the move in the next session. Technically 9500-9800 levels are important for the index as below which the supports and retracements are quite deeper. Also the index is highly volatile so one needs to see a confirmed closing before one can look for more indications....

Punj Lloyd and Educomp cracked quickly as expected and should be covered on tgts.

Bank of India which stood the storm may finally crack if sustains below 260 could tgt 248-225.

Bharti Airtel another stock which has not broken 680-700 levels in spite of market fluctuations. Need to watch that level closely if holds could give a bounce other wise a quick drop.

BHEL important supports at 1340-1400 which should hold on for some time.

RPL has broken below 140 and the next major support is placed at 108-112 .Reliance inds has a strong support at 1550 and one needs to buy the stock in staggered manner.

Chamble Fert,IFCI , IDFC look highly oversold and can give a sharp pullback and are fundamentally well placed for long term value also .

For more search Nooresh on Google......

Market strategy :
Since 16k-17k broke down on Sensex the view was consistent to exit and wait for 14k-12.5k zones for investment. Again after the accumulation the view was to exit at 15k + .

Yet again the view has been consistent to buy in stock specific in small lots from 13k-11.2k. Although this would be easy for people who have been following the views strictly and for others the pain in markets could get unbearable as of now.

This is a time only for investors who have patience and do pick up good quality stocks with due research done. As it happens in euphoria stocks can stay at highly overvalued levels for quite some time similarly in pessimism and panics lot of stocks can stay much lower then fair value. So best way to go is buy in small lots and go staggered as its very difficult to spot an exact bottom in panics. 11200-12200 is a good zone to buy stock specific and look to book them partially on profits of 15-25 % to keep a good cash level . One should not commit more then 50 % at 11900-13k and add only at 11200-11500 if it comes or wait . For people those who are stuck can commit fresh money at 11500 or roundabouts only with a view to exit on 25 % gains and lock that money out as part of discipline and consider it fresh money !!! .

For traders this may not be the best time as volatility will be very high and one needs to play with strict stops and agility.

For more search Nooresh on google.....

On further pressure, Chambal could go to 36, 30, and Nagarjuna could go all the way to 17-18....

better q.of this mth yes ...