Last week we wrote... (Please refer my earlier blog)
Every one says that now the Nifty will show the levels of 5100-5150. I some how dont believe. I also think that when everyone is so much confident about markets going down, they have probably already shorted or sold off. SO WHERE IS THE POWER TO SHORT THE MARKET FURTHER FROM CURRENT LEVELS?
I might be wrong. But I feel that whatever bottom we make during first 3 days of this week (uptil Wednesday evening) should be a near term bottom. I also feel that these bottoms would be more like a printed numbers. Not many people will get a chance to buy at those levels. There are two reasons for that:
1. The weak hands will sell the stocks at the panic.
2. Not many people will come to sell the stock at such levels. So, after the initial sell off, the market should return to the normalcy and many stocks should resume their uptrends / short covering.
First 3 day's Bottom was 5225. On Friday however, it went down to 5177, but it was like a printed number (Hardly traded there for 1 or 2 trades - Not many people got a chance to buy at that level).
There was a panic due to IIP numbers. Markets sold off for a brief period of time but recovered more that what it lost, which was as we expected in point no.2.
So, what is happening in the Markets?You must have watched the stupendous recovery in the markets inspite of a horrifying IIP numbers. Most of the layman investors are now confused because "Bad News" doesnt mean "Falling Markets" anymore...! In fact, that triggers the sell off from the weaker hands and opportunistic buying in the stronger hands. Thats what happened yesterday. The Moment the IIP data were released, the markets actually rose from 5200 levels to 5230 levels (Around 100 points rise in Sensex) and then after an hour, it broke 5200 and went to 5177 for a brief period (Around 200 points down from the high point it reached after bad IIP data). Again, in an hour it sarted moving up and closed at the highest point (Around 450 sensex points up from the lowest point). ZIG ZAG ZOOOOM !!!
Markets have again proven that it discounts the future in advance. Post November when the markets started falling, who could have courage to say that we see a really bad IIP Numbers for November and December? But market did! November IIP was 2.70% and December IIP was 1.60%. (By the way, December 2009 IIP was 18%)
Bad IIP numbers for 2 months - Does it mean halting 0.25% rise in the Interest Rates by RBI in March Policy?Well, too early to say that. But if you go by what market is sensing, it certainly has changed stance on the banking stocks for the time being. The Bank Nifty, which is representative of the Banking Stocks, was up almost 4% in yesterdays trade, driven by huge shortcovering in the Banking Stocks. Whether RBI does the rate hike or not, the market participants are not ready to sell Banks any more. So the only way to go is go up... at least for the short term.
Does this mean the time to Invest?Not Yet, if you are a "long term investor".
But yes, for traders a quick 10% is available in many stocks just on short covering. Those of you interested to execute these trades on your own, can try your luck !
What I see happening over next 1 or 2 weeks?1. Short Covering should continue and we should be heading to cross 5400, 5450 and 5500. Last we sold off was from 5550-5600 levels. I feel at least that much of target is achievable in February itself.
2. The stocks which have sold off aggressively will see a short covering rally of 5-25% in next week and can continue till the mid of second week.
3. Pre-budget rumors, discussion and announcements will be another fuel to take the rally up to 5600 levels.
4. Banking, Auto and Infra stocks would be in limelight. Pharma and defensives may spend boring days. IT may sell off due to Rupee strengthening further.
So, if you were a long Investor all these days, and worried about your portfolio returns, the market has given you a second chance to exit... Your worries for the time being are halted and you need to be cautious on protecting your gains now, when the market moves up.
Risk Trades Ideas (High Risk High Returns)
These trade ideas are based on short covering which has started on Friday, 11th February 2011. The underlying premise of these trades is that although we go long on the stocks which has bad news and poor fundamentals, we do this as the stock has got hammerred more than what it should have.
Following are some ideas:
1. IRB Infra: Buy above 179, Targets 185, 195 and 205. Stop Loss: 177 (Risk traders can keep the stop loss below previous day's low.)
2. SBI: Buy above 2665, Targets 3011, Stop Loss: First Stop at 2480. Then put trailing stops below previous day's low.
3. IVRCL Infra: Buy above 67, targets 73, 97. Stop Loss: 62 and then put trailing stop loss below previous day's low. (In any case, at round 40-45, IVRCL Infra is a steal buy...)
4. Aban Offshore: Buy above 572, targets 630. Stop Loss: 553. (Screaming buy if this stock comes to 337-350 range, which it will....!)
5. CESC: Buy at around 291 or above 303. Targets 325. Stop Loss: Trade below 277 for half an hour.
Enjoy these trades ! But always keep stop losses to protect your capital.
Every one says that now the Nifty will show the levels of 5100-5150. I some how dont believe. I also think that when everyone is so much confident about markets going down, they have probably already shorted or sold off. SO WHERE IS THE POWER TO SHORT THE MARKET FURTHER FROM CURRENT LEVELS?
I might be wrong. But I feel that whatever bottom we make during first 3 days of this week (uptil Wednesday evening) should be a near term bottom. I also feel that these bottoms would be more like a printed numbers. Not many people will get a chance to buy at those levels. There are two reasons for that:
1. The weak hands will sell the stocks at the panic.
2. Not many people will come to sell the stock at such levels. So, after the initial sell off, the market should return to the normalcy and many stocks should resume their uptrends / short covering.
First 3 day's Bottom was 5225. On Friday however, it went down to 5177, but it was like a printed number (Hardly traded there for 1 or 2 trades - Not many people got a chance to buy at that level).
There was a panic due to IIP numbers. Markets sold off for a brief period of time but recovered more that what it lost, which was as we expected in point no.2.
So, what is happening in the Markets?You must have watched the stupendous recovery in the markets inspite of a horrifying IIP numbers. Most of the layman investors are now confused because "Bad News" doesnt mean "Falling Markets" anymore...! In fact, that triggers the sell off from the weaker hands and opportunistic buying in the stronger hands. Thats what happened yesterday. The Moment the IIP data were released, the markets actually rose from 5200 levels to 5230 levels (Around 100 points rise in Sensex) and then after an hour, it broke 5200 and went to 5177 for a brief period (Around 200 points down from the high point it reached after bad IIP data). Again, in an hour it sarted moving up and closed at the highest point (Around 450 sensex points up from the lowest point). ZIG ZAG ZOOOOM !!!
Markets have again proven that it discounts the future in advance. Post November when the markets started falling, who could have courage to say that we see a really bad IIP Numbers for November and December? But market did! November IIP was 2.70% and December IIP was 1.60%. (By the way, December 2009 IIP was 18%)
Bad IIP numbers for 2 months - Does it mean halting 0.25% rise in the Interest Rates by RBI in March Policy?Well, too early to say that. But if you go by what market is sensing, it certainly has changed stance on the banking stocks for the time being. The Bank Nifty, which is representative of the Banking Stocks, was up almost 4% in yesterdays trade, driven by huge shortcovering in the Banking Stocks. Whether RBI does the rate hike or not, the market participants are not ready to sell Banks any more. So the only way to go is go up... at least for the short term.
Does this mean the time to Invest?Not Yet, if you are a "long term investor".
But yes, for traders a quick 10% is available in many stocks just on short covering. Those of you interested to execute these trades on your own, can try your luck !
What I see happening over next 1 or 2 weeks?1. Short Covering should continue and we should be heading to cross 5400, 5450 and 5500. Last we sold off was from 5550-5600 levels. I feel at least that much of target is achievable in February itself.
2. The stocks which have sold off aggressively will see a short covering rally of 5-25% in next week and can continue till the mid of second week.
3. Pre-budget rumors, discussion and announcements will be another fuel to take the rally up to 5600 levels.
4. Banking, Auto and Infra stocks would be in limelight. Pharma and defensives may spend boring days. IT may sell off due to Rupee strengthening further.
So, if you were a long Investor all these days, and worried about your portfolio returns, the market has given you a second chance to exit... Your worries for the time being are halted and you need to be cautious on protecting your gains now, when the market moves up.
Risk Trades Ideas (High Risk High Returns)
These trade ideas are based on short covering which has started on Friday, 11th February 2011. The underlying premise of these trades is that although we go long on the stocks which has bad news and poor fundamentals, we do this as the stock has got hammerred more than what it should have.
Following are some ideas:
1. IRB Infra: Buy above 179, Targets 185, 195 and 205. Stop Loss: 177 (Risk traders can keep the stop loss below previous day's low.)
2. SBI: Buy above 2665, Targets 3011, Stop Loss: First Stop at 2480. Then put trailing stops below previous day's low.
3. IVRCL Infra: Buy above 67, targets 73, 97. Stop Loss: 62 and then put trailing stop loss below previous day's low. (In any case, at round 40-45, IVRCL Infra is a steal buy...)
4. Aban Offshore: Buy above 572, targets 630. Stop Loss: 553. (Screaming buy if this stock comes to 337-350 range, which it will....!)
5. CESC: Buy at around 291 or above 303. Targets 325. Stop Loss: Trade below 277 for half an hour.
Enjoy these trades ! But always keep stop losses to protect your capital.
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