Last week we wrote:
"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...."
Against all odds of passimism, inflation fears and lower IIP numbers, we gained around 2.50% during the week. People talking about 4800 levels of Nifty have gone terribly wrong. As anticipated, our targets of 5400-5450-5500 were achieved comfortably on Thursday and then on Friday also for a brief period we traded above 5550 before we sold off.
Banking and Infra stocks gave on an average 10-15% gains where the markets hardly moved 2.50%. IVRCL Infra, which lost around 40% over last 2 months, bounced sharply from a low of 60 to high of 81 and then closed at 75 on Friday. There are many such stories of short covering rally.
But important point is that from the levels we saw during the panic on last friday, when the IIP numbers came, we have shown no signs of weakness. But will this be a "V" shape recovery and nobody will get chance to buy?
My feeling is that we will get one more chance during this week, when the markets may head lower but not as much as it did in recent past. Here goes my estimates for next week:
1. Nifty is expected to go down up to a level of 5240 and then it should bounce and close the next week at around 5420-5450 kind of levels. This assumes that we are not making an incremental low. The medium term investors are advised to buy into this temporary weakness. The premises for the weakness is that on Friday we sold off aggressively and during first 2-3 days of next week, we are expected to continue see the follow up selling. However, the selling would be more in the form of profit booking rather than the significant shorts building up in the futures or the long unwinding.
2. Similarly, Bank Nifty is expected to go down to 10,335 levels and then recover to around 10,800 levels. Those who did not buy the bank stocks can look at buying them at such levels.
3. Pre-budget announcements, speculation over interest rates and 3G scam related news will continue to be in the focus. Large corporate houses involvement in 3G scam will be the fuel for markets to go down.
4. Egypt story of dethroned dictator is slowly spreading to other middle east oil producing countries (Libya, Iraq and Bahrain), and this can again put pressure on crude oil prices. If this happens, it would be really bad for our economy which is already struggling from inflation, high current account deficit and unmanagable fiscal deficit. I feel this being the larger risk, which most TV Channels and analysts are currently ignoring.
Follow Up on my stock ideas:
I wrote in last blog:
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.)
IRB achieved all our targets. First target of 185 on Thursday and 195 and 205 on Friday. Again, it has closed at 182. If you have not booked your profits on targets mentioned above, please close the trade on monday morning as the stock might go down again.
2. SBI: Buy above 2665, Targets 3011, Stop Loss: First Stop at 2480. Then put trailing stops below previous day's low.
SBI's friday's close was 2761. However, if on Monday it trades below 2740, one should exit the position.
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...)
First target of 73 was achieved quickly. On Friday, the stop loss triggerred at 76.30.
4. Aban Offshore: Buy above 572, targets 630. Stop Loss: 553. (Screaming buy if this stock comes to 337-350 range, which it will....!)
Aban made a multiple highs around 600-610 levels but could not go past it. Finally, stop loss triggerred at 587.
.
5. CESC: Buy at around 291 or above 303. Targets 325. Stop Loss: Trade below 277 for half an hour
CESC: Made a high of 309. And closed at 303 on Friday. Stop Loss revised at 300 (Friday's low)
Hope you have made the best use of this analysis! Get ready for another fall during next week...
"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...."
Against all odds of passimism, inflation fears and lower IIP numbers, we gained around 2.50% during the week. People talking about 4800 levels of Nifty have gone terribly wrong. As anticipated, our targets of 5400-5450-5500 were achieved comfortably on Thursday and then on Friday also for a brief period we traded above 5550 before we sold off.
Banking and Infra stocks gave on an average 10-15% gains where the markets hardly moved 2.50%. IVRCL Infra, which lost around 40% over last 2 months, bounced sharply from a low of 60 to high of 81 and then closed at 75 on Friday. There are many such stories of short covering rally.
But important point is that from the levels we saw during the panic on last friday, when the IIP numbers came, we have shown no signs of weakness. But will this be a "V" shape recovery and nobody will get chance to buy?
My feeling is that we will get one more chance during this week, when the markets may head lower but not as much as it did in recent past. Here goes my estimates for next week:
1. Nifty is expected to go down up to a level of 5240 and then it should bounce and close the next week at around 5420-5450 kind of levels. This assumes that we are not making an incremental low. The medium term investors are advised to buy into this temporary weakness. The premises for the weakness is that on Friday we sold off aggressively and during first 2-3 days of next week, we are expected to continue see the follow up selling. However, the selling would be more in the form of profit booking rather than the significant shorts building up in the futures or the long unwinding.
2. Similarly, Bank Nifty is expected to go down to 10,335 levels and then recover to around 10,800 levels. Those who did not buy the bank stocks can look at buying them at such levels.
3. Pre-budget announcements, speculation over interest rates and 3G scam related news will continue to be in the focus. Large corporate houses involvement in 3G scam will be the fuel for markets to go down.
4. Egypt story of dethroned dictator is slowly spreading to other middle east oil producing countries (Libya, Iraq and Bahrain), and this can again put pressure on crude oil prices. If this happens, it would be really bad for our economy which is already struggling from inflation, high current account deficit and unmanagable fiscal deficit. I feel this being the larger risk, which most TV Channels and analysts are currently ignoring.
Follow Up on my stock ideas:
I wrote in last blog:
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.)
IRB achieved all our targets. First target of 185 on Thursday and 195 and 205 on Friday. Again, it has closed at 182. If you have not booked your profits on targets mentioned above, please close the trade on monday morning as the stock might go down again.
2. SBI: Buy above 2665, Targets 3011, Stop Loss: First Stop at 2480. Then put trailing stops below previous day's low.
SBI's friday's close was 2761. However, if on Monday it trades below 2740, one should exit the position.
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...)
First target of 73 was achieved quickly. On Friday, the stop loss triggerred at 76.30.
4. Aban Offshore: Buy above 572, targets 630. Stop Loss: 553. (Screaming buy if this stock comes to 337-350 range, which it will....!)
Aban made a multiple highs around 600-610 levels but could not go past it. Finally, stop loss triggerred at 587.
.
5. CESC: Buy at around 291 or above 303. Targets 325. Stop Loss: Trade below 277 for half an hour
CESC: Made a high of 309. And closed at 303 on Friday. Stop Loss revised at 300 (Friday's low)
Hope you have made the best use of this analysis! Get ready for another fall during next week...
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