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Turn-By-Turn Moves of Bulls and Bears!!!!!
Stock Markets opened higher and on a flat note and experienced a fall for three consecutive days to close lower by nearly 2%. The share markets opened flat on the fourth trading session and ended flat with high volatility throughout the day. The last day had a kind of bounce back but again opened higher with a gap-up, so experienced a fall from the beginning itself. There was no much fascination in the markets last week and hence traders participated in sector specific and stock specific moves.
On the first trading day the FMCG giant HUL outperformed due to the positive quarterly results, to close higher by almost 6.7%. Otherwise PNB, HDFC in the banking sector and Sesagoa, Heromotors performed well. Overall Media, Banking and FMCG sectors performed well. However, stock markets were dragged down due the worst performances of Energy and Metal sectors. Amongst the frontline stocks there was no much sector specific positive or negative move on the second day, but considering the whole list of stocks; Realty, Auto and Banking sectors pulled the markets down. On the third day RIL and ADAG performed well as a result of their collaboration talks to start the data services together. Otherwise there was no much sector specific negativity in the markets. The share markets experienced a sector specific move with Infra sector specifically; Bhel, RElinfra, Jpassociates and its allied construction sector specifically; DLF and ACC performed very well. The power sector specifically; Tatapower, Gail and Reliance too performed well. The last day again did not perform sector wise. The combination of different stocks like Ambuja, Heromotors, Hindalco, cairn and Sunpharma contributed nearly 2% on an average. Media was the only sector that performed consistently positive for the entire week.
The appreciation of Dollar and the fall in demand for the oil tended the oil sector to fall at the initial session of the week. Rupee too depreciated due to the fall in the quantity of foreign exchange and negative local indices. The resultant was a rise in oil prices by almost 2 Rs/Litre. The shifted focus on ways to curb the Euro Debt crisis was one of the major reasons for a low demand. This concentration could have given a positive jerk to the European markets but the Greece leaders’ referendum at a bailout plan led to a crash in the French banks and overall Euro zone countries. Analysts also fear that Italy might be the next country to follow Europe and America. Now, India is looking forward to financing the Euro zone debt if the Euro gives an assured assessment of its policies.
The Economists are still holding their view of more than 7% GDP growth next fiscal year, even though the recession fear globally and project delays locally is prevailing in the markets. The FDI inflows are also not affected irrespective of unhealthy global conditions and intra political controversies in India. In fact, it has increased nearly double as compared to the last year. India is also heading towards introducing more FDI allowances to welcome more FDI participation specifically in broadcasting industry. Moreover, the FII limit for infrastructure bonds and debentures has been increased from 5 Bn to 25Bn dollars. FIIS also invited to the other Government and corporate bonds.
What next………
Now the resistance turned support at 5200 levels for the Nifty will act as the next immediate support for the markets. The markets opened higher in the last trading session of the previous week and it might give a correction up to 5030-5010 levels. To support this, not so good volumes and the oscillators lying in the overbought zone too suggest some negativity. However, the positive oscillator crossovers specifically in the Stochastic with higher volumes on the daily charts might give some bounce back initially up to 5400 levels which is acting as a strong trend line resistance for the markets.
So traders are requested to avoid index trading and go stock specific for now.
E-S-C Analysis…
Economic-Sector-Company Analysis is just like a funnel used to seperate one ideal stock from a big lot. The impurities in the form of not so desirable stocks are inspected and thereby removed and then a fine range of few stocks are selected for investment. In short E-S-C analysis is used for filtration of fundamentally good companies from the economy as a whole.
E-S-C analysis is a part of security analysis where forces affecting the value of the global and national economy are taken into consideration. Later as per the economic conditions, various sectors viz; IT Sector, Retail Sector, Power Sector, Insurance Sector, Service Sector, Auto Sector, Banking Sector etc. and industries within these sectors are examined on the basis of demand-supply factors. Ultimately, a scanning of the companies including their financial data, management, business and competition with others is done. This can further be elaborated to Global economy- local economy-Sector-industry-company. This reduces the risk of random selection and maximizes profits.
Fundamental analysis helps in analyzing the performance at each level:
Firstly forecast the performance of all the major economies of the world and analyze their growth cycle i.e. the rate of inflation or recession. This Study might indirectly reveal the condition of Power sector or Banking Sector.
Secondly study the local economy in comparison with the world economy in terms of its GDP, currency valuation, Government taxation policies, Employment and other natural factors. Analysis at this stage automatically helps to generate the performances of Agricultural sector, IT Sector, Retail Sector etc.
Subsequently evaluate different sectors in accordance with the conditions prevailing in the economy. Some sectors (agricultural) work better than others during specific economic conditions (monsoon).
The segregation of the sector into various industries (sugar, cotton etc) is the following step. The fittest during that period is taken into consideration.
Ultimately once the possible industry is narrowed down, the investor is left with a few potential individual stocks based on the synthesis of their financial statements and management and most importantly their performance as compared to other businesses within the same industry (Renuka, Balrampur Chini, Sakhti Sugars etc).
So if you are looking for a successful life time value investment in the stock market, just go for it!!!
Investors Be Cautious: Gang War Still On
Stock Market opened on a positive note and recorded a 2% upward move on the same day itself. The second trading session experienced a gap-up opening but was ultimately pushed down to close flat, due to a fall in the IT sector. On the contrary, the IT sector specifically Infosys and Banking sector were at the forefront on the third day to pull the stock markets up; one of the major reasons being good Quarter 2 results for Infosys. The fourth day opened higher but closed negative as a result of the collective poor performance by Auto, Infra and Pharma. The last day opened lower and traded positive with all sectors positive, but Realty. In short the stock markets rallied for the entire week to close higher by 5%.
IMF, EU and ECB have given a green signal for providing aid of up to 8 Billion to Greece by early November. This would be possible with the joint efforts of Private sector and Official sector to some extent. Following the footsteps of the Greece, S&P last week announced the Spain’s downgrading to AA-. Spain is forced to rely on deficit financing and is expected to add to its yield through Government bonds to provoke investors. Now all the other Euro zone countries are striving for their own solvency issues.
To change the investor sentiments and increase the free flow of foreign currency, Government, specifically Anand Sharma, the Union Cabinet Minister for Commerce and Industry, has taken initiative to allow up to 51% FDI stake in single brand retail businesses in India. For this the Government is likely to lower the tariff barriers.
On one side the borrowers are concerned about the constant interest rate hikes that the RBI is undertaking after every major event and on the other side RBI is thinking of its final rate hike of 25bps even though the IIP data has come to 4.1% as against 3.3% last time. Moreover, the inflation is almost near to a double digit and Food price index also rose to 9.35% and fuel price index to 15.10%. So unless the prices ease out the RBI would not change its word. Contradictorily the central banks have cut their interest rates to welcome more demand.
The gold market was range bound for the entire week due to the recovery in the equity markets. However, on Friday it climbed a bit with a change in the investor focus to the bullion markets. The Gold is likely to make record highs next year as the long term buyers like ETFs and Central banks have entered the Bullion markets.
What next...
Last week was highly optimistic but we are yet to come out of the consolidation phase. The stock markets are still range bound and thereby indecisive. The Nifty has given a 3&8 EMA positive crossovers along with stochastic crossover with rising volumes. We can expect some more positivity up to 5300-5350 levels if the immediate resistance at 5170-5200 is broken. On the daily charts either we can expect a bit of correction as the nifty has arrived at the resistance level or it might act as a breather for the next positive rally. We also have few major company results to be announced this week and thereby expect stock specific volatility in the markets.
So let’s hope for the best…….
Stock Market Bull Wins the Bar Jump (Trendline Breakout) Race!!
Last month the country broke the trade deficit record of USD 21 Billion. The country has a trade deficit with 48 countries out of which China ranks first. India has been consistently in demand of oil and gold imports. However, the lower industrial output except for Garment & Textile industry and overall weak global market scenario specifically Eurozone crisis, the country is unable to bridge the gap between increasing imports and declining exports.
Growth rate would also record a three year low due to the lower industrial output due to the lethargic growth in the industry allied sectors viz; Power and Trade. India will experience a dip of up to 5.1% GDP this year. Moreover, India recorded highest inflation rate as compared to other BRICS nations due to lower supply, lower monsoon & poor storage facilities. The inflation has not only affected the luxurious goods sector but also dampened the basic necessities. This would lead to widening the equitable distribution gap.
What next….
Our first mentioned target for nifty at 5800 levels has been achieved. Infact nifty has crossed the resistance level at 5800. After this dynamic turn, we expect a bit of correction of up to 5720-5750 levels. To support the oscillators have already reached the over-bought zone. However, the weekly chart is still positive with rising volumes and oscillators positive crossover. So we can expect a further upward jump of up to 6000 levels in the first place.
The FDI issue is yet to be resolved. The final voting and verdict of the political parties will decide the fate of FDI in multi brand retail. Moreover, the analysts expect the markets to be illiquid till the end of the year. So book profits and cover losses beforehand.
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