Friday, October 16, 2015

Gloomy days ahead . . . ! ! !

Hi all, 

Personal View on Indian Markets - 

Nifty is currently stuck in the range of around 200 points between 8080-50 on the lower side and 8250 on the higher side; an either side breakout will decide the further course of action for markets.

Without any big trigger except the Results season for Q2FY2016 Dalal street is expected to trade range bound with different levels, one of them can be the one stated in this mail (8080-8250).

Results so far are not very attractive and the same is holding Nifty to cross higher levels, a bad quarter with poor profits can take Nifty down to lower levels of 7870-7670 also.

The short term trend is sideways with a slight negative bias based on charts and average quarterly results season so far, supports 8150-8080 and resistances near 8200-8250

The midterm trend looks gloomy because though markets are creating higher highs and higher lows, they are not able to surpass the key resistance areas, a couple of days closing above 8230-8250 can take Nifty higher till 8320-8360-8400 whereas breaking crucial support zones of 8050-7700 Nifty can even break the recent lows of 7539.....

It’s important to mention though, that the next big trigger for markets will be in 2nd week of November when Bihar Assembly results will come out

Traders are advised to trade with lesser leverage and higher caution

Cheers

Thursday, October 8, 2015

Darkness Engulfing

Hi All,

Back with the market update blogs after Ganapati Holidays.....

Nifty after bottoming out @ 7540...... now trading near a resistance of a downward gap from 8090-8225....

After 6 consecutive positive closes, today Nifty closed negative by around 0.5% @ 8129...

On daily charts a bearish candlestick at a resistance, increases chances of a weak outlook for short term.

Below 8100-8080, Nifty can come down till further support zones of 8000-7875-7700.

However 8080 level remains crucial for any downfall to unfold. Also, IV (from India Vix chart) looks like taking a support near 1699, and likely to bounce back from here, which in turn again raises concerns for bulls. Traders are also advised not to take a too many leveraged positions as the volatility is likely to increase going forward.

Supports - 8100-8080-8050-8000
Resistances  - 8160-8200-8230

Traders advised to play safe with strict stop losses for Long and short trades on the back of higher volatility expectation.

Cheers...



Wednesday, September 30, 2015

Interesting read .... Rate cut of .50% - Is it really meaningful to us.....? ? ?

EMIs down by Rs 20 per lakh, we will all buy cars nowA  A  A
- By Vivek Kaul 

Vivek is a writer who has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times, in the past. He has just finished writing a trilogy on the history of money and the financial crisis. The series is titled Easy Money. His writing has also appeared in The Times of India, Business Standard, Business Today, The Hindu and The Hindu Business Line. 

Vivek Kaul
The Nobel Prize winning physicist Albert Einstein once said: "It can scarcely be denied that the supreme goal of all theory is to make the irreducible basic elements as simple and as few as possible without having to surrender the adequate representation of a single datum of experience."

This line is believed to be the source of another quote that often gets attributed to Einstein: "Everything should be made as simple as possible, but no simpler." Irrespective of whether Einstein said this or not, it remains a very powerful quote.

It is typically applicable in scenarios where we are trying to explain things to people. And in our zeal to explain things we end up making things much simpler than they actually are. Now take the case of the Reserve Bank of India's decision to cut the repo rate by 50 basis points (one basis point is one hundredth of a percentage) to 6.75%, yesterday. Repo rate is the rate at which RBI lends to banks and acts as a sort of a benchmark to the interest rates that banks pay for their deposits and in turn charge on their loans.

This immediately led many analysts and experts who appear on television to conclude that EMIs will now fall and hence, people will borrow more and buy cars, bikes, homes, and so on. This simplistic sort of analysis you would have read by now in your daily newspaper as well.

Only if it was as simple as that.

The banks borrow deposits at a certain rate of interest. They lend these deposits as loans at a higher rate of interest. Hence, for banks to cut the interest rates at which they lend, they first need to cut interest rates at which they borrow.

Further, even if banks cut deposit rates, after a cut in the repo rate, they may not cut lending rates or they may not cut lending rates to the same extent as the deposit rates. As the RBI said in a statement released yesterday: "The median base lending rates of banks have fallen by only about 30 basis points despite extremely easy liquidity conditions. This is a fraction of the 75 basis points of the policy rate reduction during January-June, even after a passage of eight months since the first rate action by the Reserve Bank. Bank deposit rates have, however, been reduced significantly, suggesting that further transmission is possible."

Before yesterday's 50 basis points cut in the repo rate, the RBI had cut the repo rate by 75 basis points between January and June 2015. In response to this banks had cut their lending rates by around 30 basis points on an average. They had cut their deposit rates more.

Why was this the case? In some cases, banks were simply trying to make more money. In other cases, particularly in case of public sector banks, the banks also had to deal with a huge amount of bad loans that had been piling up. Basically banks had lent money to corporates, who were no longer returning it. In this scenario, in order to maintain their profit levels, banks decided to cut their deposit rates more than their lending rates.

Further, banks also need to compete with small savings schemes offered by India Post. Hence, they cannot cut interest rates on their deposits beyond a point, unless the interest rates offered on the small savings schemes are cut as well.

The larger point being the "transmission" as experts like to call it from a repo rate cut to falling interest rates on banks loans, is not so straightforward, as it is often made out to be.

In the press conference that happened soon after the RBI rate cut, the economic affairs secretary Shaktikanta Das said that the government would review the interest rate offered on small savings schemes like the Public Provident Fund (PPF) and post office deposits.

Soon after this, the State Bank of India cut its base rate by 40 basis points to 9.3%. The cut will be effective from October 5, 2015. Base rate is the minimum interest rate a bank charges its customers. This cut by the country's largest bank is expected to force the big private sector banks to act as well and cut their base rates. Andhra Bank also cut its base rate by 25 basis points to 9.7%.

Hence, this time the transmission of lower interest rates after a repo rate cut is likely to be faster than in the past. Nevertheless, does that mean consumption will pick up because interest rates are now slightly lower?

Let's do some basic maths to understand this. SBI currently offers a car loan at 10.05% to men, 35 basis points above its base rate of 9.7%. For women, the rate of interest charged is 10%.

A car loan of five years of Rs 5 lakh at 10.05% would mean paying an EMI of Rs 10,636 in order to repay the loan. With the base rate being cut by 40 basis points, a new car loan would be offered at an interest of 9.65%. This would mean an EMI of Rs 10,538 or around Rs 100 lower. Hence, for every Rs 1 lakh of loan, the EMI will come down by around Rs 20 (Rs 100 divided by 5).

So, does that mean people will now buy cars because the car loan EMI will be down Rs 20 per lakh? Does that also mean that people were earlier not buying cars because the car loan EMI was Rs 20 per lakh higher?

If the car industry is to be believed that seems to be the case. Rakesh Srivastava of Hyundai Motors told the news-agency PTI that the rate cut was a "festival gift" from the RBI. R S Kalsi of Maruti Suzuki said: "On the whole, it gives a good signal to customers. The market so far has been moving very slowly but with this (rate cut) sentiments will improve. It gives the much-needed boost to the market in the pre-festive season."

In fact, Pawan Munjal of Hero Honda also joined the rate-cut kirtan and said: "It has come at an opportune time as it will help in raising customer sentiment during the festival season."

Hero Honda as you would know is in the business of selling two-wheelers, motorcycles in particular. SBI currently charges 12.85% on its Superbike loan. The EMI on a Rs 50,000, three year loan, would work out to Rs 1681.1. With a 40 basis points cut, the new interest rate will be 12.45%. The EMI on this will be around Rs 1671.5, or around Rs 10 lower.

So people will go and buy bikes because the EMI is Rs 10 lower now? And they were not buying bikes earlier because the EMI was Rs 10 too high?

This sort of simplistic logic on part of corporates and analysis on part of the media, really beats me.

People will consume and buy things when they feel confident about their economic future. This will happen when they see job security and steady increments on the way. Steady increments will come when corporate profits start growing, which isn't the case currently. Corporate profits will start growing when the corporates are able to clean up the excessive debt that they have on their balance sheets now, among other things. And all this is easier said than done.

At the end of the day, monetary policy can only do so much.

Postscript: I would also suggest that you read the excellent piece by Tanushree Banerjee, Co-Head of Research at Equitymaster, on yesterday's rate cut. You can read the piece here.

Friday, September 11, 2015

Bulls Partying.... But be cautious....

Hi All,

As mentioned in Wednesday’s update, Nifty took resistance near 7840-7880 levels (Wednesday’s high 7846) and fell sharply by almost 2%.

However, its good to see Nifty recovered the losses smartly yesterday and now again trading near the resistances, however by now Nifty has created a higher bottom formation and if closes above 7823-7830 it will also create a higher top formation as well. Sustaining above the said levels Nifty can travel further, but 7880-7900 levels are still going to be crucial any fresh longs, on a conservative side can be initiated above 7880-7900 levels preferably.

On the lower side, 7710-7670-7600-7540 will act as good supports going forward.


Cheers....

Wednesday, September 9, 2015

Is it a reversal ? ? ?

Hi All,

After breaking the supports near 7760-50, Nifty dipped till almost 7500 levels and saw a real good bounce yesterday and today.

Now its trading near a key resistance of 7840-7880, this bounce can be termed as a reversal only if Nifty sustains above the mentioned levels, and can then travel till 8100 mark.

However, till the time 8200-8300 levels are not convincingly surpassed a major trend is likely to be negative and further lows are possible.

On a safer side traders can watch 7840-7880 levels for short term and 8200-8360 levels for midterm bullishness.

Recent low of 7540 will act as a crucial zone going forward and breaking the same might take Nifty till 7300-7200.


Cheers

Hrishi

Wednesday, September 2, 2015

Bears close the day.....

Hi All,

As mentioned in yesterday's post, Nifty saw a small bounce in the opening trades today, however, was not able to sustain the resistances near 7860-7880 and came down drastically from there, even breaking yesterdays low.

Now, as mentioned earlier 7760-7750 is the last ray of hopes for bulls and if that is broken ever more pain left for the traders....

For investors all these dips are good buying opportunities.

Cheers

                                    

Tuesday, September 1, 2015

Bears attack, Bulls ready? ? ?

Hi All,

As expected, Nifty saw a huge decline after breaking 7960-7950 levels and now trading below 7800.

Now, the recent low of 7667-7650 will act the last ray of hopes for midterm bulls, sustaining below which will open the gates for 7500-7300-7000....

Even if there is a bounce, prima facie it will be a short lived bounce (called as dead cat bounce) and 8100 will act as a crucial resistance, midterm bias will only change after surpassing 8100-8200 levels.

However, for short term bias 7650 levels will be very crucial to watch out for and will turn positive if and only if Nifty surpasses and sustains above 7800 mark today or tomorrow.

Nifty on hourly charts have a Bullish Candlestick pattern called Hammer, so if Nifty sustains above 7800 mark, one can expect a short term bounce till 7975-7950-8000-8050-8100, however breaking today's low of 7746-7740 we can expect Nifty to reach recent lows near 7680-7650.....



Cheers...
Hrishi

Friday, August 28, 2015

Fell from the Top......

Hi all,

As expected, Nifty took resistance near the levels of 8090-8100, traders should avoid going long.

Ideally Nifty should not come below 7960-7950 if this up move has to resume, breaking that would violate the gap up opening today.

Nifty support zones 7960-7950-7920-7880-7850...


Cheers...

Sign of Concern ! ! !

Hi All,

After crossing 7930 level and sustaining above it, markets rallied further by another 100 points. Now there is a big resistance zone from 8060-8230, and markets are likely to face some tension here, so it’s better to be a bit cautious and conservative.

If you have taken positions near the lows of 7770-7800 for this rally then it’s time to book some profits as markets are nearing multiple selling zones of 8060-8090-8165-8200-8230.

However, going short without any confirmation will also be not advisable.


Cheers....

Tuesday, August 25, 2015

Bottom Fishing Successful ! ! !

Hi All,

As predicted in the morning post, Nifty witnessed a bounce of almost 100 point today and now thanks to the hourly bullish pattern, we also have same pattern on daily charts (Bullish Hammer), which is usually a reversal pattern, however this time can be lesser impactful due to 2 big gap down openings.

However, for the pattern to be successful, Nifty should sustain above 7930-50 levels tomorrow, then one can expect some more bounce till 7990-8060-8100 levels.


Cheers

Bottom Fishing ! ! !

Hi All,


After a massive sell off for few days Nifty has created a Bullish Pattern on hourly charts and is sustaining above it.

If Nifty sustains above 7800 and closes above it, there is a chance of having a small bounce back; however, the resistances are near 7930-7990-8060....

Since the markets are very volatile, traders are advised to trade with strict SL on both short and long positions...

Please note that this bounce may not be a short term trend reversal and just a relief rally, let the time decide....

Cheers

Hrishi

Monday, August 24, 2015

Black Monday ! ! !

Hi All,

As stated in the earlier post, after breaching 8300-8180 Nifty continued its downward journey and reached the targets of 7900-7800....

Now on daily charts it may find a small support near 7700-7750 levels and witness a small bounce after a massive sell off of past 2 days, however, that may not be a start of a fresh up move and Nifty is likely to come down further to the levels of 7500-7400 at least.

Any bounce from now should be taken as a selling opportunity till the time Nifty does not cross 8550-8650 levels.

As per FM’s and RBI Governor’s statement nothing is drastically wrong with Indian economy except a below normal monsoon, which I personally feel is been discounted in the current sell off.

For investors - this is a golden opportunity to procure quality stocks at these levels with an appetite to invest a bit more if Nifty falls below 7500.

Traders are expected to trade cautiously as the IV (Implied Volatility) has shot up by 70-80% in a single day, suggesting markets are going to be extra volatile in coming days, advisable to trade with strict stop losses on either side...


Cheers....

Friday, August 21, 2015

Rising Window Calling....

Hi all,

Please find below a write up on what to talk to customers if they ask for the market crash.

Reasons for market crash
·         Markets crashed more on Global worries, ·         China PMI data comes lowest than 2009, Fed Rate hike looms ·         Around 4-5 Asian markets hitting 52 week lows ·         Greek PM resigns, Korea making war noises ·         Rupee hitting lower lows  

Markets going forward....What to do?

Traders – As stated earlier, markets trading below 8300 is not a good sign, however Nifty may find a support near 8180-8200-8220 range as lot of Technical Indicators like Retracements, Support & Resistances, Chart Patterns, etc are suggesting the same. However, it’s not a good time to take long positions for short term as there are no other confirmation n charts.

8185-8195 is a gap on daily charts so, If 8180 is broken on closing basis them it is almost certain that we are heading towards 8000-7900 again as that will be the target for the Triangle breakdown on Daily charts....


Investors - Best time for Long term investors in stocks and MF

Cheers

Hrishi

Thursday, August 20, 2015

Markets in bad mood.....

Hi All,

Markets witnessed a heavy sell off today on account of Trade Fire between South and Korea.

Now key levels for short term can be 8300-8350, below these levels further downside can be expected till 8180-8200.

Short term bias remains up till the time 8300 is held and midterm bias is held till the time 7900-7940 levels are intact

Nifty forming a Symmetrical Triangle on daily charts. A close above 8621-8630 or a close below 8300 will decide the further course of action....

Cheers

Tuesday, August 18, 2015

The cockroach theory by Sundar Pichai . ! ! !

A beautiful speech by Sundar Pichai - an IIT-MIT Alumnus and Global Head Google Chrome: The cockroach theory for self development At a restaurant, a cockroach suddenly flew from somewhere and sat on a lady. She started screaming out of fear. With a panic stricken face and trembling voice,she started jumping, with both her hands desperately trying to get rid of the cockroach. Her reaction was contagious, as everyone in her group also got panick The lady finally managed to push the cockroach away but ...it landed on another lady in the group. Now, it was the turn of the other lady in the group to continue the drama. The waiter rushed forward to their rescue. In the relay of throwing, the cockroach next fell upon the waiter. The waiter stood firm, composed himself and observed the behavior of the cockroach on his shirt. When he was confident enough, he grabbed it with his fingers and threw it out of the restaurant. Sipping my coffee and watching the amusement, the antenna of my mind picked up a few thoughts and started wondering, was the cockroach responsible for their histrionic behavior. If so, then why was the waiter not disturbed? He handled it near to perfection, without any chaos. It is not the cockroach, but the inability of the ladies to handle the disturbance caused by the cockroach that disturbed the ladies. I realized that, it is not the shouting of my father or my boss or my wife that disturbs me, but it's my inability to handle the disturbances caused by their shouting that disturbs me. It's not the traffic jams on the road that disturbs me, but my inability to handle the disturbance caused by the traffic jam that disturbs me. More than the problem, it's my reaction to the problem that creates chaos in my life. Lessons learnt from the story: I understood, I should not react in life. I should always respond. The women reacted, whereas the waiter responded. Reactions are always instinctive whereas responses are always well thought of, just and right to save a situation from going out of hands, to avoid cracks in relationship, to avoid taking decisions in anger, anxiety, stress or hurry. A beautiful way to understand............LIFE.

Friday, August 14, 2015

Why Parliament did not function......

Hi all,
A Video worth watching for 9 minutes....

Please don't ignore just because its BJP Video, as some real worst things were discussed in this.

Those who have not seen speeches by Ms. Sushma Swaraj and Arun Jaitley please see the important excerpts of it in this video. Please watch what Arun Jaitly said about Lalit Modi is an eye opener

And if what Kalyan singh said in his book had to be believed, which was read word by word, then really we will think, why did we elected earlier Govt for so long time even after the massacre of Bhopal Gas Tragedy incident, Mr. Anderson was bailed out of India by those politicians then in 1984..

Please watch and be aware...



Thursday, August 13, 2015

In the Independence day week Bulls are dependent a lot on 8321 ! ! !

Hi All,

Owing to domestic and global negative factors Nifty plummeted badly in this Independence day week.

Though a positive weekly close has a remote probability Bulls will still depend a lot on 8320-8300 levels. A close below the same and Nifty is set for another down turn will 8200-8100-7950 levels.

However, personally I feel a lot of negative things are now factored in by now (Like, Yuan devaluation, GST not passing in, Policy Paralysis due to non functioning of both the houses of Parliament, etc.) and still Nifty managed to stay above yesterdays low of 8338 which is a sign of relief.

So If we hold 8320-8300 levels on closing basis a short term bounce can not be ruled out.

Bulls .... last ray of hope.... 8320...

Bears can party if the same is breached on a closing basis.

Cheers

Hrishi

Saturday, August 8, 2015

FNO lot sizes revised...

SEBI revises the market lot and minimum lot value criteria.

Minimum lot value revised to 5 lac. Minimum lot size for stocks reduced to 50 and in multiple of 25 there after.

For high value stocks minimum lot size fixed at 10 and multiple of 5.

Index minimum lot size fixed  at 10 and multiple of 5 there after

At current nifty value of appx 8500. New Nifty index lot will be 60.

Bank nifty will be 30...applicable from
Oct expiry   ..   

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1436782665000.pdf

Friday, August 7, 2015

How to Select a Fundamentally sound company......

Hi All,

Got a nice What's App forward on selecting a small Cap Company.... worth reading

Buying Strategy for Small Caps

1. Go for companies with low debt ratio (preferably less than one)
2. A high interest coverage ratio (above 3x) and a high return on equity are big advantages
3. Avoid companies with huge liabilities in the form of foreign currency convertible bonds / external commercial borrowings
4. Look at the quality of the management, its governance standards and how investor-friendly the company is.
5. Mid-cap and small-cap companies can be future market leaders, so be patient with your investments

Those who wish to invest in small-cap stocks should do so only if they have a long investment horizon and tolerance for volatility. Small-cap stocks suffer the steepest falls in a bear market and rise the most in a bull market. An investor should stay invested for at least three-five years to allow their portfolio to gain from at least one bull run.

Benefits of Investing in Small Caps

1. Huge growth potential: The first and the most important advantage that a small cap stock gives you is their high growth potential. Since these are small companies they have great scope to rise as opposed to already large companies.
2. Low Valuations: Usually small cap stocks are available at lower valuations compared to mid & large caps. Hence, if you invest in good small cap companies at initial stage and wait for couple of years,  you will see price appreciation not only because of growth in top line and bottom line but also due to rerating which happens with increase in market capital of the company.
3. Early Entrance Advantage: Most of the fund house and institutions do not own small caps with low market cap due to less liquidity which make it difficult for them to own sufficient no. of shares. This gives retail investors an opportunity to be an early entrant to accumulate such companies shares. When company grows in market cap by delivering consistent growth and becomes more liquid, entry of fund houses and institutions push the share prices up giving maximum gains to early entrants.  
4. Under–Researched: Small cap stocks are often given the least attention by the analysts who are more interested in the large companies. Hence, they are often under - recognized and could be under-priced thus giving the investor the opportunity to benefit from these low prices.
5. Emerging Sectors: In a developing economy where there are several new business models and sectors emerging, the opportunity to pick new leaders can be hugely beneficial. Also the disruptive models in the new age is leading to more churn and faster growth amongst the nimble footed smaller companies.

Concerns while Investing in Small Caps

1. Risk: The first and the most important disadvantage a small cap stock is the high level of risk it exposes an investor to. If a small cap company has the potential to rise quickly, it even has the potential to fall. Owing to its small size, it may not be able to sustain itself thereby leading the investor into great loses. After all, the bigger the company, the harder it is for it to fall.
2. Volatility: Small cap stocks are also more volatile as compared to large cap stocks. This is mainly because they have limited reserves against hard times. Also, it in the event of an economic crisis or any change in the company administration could lead to investors dis-investing thereby leading to a fall in prices.
3. Liquidity: Since investing in small cap stocks is mainly a decision depending upon one’s ability to undertake risk, a small cap stock can often become illiquid. Hence, one should not depend upon them for an important life goal.
4. Lack of information: As opposed to a large cap company, the analysts do not spend enough time studying the small cap companies. Hence, there isn’t enough information available to the investor so that he can study the company and decide about it future prospects.

Cheers Hrishi

Tuesday, August 4, 2015

And the God opens a Dmat Account ! ! !.. Why are you waiting.

Tirupati Trust opens demat account on Balaji's name to enable devotees to donate shares and securities 
HYDERABAD: Balaji, the world's richest god at Tirupati, has now opened a demat account to enable devotees to donate shares and securities, after finding it a tedious task to get physical share certificates dropped in Hundi transferred on his name.

Considered the first globally for a shrine management, Tirumala Tirupati Devasthanams (TTD) has opened demat account (1601010000384828) with the Stock Holding Corporation of India.

PS Reddy, MD and CEO of Central Depositories Service (CDSL), told ET that the innovative move by TTD was primarily aimed at addressing the hassles pertaining to transferring the physical share certificates. "TTD has been receiving physical share certificates as donations by devotees in its open Hundi, which indicates that devotees are interested in donating shares.

TTD viewed that enabling devotees to use the demat account for donations helps both." Reddy said though TTD is the first shrine management in the country till date to open a demat account, CDSL would explore similar interest from other temple managements in other parts of the country that were receiving shares as donations.

While acknowledging that the temple has been receiving thousands of share certificates valuing lakhs of rupees, a TTD top official, however, refused to divulge details on the quantum and value of shares received so far. 

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