Tuesday, December 12, 2006

Stock market requires commitment both in terms of money and mind.


NIFTY: - Open 3962 High 3965 Low 3798 Close 3850

Supp 3795/3770/3735 Res 3873/3925/3946

SENSEX: - Open 13783 High 13802 Low 13262 Close 13399

Supp 13200-170/12950/12670 Res 13490/13580/13720

What happened on Monday:-

We opened a bit down and went to lows around 1 pm yesterday. There were no gainers on Nifty. All 50 stocks were down yesterday. It was a Manic Monday Mayhem. But the notable thing is that FIIs didn’t sell much yesterday. RBI’s move of raising CRR was reacted in an exaggerated way. Banks did most of the damage as they were torn apart by market players and we saw a 7% fall on Bank Nifty. PNB, SBI,ICICI each lost 7%. Other losers were Zee, Tisco. They too lost 6% each.

What shall we witness on Tuesday:-

When we got the provisional figure, it was Rs 334 Cr net buys. And if we are to go by that figure, we have to believe that yesterday’s selling pressure was peculiarly from the weak players in the market. They buy in Futures and Options or they buy on margin funding. Such people will never make money in this market. Stock market requires commitment both in terms of money and mind. We have to understand that we have to buy in cash and then play this game. Derivatives and Margin funding are played on leverage and borrowed money. And that is never a way to earn money in this market. If anybody wants to earn some serious and consistent money, one has to buy in cash and not through any kind of leverage. In the long run, cash-buyers are only going to survive and not any leveraged players.

Now in this fall, we still held 3795 which was the previous swing point of Nifty and on Sensex also 13200 is a major support which has not been broken. The bullish outlook gets confirmed by looking at these factors. So we can still buy good stocks.

If we suppose CRR raise as a bad news, we cannot ignore good news such as Infosys getting added to NASDAQ100 and Indo-US Nuke deal going through. Sometimes good news gets neglected because of overwhelming response to some bad news but market has a habit of discounting each and every news and good news will be discounted when we do bottom out.

Bottom fishers can look at ONGC, Hero Honda, Reliance for sharp reversals.

Catch them falling :-

TISCO has come down around 17% from recent top around 548 levels and we can invest in it. There has been lot of hoo-hah about the Corus deal and we may see stability in the stock as and when this matter gets over. We should get returns in excess of 15% in this counter.

Dr Reddys Labs is one stock where we should invest and this stock has a lot of potential to reach 850-900 levels.

L&T has got many big orders in the recent past and the stock can be bought for investment purposes. The stock can target 1600-1650 levels soon.

Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.

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