DAILY REPORT FOR 16 JULY, 2008
NIFTY (3861 -178 pts)
Supp 3820/3770/3700 Res 3925/3980/4050
SENSEX (12676 -654 pts)
Supp 12600/12420/12280 Res 12790/12950/13100
We have fallen from 21200 to nearly 12500 and risk-reward ratio looks favourable here. We are not buying at 21000 to fear, we are at almost 12000. The downside from here may be 10000 also but India growth story being still strong, one can start buying. There have been hiccups like IIP, Inflation, Crude and now politics. But now it looks like all bad news is getting discounted. No economy can prosper without odd slowdowns like we are facing. So it is a time to invest and one should take benefit of these opportunities. Finding a bottom is always difficult in a Bear market like it is with tops in a bull market. WE CAN NEVER BUY A BOTTOM AND SELL A TOP, BUT THIS IS A CASE WHERE WE HAVE A LITTLE DOWNSIDE RISK BUT MORE UPSIDE POTENTIAL.
Review of the previous session:-
It was a very bad session for the bulls as Sensex and Nifty stocks got sold off consistently for the whole day. Asian markets opened weak and so did Indian markets. Both could not recover the whole day and went into a downtrend.
All 50 stocks from Nifty and 30 stocks from Sensex finished in the negative zone. Banks, Realty were major losers. Frontline Tech stocks showed some hope. Only 20% stocks on the BSE could close in the positive.
BSE Breadth 535 Adv-2105 Dec NSE Breadth 147 Adv-1067 Dec Upper Circuit - 88 Lower Circuit –240
BSE Vol Rs 4304 Cr NSE Vol Rs 10623 Cr F&O NSE Vol Rs 44122 Cr
FIIs sold Rs 702 Cr in cash market and MFs bought 283 Cr. In F&O, FIIs sold Index Futures worth Rs 103 Cr and sold Stock Futures worth Rs 327 Cr. Their Outstanding position in Futures is 34675 Cr and Options is 20331 Cr.
Additional Data:- Gold $984/oz Nymex Crude $145.50/bbl
Bullish build-up – No stocks showed significant bullish build-up
Bearish build-up – Minifty, BankNifty, Ranbaxy, Orchid, NTPC, ICICIBank, RPL, ITC, SBI
OI 66768 Cr (-2142 Cr) Nifty OI Up 5% PCR 1.01 (from 1.22)
F&O cues show very weak markets as Nifty built up more shorts. PCR going down shows shakeout of Put writers. Ranbaxy added a lot of short OI and it will have to consolidate before generating any meaningful rally.
Outlook for 16 July, 2008:-
Sensex broke through the recent support at 12822 and then it was like a bottomless pit. We hit new lows for 2008 and tested May 2006 tops around 12600.
12300-12600 was the level where we were going to bottom-fish, but we started a bit early. In spite of that, investors still have to look for good buys. We have to buy decent stocks when there is blood on the street. Patience will be rewarded.
Anybody having investment term for 3-5 years will gain by these opportunities. Tops happen quickly but bottoms take time to form. So buying in cash is only advised. Those who trade on leverage and F&O can find buying a very painful experience.
Ideas for Trading (for short-term position):-
Catch them falling (Ideas for Investment):-
List of stocks one can buy has already been given yesterday: - Bata, Bharat Electronics, Crompton Greaves, ICICI Bank, IDEA, Infosys, Rolta, Mercator Lines, Siemens, Tata Steel. Add Capital Goods stocks like L&T and Thermax to this list.
One can accumulate these stocks for 15-20% appreciation in next 1 to 2 months from current levels. But being a bear market rally, upside will face resistance. One needs to take profits when they are available and buy the stocks again in dips.
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.