The Bombay Stock Exchange will launch SENSEX mini derivatives Contracts from January 1, 2008 in a market lot of FIVE. This is a first in India. The small size of the contract would be attractive for retail investors as there would be comparatively lower capital outlay, lower trading costs, more precise hedging and flexible trading. It is a step to encourage and enable small investors to mitigate risk and enable easy access to India’s most popular index, SENSEX, through futures & options.
The Security Symbol for SENSEX mini Contracts will be MSX. The contract is available for one, two & three months along with weekly options.
The SEBI Board has approved introduction of 7 new derivative products for the Indian market based on the recommendations made by the SEBI Committee on Derivatives headed by Prof. M. Rammohan Rao. As stated by SEBI, the introduction of these products is a step intended to progressively encourage markets to move onshore.
Source: Moneycontrol.com
Showing posts with label Sensex. Show all posts
Showing posts with label Sensex. Show all posts
Sunday, December 30, 2007
Sensex to give 15-20% returns in long-term
Ajit Dayal of Quantum Advisors says Sensex has given compounded returns of 35% peranum in the last 7 years and one must not expect similar returns but returns of 15-20% over the long-term is possible.
He further told CNBC-TV18 that valuations in India are not cheap but they are not near bubble phase either and so they are not uncomfortable with current valuations. At present at Quantum Advisors they have fairly low cash levels said Dayal.
Excerpts from CNBC-TV18's exclusive interview with Ajit Dayal:
Q: The expectation is that come January there is going to be big dollops of cash and that’s probably going to take the market a bit higher than where it is. Would you go with that theory?
A: We have to go back a bit and look at- if you had put Rs 100 in the BSE 30 Index in January 2001, today that Rs 100 standing in December 2007, seven years later effectively would have been Rs 874. So that’s a profit of Rs 774 over the last 7 years i.e a compounded rate of return of about 35% per annum or about 2.5% per month. I don’t think that people should expect January-February-March-April 2008 to sort of give you that sort of return.
Having said that we are very optimistic on India. We believe that Indian economy is totally in many ways dealing from what's happening in the US. It never has really been coupled to the global economy. India is very much a domestic driven economy. Unfortunately, some mishaps in policy where we have gotP-notes that has made us part of global capital flows in a far more accelerated fashion then probably what we can handle and so if something happens in the US- subprime crisis, if the big groups out there begin to withdraw capital from all their sort of territorial expansion plans and territorial investment plans which includes India and they take capital back home then yes, because of the P-note exposure and linkage that the Indian capital market has you could see a sell off.
So will January 2008 see a sell off because of what's happening in the US or will January 2008 see an increase-We don’t know but one should expect about a 15-20% rate of return in our view from Indian stocks in the long run not the 35% per annum that we have seen since 2001 in last seven years but certainly a 15-20% long-term sustainable number still looks very good us.
Q: How comfortable are you feeling about valuations at this point- the 20,000 plus? Are you feeling okay about the way we are stepping into earnings?
A:We are a value investor and we tend to be in cash when we don’t like the valuations. We actually are in fairly low cash right now. We had taken a bit of profits if you will in the month of October and we looked quite smart because the market fell off when the P-notes thing was announced. We looked very stupid when the market rebounded and we are still sitting in some cash but we have been in fairly low cash levels right now and that’s should indicate to you and to our viewers that we are very comfortable with valuations, we are not saying it is cheap but we don’t think it is anywhere close to bubble environments.
There is always stock selection that’s going on in our processes and within a basket of 20-25 stocks we have a portfolio now, which is in our view still a value portfolio. So yes, there is value; we are not uncomfortable with the valuation at this index level.
Q: How are you feeling about that midcap and smallcaps? Do you think its still a valuation catch up that’s playing out or is it just the money flows, which are being diverted to that part of the market?
A: It is more like money flows. There is always sector rotation in stock market. Many fund managers have got sort of favorite sectors. We are sort of cap insensitive and sector insensitive in many ways when we pick and choose our stocks. But if one looked at what happened in the indices from 2006 May, which sort of bottom in May-June 2006, it’s been really the largecaps, the BSE 30 led stocks and within the BSE 30, 5-6 stocks have accounted for a much of the rise in the Index till about the third quarter this year.
So there is some sort of a leadership change, as you all would talk about it. With regards to DSP Merrill Lynch forecast of estimated 10% GDP growth rate, our numbers and our valuation numbers are based upon a 6.5-7% the rate of growth of GDP, and if the GDP numbers do indeed end up at been 8-9 or 10% that would make the market in our view very cheap. So at 6.5% we are seeing the market to be not expensive, not cheap but if a 10% number did pan out which we don’t believe it will but if it did pan out and in the next few years if we get the infrastructure right then we believe it can, then the market is trading still in our view extremely cheap.
So we will be rushing into buy, if we got new cash and the 10% GDP numbers did sort of pan out.
Q: From the earnings lot though would you include IT in your list this time around or you will still stay away?
A: No we have been buyers of IT. We have been buying IT; we had some IT exposure at the start of the year. We have actually been adding to it over the last few quarters. We don’t believe that currencies, a weak currency is the only reason to buy IT stocks. We believe there are some fabulous companies out there and we hope that we own them in the portfolio and have made the right selection.
We have been buyers of IT. So it has been a nice last one or two weeks for us though not nice one-two quarters for us because we have been sort of buying up the IT as they have been coming down.
Q: Have you had reason to add any agro commodities to your list such as sugar?
A: No, we actually looked at sugar a couple of months ago and we know the share prices have rebounded a bit since then. But we haven’t really had the strength to go in and buy into sugar because that is sort of driven a lot by political influence and by near-term political events. Our job as analyst, as fund managers we believe in the long-haul is to try to sort of analyze things that we can understand and we have little understanding of what makes sugarcane and sugar prices move around given all the political stuff going on around it. So we are not able to guess that and we don’t have it.
We have been certainly watching it, studying it but don’t have the conviction or the strength to put money behind it as yet. One day we will probably but haven’t done so far.
Q: What is the top pick for 2008?
A: We do not disclose names but I recently spoke about IT and we like IT. We haven’t bought IT with a view of three-six months; we do not buy stocks with three-six months views. We invest in them after studying and trying analyze where things could end up on the three-five year view at the very minimum. So our view is that IT as a sector could recover.
We are not believers in a strong rupee. I think we kind of fool ourselves a bit by saying that when we strengthen against US dollar that we are a strong currency. There have been some issues in America and America has had an inherently weak currency. So a basic currency trade is a two way game; if one has a weak dollar it got to be something strong on the opposite side. So we have happened by accident to have a strong rupee against the US dollar.
And our view is that the Indian rupee given the fact that if one looks at the current account deficits or trade flows, you stripe out of the portfolio money that’s coming into India every year and we have had about USD 50 billion of portfolio money in India over the last four years and so if you strip at money out, India is actually running a current account deficit and is been funded by portfolio flows and no one has any control or any understanding of how sustainable these portfolios flows are on a month to month basis, on a quarterly basis or even on annual basis specially given the fact that P-Notes account for half of those flows.
We are not convinced that a weak dollar in that sense a strong Indian rupee is a given and the IT companies that we own in the portfolios we believe can manage the environment around them.
Source: Moneycontrol.com
He further told CNBC-TV18 that valuations in India are not cheap but they are not near bubble phase either and so they are not uncomfortable with current valuations. At present at Quantum Advisors they have fairly low cash levels said Dayal.
Excerpts from CNBC-TV18's exclusive interview with Ajit Dayal:
Q: The expectation is that come January there is going to be big dollops of cash and that’s probably going to take the market a bit higher than where it is. Would you go with that theory?
A: We have to go back a bit and look at- if you had put Rs 100 in the BSE 30 Index in January 2001, today that Rs 100 standing in December 2007, seven years later effectively would have been Rs 874. So that’s a profit of Rs 774 over the last 7 years i.e a compounded rate of return of about 35% per annum or about 2.5% per month. I don’t think that people should expect January-February-March-April 2008 to sort of give you that sort of return.
Having said that we are very optimistic on India. We believe that Indian economy is totally in many ways dealing from what's happening in the US. It never has really been coupled to the global economy. India is very much a domestic driven economy. Unfortunately, some mishaps in policy where we have gotP-notes that has made us part of global capital flows in a far more accelerated fashion then probably what we can handle and so if something happens in the US- subprime crisis, if the big groups out there begin to withdraw capital from all their sort of territorial expansion plans and territorial investment plans which includes India and they take capital back home then yes, because of the P-note exposure and linkage that the Indian capital market has you could see a sell off.
So will January 2008 see a sell off because of what's happening in the US or will January 2008 see an increase-We don’t know but one should expect about a 15-20% rate of return in our view from Indian stocks in the long run not the 35% per annum that we have seen since 2001 in last seven years but certainly a 15-20% long-term sustainable number still looks very good us.
Q: How comfortable are you feeling about valuations at this point- the 20,000 plus? Are you feeling okay about the way we are stepping into earnings?
A:We are a value investor and we tend to be in cash when we don’t like the valuations. We actually are in fairly low cash right now. We had taken a bit of profits if you will in the month of October and we looked quite smart because the market fell off when the P-notes thing was announced. We looked very stupid when the market rebounded and we are still sitting in some cash but we have been in fairly low cash levels right now and that’s should indicate to you and to our viewers that we are very comfortable with valuations, we are not saying it is cheap but we don’t think it is anywhere close to bubble environments.
There is always stock selection that’s going on in our processes and within a basket of 20-25 stocks we have a portfolio now, which is in our view still a value portfolio. So yes, there is value; we are not uncomfortable with the valuation at this index level.
Q: How are you feeling about that midcap and smallcaps? Do you think its still a valuation catch up that’s playing out or is it just the money flows, which are being diverted to that part of the market?
A: It is more like money flows. There is always sector rotation in stock market. Many fund managers have got sort of favorite sectors. We are sort of cap insensitive and sector insensitive in many ways when we pick and choose our stocks. But if one looked at what happened in the indices from 2006 May, which sort of bottom in May-June 2006, it’s been really the largecaps, the BSE 30 led stocks and within the BSE 30, 5-6 stocks have accounted for a much of the rise in the Index till about the third quarter this year.
So there is some sort of a leadership change, as you all would talk about it. With regards to DSP Merrill Lynch forecast of estimated 10% GDP growth rate, our numbers and our valuation numbers are based upon a 6.5-7% the rate of growth of GDP, and if the GDP numbers do indeed end up at been 8-9 or 10% that would make the market in our view very cheap. So at 6.5% we are seeing the market to be not expensive, not cheap but if a 10% number did pan out which we don’t believe it will but if it did pan out and in the next few years if we get the infrastructure right then we believe it can, then the market is trading still in our view extremely cheap.
So we will be rushing into buy, if we got new cash and the 10% GDP numbers did sort of pan out.
Q: From the earnings lot though would you include IT in your list this time around or you will still stay away?
A: No we have been buyers of IT. We have been buying IT; we had some IT exposure at the start of the year. We have actually been adding to it over the last few quarters. We don’t believe that currencies, a weak currency is the only reason to buy IT stocks. We believe there are some fabulous companies out there and we hope that we own them in the portfolio and have made the right selection.
We have been buyers of IT. So it has been a nice last one or two weeks for us though not nice one-two quarters for us because we have been sort of buying up the IT as they have been coming down.
Q: Have you had reason to add any agro commodities to your list such as sugar?
A: No, we actually looked at sugar a couple of months ago and we know the share prices have rebounded a bit since then. But we haven’t really had the strength to go in and buy into sugar because that is sort of driven a lot by political influence and by near-term political events. Our job as analyst, as fund managers we believe in the long-haul is to try to sort of analyze things that we can understand and we have little understanding of what makes sugarcane and sugar prices move around given all the political stuff going on around it. So we are not able to guess that and we don’t have it.
We have been certainly watching it, studying it but don’t have the conviction or the strength to put money behind it as yet. One day we will probably but haven’t done so far.
Q: What is the top pick for 2008?
A: We do not disclose names but I recently spoke about IT and we like IT. We haven’t bought IT with a view of three-six months; we do not buy stocks with three-six months views. We invest in them after studying and trying analyze where things could end up on the three-five year view at the very minimum. So our view is that IT as a sector could recover.
We are not believers in a strong rupee. I think we kind of fool ourselves a bit by saying that when we strengthen against US dollar that we are a strong currency. There have been some issues in America and America has had an inherently weak currency. So a basic currency trade is a two way game; if one has a weak dollar it got to be something strong on the opposite side. So we have happened by accident to have a strong rupee against the US dollar.
And our view is that the Indian rupee given the fact that if one looks at the current account deficits or trade flows, you stripe out of the portfolio money that’s coming into India every year and we have had about USD 50 billion of portfolio money in India over the last four years and so if you strip at money out, India is actually running a current account deficit and is been funded by portfolio flows and no one has any control or any understanding of how sustainable these portfolios flows are on a month to month basis, on a quarterly basis or even on annual basis specially given the fact that P-Notes account for half of those flows.
We are not convinced that a weak dollar in that sense a strong Indian rupee is a given and the IT companies that we own in the portfolios we believe can manage the environment around them.
Source: Moneycontrol.com
Saturday, December 1, 2007
Sensex to touch 20,200 in Dec
The markets kicked off the December series on a strong note. Powered by positive global cues and healthy buying interest in stocks across sectors, the indices surged ahead to close with handsome gains. Nifty closed at 5,763, up 128 points, while the Sensex shut shop at 19,363, up 360 points.
The markets started the new series on a positive note and ended the day on an extremely strong note. There was high turnover on both the cash and F&O side. Volatility was very low. Cues from equity markets, across the globe, were encouraging, as most of the Asian peers ended in green. Midcaps were also shining and the BSE midcap index outperformed the benchmark indices.
Sensex and Nifty are up 2.7% each. The CNX midcap index is up 4.8% and the BSE smallcap index is up 3.4%. The BSE realty index is up 8%. Among the Nifty gainers, VSNL is up 19% and Maruti is up 7%. Among the midcap gainers, Eveready Industries is up 31% and WWIL is up 29%.
All the key BSE indices ended in green led by metal, power, realty and IT indices.
DLF, Reliance Energy, Sterlite, Unitech, Nalco, Tata Power, MTNL, TCS and HDFC were among the top gainers on indices. Among the few losers were HUL, Ambuja Cements, Bajaj Auto, GSK, HPCL and Hero Honda.
Deven Choksey of K R Choksey Securities said that distributed buying is taking place in various counters and that shows an indication that the market will go up in December. He added that the range in which the market will move in December will be in the range of 18,800-20,200 levels.
“I do not know much about short covering at this point of time. Post Q2 results, investors are shuffling their portfolio and distributing their weights, across some of the stocks, which are likely to emerge as leaders. I see a kind of distributed buying taking place in various counters, which give a promise for the market to go up in the month of December. Having consolidated in the month of November, we are heading for 19,600 and 20,200 levels in this month on a higher side. The market may take some support at around 18,800 levels, which will become a kind of base level for this month. Broadly, the range will be 18,800 and around 20,000-20,200 levels, in which I see the market moving in the month of December,” said Choksey.
Source: Moneycontrol.com
The markets started the new series on a positive note and ended the day on an extremely strong note. There was high turnover on both the cash and F&O side. Volatility was very low. Cues from equity markets, across the globe, were encouraging, as most of the Asian peers ended in green. Midcaps were also shining and the BSE midcap index outperformed the benchmark indices.
Sensex and Nifty are up 2.7% each. The CNX midcap index is up 4.8% and the BSE smallcap index is up 3.4%. The BSE realty index is up 8%. Among the Nifty gainers, VSNL is up 19% and Maruti is up 7%. Among the midcap gainers, Eveready Industries is up 31% and WWIL is up 29%.
All the key BSE indices ended in green led by metal, power, realty and IT indices.
DLF, Reliance Energy, Sterlite, Unitech, Nalco, Tata Power, MTNL, TCS and HDFC were among the top gainers on indices. Among the few losers were HUL, Ambuja Cements, Bajaj Auto, GSK, HPCL and Hero Honda.
Deven Choksey of K R Choksey Securities said that distributed buying is taking place in various counters and that shows an indication that the market will go up in December. He added that the range in which the market will move in December will be in the range of 18,800-20,200 levels.
“I do not know much about short covering at this point of time. Post Q2 results, investors are shuffling their portfolio and distributing their weights, across some of the stocks, which are likely to emerge as leaders. I see a kind of distributed buying taking place in various counters, which give a promise for the market to go up in the month of December. Having consolidated in the month of November, we are heading for 19,600 and 20,200 levels in this month on a higher side. The market may take some support at around 18,800 levels, which will become a kind of base level for this month. Broadly, the range will be 18,800 and around 20,000-20,200 levels, in which I see the market moving in the month of December,” said Choksey.
Source: Moneycontrol.com
Wednesday, November 28, 2007
Stay short or stay out, advise experts
In a choppy session today on Dalal St, the last hour jitters returned to haunt the investors and the markets slipped significantly. The Nifty closed at 5,616 down 81 points, while Sensex shut shop at 18,939 down 189 points.
The weakness in markets was inline with Asian indices trading flat or negative despite some positive cues from the Dow yesterday.
A Merrill Lynch report on the market says that they expect a consolidation before the final bubble phase. They say that fair value of Sensex is close to about 16,000. That is the 2008 target.
Rahul Mohindar of viratechindia.com believes the last half hour of volatility today indicates that the market has broken important support level today. He said, "That’s 5,650, so for shorter-term traders, someone who is trying to trade the next week or two weeks off for the next series, he is going to try and remain short. There is a very important support level punctured, which could bring in some weakness in the shorter-term. So again there is a lot of clarity, which is awaited in terms of levels being broken down, but the call is clear that either one stays short or stays out."
Sushil Kedia, Head- Institutional Equities, K&A Securities said that 5,640 and 5,840 are two important fulcrums on the Nifty. According to him, chances are that 5,640 will break on the downside in the next few sessions. Kedia advises investors to initiate a downside on the Nifty from here. “If the Nifty falls below 5,640 it may test 5,320 levels,” Kedia said, adding that until the Nifty moves beyong 5,840, there will be a downward bias.
Source: Moneycontrol.com
The weakness in markets was inline with Asian indices trading flat or negative despite some positive cues from the Dow yesterday.
A Merrill Lynch report on the market says that they expect a consolidation before the final bubble phase. They say that fair value of Sensex is close to about 16,000. That is the 2008 target.
Rahul Mohindar of viratechindia.com believes the last half hour of volatility today indicates that the market has broken important support level today. He said, "That’s 5,650, so for shorter-term traders, someone who is trying to trade the next week or two weeks off for the next series, he is going to try and remain short. There is a very important support level punctured, which could bring in some weakness in the shorter-term. So again there is a lot of clarity, which is awaited in terms of levels being broken down, but the call is clear that either one stays short or stays out."
Sushil Kedia, Head- Institutional Equities, K&A Securities said that 5,640 and 5,840 are two important fulcrums on the Nifty. According to him, chances are that 5,640 will break on the downside in the next few sessions. Kedia advises investors to initiate a downside on the Nifty from here. “If the Nifty falls below 5,640 it may test 5,320 levels,” Kedia said, adding that until the Nifty moves beyong 5,840, there will be a downward bias.
Source: Moneycontrol.com
Thursday, November 22, 2007
Markets recover: What's the next resistance level?
What are the views of brokerages and technical analysts on where the support and resistances for the market lie?
On speaking to technical analysts, the consensus seems to be that the intermediate downtrend has been established. The Nifty did close below the 5,700 level yesterday. Many critical support levels have been broken. But the next major level to watch out for and all seem to be unanimous on this, is 5,470-5,475.
CLSA earlier today, gave out a target of 18,275 as the next major support on the Sensex. They said that below this, a typical head-and-shoulder pattern would be formed out. In simple words, a head-and-shoulders pattern would see a huge volume build-up at the initial peak, at the peak of the market, which is at 6,000 level on the Nifty or 20,238 on the Sensex.
We saw low levels of volumes, so if this statistical support level of 18,275 is broken, a head-and-shoulders pattern may emerge, which would lead to a further downside of about a 1,000 points, where the next major support would emerge.
Technical analysts say that 5,475 would be the critical support level; 5,462 is the low of today and intermediate support levels have been broken at about 5,530.
Technical indicators like the RSI have indicated a pretty oversold market and there may be some bounce back on short covering, but all these bounce backs must be sold into and profits must be taken.
5,600-5,650 are the next major resistance levels on the top and 5,700 is the key resistance level below which the market closed yesterday.
If one does want to participate in this market, largecaps would be the safest and best bets and stocks like Reliance, L&T, NTPC and Neyveli Lignite would be the choices.
Source: Moneycontrol.com
On speaking to technical analysts, the consensus seems to be that the intermediate downtrend has been established. The Nifty did close below the 5,700 level yesterday. Many critical support levels have been broken. But the next major level to watch out for and all seem to be unanimous on this, is 5,470-5,475.
CLSA earlier today, gave out a target of 18,275 as the next major support on the Sensex. They said that below this, a typical head-and-shoulder pattern would be formed out. In simple words, a head-and-shoulders pattern would see a huge volume build-up at the initial peak, at the peak of the market, which is at 6,000 level on the Nifty or 20,238 on the Sensex.
We saw low levels of volumes, so if this statistical support level of 18,275 is broken, a head-and-shoulders pattern may emerge, which would lead to a further downside of about a 1,000 points, where the next major support would emerge.
Technical analysts say that 5,475 would be the critical support level; 5,462 is the low of today and intermediate support levels have been broken at about 5,530.
Technical indicators like the RSI have indicated a pretty oversold market and there may be some bounce back on short covering, but all these bounce backs must be sold into and profits must be taken.
5,600-5,650 are the next major resistance levels on the top and 5,700 is the key resistance level below which the market closed yesterday.
If one does want to participate in this market, largecaps would be the safest and best bets and stocks like Reliance, L&T, NTPC and Neyveli Lignite would be the choices.
Source: Moneycontrol.com
Wednesday, November 21, 2007
Will tomorrow bring some signs of stability in Market?
Terrible day for the markets though the first signs were there yesterday but today was the perfect follow-up to that huge sell off that we saw yesterday but nothing like today. There was a 700-points sell off nearly on the Sensex, which has dragged us back to 18,600 levels. The Nifty has collapsed more than 200-points and got us back to sub 5,600 levels- 5,560. There has been a big largecap sell off but even more savage and perhaps more importantly there has been a huge fall in midcap and smallcaps. That’s been the outperforming end of the market and that’s where the real money has been made and starting yesterday there has been a big pullback in midcaps.
Today the Midcap index was down 4.5%. The Nifty Junior fell 5% and many of the liquid names were down between 8% and 12% particularly the stock futures. Of course there are visible signs of not just unwinding in stock futures but heavy shorting in the Nifty futures again. Today the Nifty futures discount widened to 30-points and more than 50-lakh shares got added in OI, clear signs that there has been fresh shorting once again.
One look at the screen would convince you that there has been selling from FIIs once again today in both the cash and in the futures market. The global setup is not helping us. The Yen is gone to 109 to the dollar. There is consistent pressure in the Asian markets. The European markets also opened up weak while we were trading. So things are not looking good from a global perspective and that’s only adding pressure on the margin. India has been the biggest outperformer compared to other Asian markets and now as selling comes in this out performance is beginning to weigh on our backs as we correct and catch up with some of our peers.
So the picture has not looked very good today. Large caps across the board particularly hard hit were some of the power names across the board ABB, BHEL, Tata Power, Suzlon, Siemens and they all collapsed quite a bit. MTNL, VSNL got hit; ICICI Bank had a rough day. The entire metal space led by SAIL, Sterlite, Nalco were all down and down quite sharply.
Techs did not fall too much because they fell yesterday but otherwise they were not too many places to hide in today's fall. In the midcaps space, the carnage was even more severe. Popular stocks like IFCI, TTML, and RNRL got hammered 8-10% today. The entire fertiliser space has got butchered with Chambal and Nagarjuna leading the fall. Sugar has had a nasty fall again led by Balrampur Chini and Triveni, both those stocks were down quite a bit and many of the recent high flyers like your Hotel Leela, DCB, Bongaigaon have all come off.
Popular power stocks like Neyveli, PTC, NTPC have all corrected quite significantly. So big falls in many stocks today and the magnitude of the fall is 8-12%. From their recent highs, most of the popular midcaps have probably fallen anywhere between 10% to 20% so a meaningful erosion in value has happened already. Few like SRF, Jindal Stainless and Deccan Aviation did okay.
But the one stock, which deserves mention on the way up, is Religare. It debuted on a difficult day but finally passed the test with flying colours and ended the day around Rs 550 mark, which has to go down as a spectacular debut under the current market conditions from its issue price of Rs 185. So thumbs up for Religare but the rest of the market did quite bad, closed on a bad note and the mood cannot be good. So let us hope tomorrow there is some sign of stability because we are dangerously close to that earlier support level of 5,500 on the Nifty.
Source: Moneycontrol.com
Today the Midcap index was down 4.5%. The Nifty Junior fell 5% and many of the liquid names were down between 8% and 12% particularly the stock futures. Of course there are visible signs of not just unwinding in stock futures but heavy shorting in the Nifty futures again. Today the Nifty futures discount widened to 30-points and more than 50-lakh shares got added in OI, clear signs that there has been fresh shorting once again.
One look at the screen would convince you that there has been selling from FIIs once again today in both the cash and in the futures market. The global setup is not helping us. The Yen is gone to 109 to the dollar. There is consistent pressure in the Asian markets. The European markets also opened up weak while we were trading. So things are not looking good from a global perspective and that’s only adding pressure on the margin. India has been the biggest outperformer compared to other Asian markets and now as selling comes in this out performance is beginning to weigh on our backs as we correct and catch up with some of our peers.
So the picture has not looked very good today. Large caps across the board particularly hard hit were some of the power names across the board ABB, BHEL, Tata Power, Suzlon, Siemens and they all collapsed quite a bit. MTNL, VSNL got hit; ICICI Bank had a rough day. The entire metal space led by SAIL, Sterlite, Nalco were all down and down quite sharply.
Techs did not fall too much because they fell yesterday but otherwise they were not too many places to hide in today's fall. In the midcaps space, the carnage was even more severe. Popular stocks like IFCI, TTML, and RNRL got hammered 8-10% today. The entire fertiliser space has got butchered with Chambal and Nagarjuna leading the fall. Sugar has had a nasty fall again led by Balrampur Chini and Triveni, both those stocks were down quite a bit and many of the recent high flyers like your Hotel Leela, DCB, Bongaigaon have all come off.
Popular power stocks like Neyveli, PTC, NTPC have all corrected quite significantly. So big falls in many stocks today and the magnitude of the fall is 8-12%. From their recent highs, most of the popular midcaps have probably fallen anywhere between 10% to 20% so a meaningful erosion in value has happened already. Few like SRF, Jindal Stainless and Deccan Aviation did okay.
But the one stock, which deserves mention on the way up, is Religare. It debuted on a difficult day but finally passed the test with flying colours and ended the day around Rs 550 mark, which has to go down as a spectacular debut under the current market conditions from its issue price of Rs 185. So thumbs up for Religare but the rest of the market did quite bad, closed on a bad note and the mood cannot be good. So let us hope tomorrow there is some sign of stability because we are dangerously close to that earlier support level of 5,500 on the Nifty.
Source: Moneycontrol.com
Will market go below 18K levels?
It was a blood bath on Dalal Street. Deep cuts in markets across the globe weighed down investor sentiment, and the markets went into a free fall. The Nifty closed at 5,561, down 220 points, while Sensex shut shop at 18,603, down 678 points - the 3rd biggest single-day fall ever.
Even the midcaps and smallcaps took it on their chin today. It was large scale equity sell off across markets and sectors.
The worst hit index is bankex which has seen a sharp run up in the past few sessions followed by metal, capital goods and power. The sector that is least hit is the IT index on hopes that rupee may not appreciate further against the dollar. The rupee was trading weak at 39.385 against the dollar.
Sajiv Dhawan of JV Capital Services said that he has maintained his call for the past few days. “The call has been the same for the last few days. The midcaps were rising without the leadership from the frontline. I am not a believer that midcaps will continue to outperform frontline for a long period of time. I know it is easy to say after the event has happened. But if you had your stop losses in and you have got no problem, you are probably out at higher levels, you are probably still on a large amount of profit. But what I am finding a bit disturbing is that a lot of investors are holding on and they are now hoping that the markets will bounce back without any real conviction because they have seen this time and again and they say if they sell out now, they may not be able to buy those stocks back, if the upmove starts again.”
He opined that the investor should trade with clarity. He said, “I think you have got to be very clear which stocks you have, why you bought them, were they a tip, were they rumour, some market buzz or was that actually some fundamental in those stocks. If there is nothing fundamental then probably you are wiser off taking a small loss, exiting at the current juncture and reentering when the market stabilises and started to bounce back. If you are in stocks where you believe there is a growth story, there is something fundamental then you can use any sharp correction, 10-20% in whatever the stock is, to average out your position or add a few more.”
Dhawan adds, “I think if you are an Index trader- fine, you got a nice short position, plenty of cushion, good profit for the short after a long time. But the next 2-3 days, will be very important because I do feel a lot of people are still stuck in the futures and with the leveraged positions elsewhere and they might panic over the next 2-3 days if the market don’t stabilise or bounce back.”
Anil Manghnani of Modern Shares & Stock Brokers said that he is not very surprised by what happened in the markets today. “I think in the last two-three weeks action was only in the midcaps. For a while we had been seeing lot of the largecaps falling 3-5%. Even those that are in the midcap index itself, were up 2-3% which was clearly suggesting that some sort of delivery base selling by FIIs was taking place. In addition, continuously over the last few days on the stock futures side, we are seeing hedge sale position being buildup mainly by FIIs. This was clearly suggesting that at least on the largecap front, a fall is definitely round the corner," he said.
He added, "It was probably the euphoria in the midcaps that was not reflecting so much what is happening in the largecaps and now that is all taking place today and I think its pretty much playing catch-up in the sense that while the rest of the world corrected, we didn’t and now that everything else abroad has slowed down, that is the correction; it was likely that eventually we will have to catch-up on the down side. I think most of the markets had fallen about 10%; we were down maybe 3% yesterday. So we are pretty much catching up to that. We have broken through some serious levels and even major trend lines, I don’t think that 18,330, which was a recent bottom will hold now. I think chances are heading closer to 17,770 on the Sensex."
Should this, as a short-term trend be called down?
Manghnani says, “I will call it down and probably sell any bounce if we get like we have seen intra-day falls and pullbacks. I think immediately if suppose one might have a good day overseas also overnight, I think one is going to have a scenario where it’s going to open up and then start correcting. We have seen that already happened two-three times in the last week but like I said it didn’t get accentuated or reflected that closely because the midcaps were flying all around the place and the focus was so much on midcaps. But that phenomena of the Sensex opening up and coming down has been taking place last week and I think in the next few days if there is again a gap up opening then eventually the selling pressure would start again at higher levels and I think we will probably head it lower at least on the Sensex and Nifty in the immediate short-term.”
Source: Moneycontrol.com
Even the midcaps and smallcaps took it on their chin today. It was large scale equity sell off across markets and sectors.
The worst hit index is bankex which has seen a sharp run up in the past few sessions followed by metal, capital goods and power. The sector that is least hit is the IT index on hopes that rupee may not appreciate further against the dollar. The rupee was trading weak at 39.385 against the dollar.
Sajiv Dhawan of JV Capital Services said that he has maintained his call for the past few days. “The call has been the same for the last few days. The midcaps were rising without the leadership from the frontline. I am not a believer that midcaps will continue to outperform frontline for a long period of time. I know it is easy to say after the event has happened. But if you had your stop losses in and you have got no problem, you are probably out at higher levels, you are probably still on a large amount of profit. But what I am finding a bit disturbing is that a lot of investors are holding on and they are now hoping that the markets will bounce back without any real conviction because they have seen this time and again and they say if they sell out now, they may not be able to buy those stocks back, if the upmove starts again.”
He opined that the investor should trade with clarity. He said, “I think you have got to be very clear which stocks you have, why you bought them, were they a tip, were they rumour, some market buzz or was that actually some fundamental in those stocks. If there is nothing fundamental then probably you are wiser off taking a small loss, exiting at the current juncture and reentering when the market stabilises and started to bounce back. If you are in stocks where you believe there is a growth story, there is something fundamental then you can use any sharp correction, 10-20% in whatever the stock is, to average out your position or add a few more.”
Dhawan adds, “I think if you are an Index trader- fine, you got a nice short position, plenty of cushion, good profit for the short after a long time. But the next 2-3 days, will be very important because I do feel a lot of people are still stuck in the futures and with the leveraged positions elsewhere and they might panic over the next 2-3 days if the market don’t stabilise or bounce back.”
Anil Manghnani of Modern Shares & Stock Brokers said that he is not very surprised by what happened in the markets today. “I think in the last two-three weeks action was only in the midcaps. For a while we had been seeing lot of the largecaps falling 3-5%. Even those that are in the midcap index itself, were up 2-3% which was clearly suggesting that some sort of delivery base selling by FIIs was taking place. In addition, continuously over the last few days on the stock futures side, we are seeing hedge sale position being buildup mainly by FIIs. This was clearly suggesting that at least on the largecap front, a fall is definitely round the corner," he said.
He added, "It was probably the euphoria in the midcaps that was not reflecting so much what is happening in the largecaps and now that is all taking place today and I think its pretty much playing catch-up in the sense that while the rest of the world corrected, we didn’t and now that everything else abroad has slowed down, that is the correction; it was likely that eventually we will have to catch-up on the down side. I think most of the markets had fallen about 10%; we were down maybe 3% yesterday. So we are pretty much catching up to that. We have broken through some serious levels and even major trend lines, I don’t think that 18,330, which was a recent bottom will hold now. I think chances are heading closer to 17,770 on the Sensex."
Should this, as a short-term trend be called down?
Manghnani says, “I will call it down and probably sell any bounce if we get like we have seen intra-day falls and pullbacks. I think immediately if suppose one might have a good day overseas also overnight, I think one is going to have a scenario where it’s going to open up and then start correcting. We have seen that already happened two-three times in the last week but like I said it didn’t get accentuated or reflected that closely because the midcaps were flying all around the place and the focus was so much on midcaps. But that phenomena of the Sensex opening up and coming down has been taking place last week and I think in the next few days if there is again a gap up opening then eventually the selling pressure would start again at higher levels and I think we will probably head it lower at least on the Sensex and Nifty in the immediate short-term.”
Source: Moneycontrol.com
Experts see further correction in markets
Sanjeev Prasad, Head of Research, Kotak Securities, said the fair range for the Sensex is 16,000-19,000 based on FY09 numbers. "Can't rule out another 10% correction from current levels."
He feels hedge funds may be selling to book year-end profits. "India's relative outperformance may have triggered this selling." Prasad feel hedge funds may be selling to book year-end profits. He feels India's relative outperformance may have triggered selling. Technical Analyst Ashwani Gujral said the market might fall further if the Nifty goes below 5,470. "Nifty could go down to 5,000 levels if correction continues."
He feels we may see an intermediate downtrend if the Nifty falls below 5,500.
Excerpts from CNBC-TV18’s exclusive interview with Sanjeev Prasad and Ashwani Gujral:
Q: Was it looking inevitable, this kind of cut after the midcap gains you saw over the last fortnight?
Prasad: There were some indications that India was outperforming the rest of the region. Most markets have already pulled back 10-15% from their peaks and India was the only one which was still hovering at more or less its peak. The Sensex peaked at 20,000. There were indications that you can’t have a market performing in isolation compared to what is happening to the rest of the region.
The second indication was clearly with what is happening on the midcap space. When stocks, without any rhythm or reason, start going up 30-40% in a matter of few days, then it is clearly a dangerous signal. It is not as if these are undiscovered stocks and people haven’t been following them. Suddenly, why should stocks get re-rated 50% in a matter of few days? I guess there were indications that there would be some corrections.
Q: There has been quite a bit of FII selling over the last couple of days both in cash and futures. Do you think it is on account of India’s relative outperformance and that is why people are tactically selling this market or is there something else which could have precipitated such large selling because the figure yesterday was almost USD 1.5 billion in cash plus F&O?
Prasad: Investors should keep in mind the fact that we are heading towards the end of the year, so hedge funds and leverage funds may be just booking profits and closing out for the year. Nobody wants to go into December with large open positions in a market which is, if not overvalued, at least reasonably valued. Then you have a lot of issues on the global side. So, anything could go wrong anywhere. Why do you want to be exposed to a market which is reasonably valued? People are just booking profits before going into a vacation. People have made great gains over the years, so why not take some money off the table.
Relative outperformance of India versus others could have been the reason for people to pull back from here and then take a view later on.
Q: Do you expect more downside in the near term or the market just to consolidate in a range?
Prasad: Everything is possible. Our fair range for the market, based on FY09 numbers, is 16,000 to 19,000. It is not as if with the recent correction we have become very cheap. In terms of valuations, we are still at about 18 times March 2009 numbers, so it is still not a very cheap market. Another 10% is not a big deal from current levels.
Q: How are you approaching this huge midcap rally which has happened? Do you think some of the valuations look excessive or has it been justified? Do you expect no more than a small shave off from the top?
Prasad: Things were quite bizarre honestly. Stocks that move up 30-40% don’t make any sense to me. I can talk about oil and gas stocks and the movements over there. For example, why should Petronet LNG be at where it is? People are assuming that Reliance will find lot more gas than whatever it has announced, ONGC has already announced big discoveries and so has GSPC. If you add all that up, we are looking at a tremendous increase in domestic supply. If that is the case, then where is the other case for a business model of Petronet LNG.
People are willing to give all such valuations since it going to enter into the power space. That is completely bizarre. If Petronet LNG is not in a position to sell, as imported LNG is expensive compared to domestically produced gas, where is the question of it selling power which is even more expensive than LNG.
Anything goes in a bull market. Similarly, look what happened in the pipeline company Gujarat State Petronet. We were talking about regulations being imposed on a sector which could cap returns. But the stocks have rallied 40% or more in a matter of days. All kinds of stuff are going on in the midcap space.
Q: What would you takeaway from today’s trade and how would you approach trade now?
Gujral: We are still in that range of 5,500-6,000 on the Nifty. The previous intermediate bottom was around 5,470 to 5,500. If that gets breached, then we head into a deeper correction. The next level there could be 5,000 to 5,050. In case 5,500 is sustained on the downside, it is just another consolidation. Around 5,500, investors need to chance going long with a 40-50 point stop loss. Inspite of negative news, our markets have bounced back. In case, 5,470-5,500 gets taken out, then you probably are into an intermediate downtrend.
Q: How do you approach the liquid midcaps now? Stocks like TTML, IFCI, Chambal Fertilisers, among others that have been really creating trading gains?
Gujral: If you have gains left, you need to take profits. If you do not have them, just get out of the way because if the previous low gets taken out, then these stocks would take a much bigger punishment. Above 5,900, we had said that cats and dogs part of the rally is generally towards the end of an intermediate uptrend. That has sort of proven true. In case the intermediate downtrend starts below 5,470, you should be cutting your positions because these stocks are where futures are quite over-leveraged and could come down much further.
Source: Moneycontrol.com
He feels hedge funds may be selling to book year-end profits. "India's relative outperformance may have triggered this selling." Prasad feel hedge funds may be selling to book year-end profits. He feels India's relative outperformance may have triggered selling. Technical Analyst Ashwani Gujral said the market might fall further if the Nifty goes below 5,470. "Nifty could go down to 5,000 levels if correction continues."
He feels we may see an intermediate downtrend if the Nifty falls below 5,500.
Excerpts from CNBC-TV18’s exclusive interview with Sanjeev Prasad and Ashwani Gujral:
Q: Was it looking inevitable, this kind of cut after the midcap gains you saw over the last fortnight?
Prasad: There were some indications that India was outperforming the rest of the region. Most markets have already pulled back 10-15% from their peaks and India was the only one which was still hovering at more or less its peak. The Sensex peaked at 20,000. There were indications that you can’t have a market performing in isolation compared to what is happening to the rest of the region.
The second indication was clearly with what is happening on the midcap space. When stocks, without any rhythm or reason, start going up 30-40% in a matter of few days, then it is clearly a dangerous signal. It is not as if these are undiscovered stocks and people haven’t been following them. Suddenly, why should stocks get re-rated 50% in a matter of few days? I guess there were indications that there would be some corrections.
Q: There has been quite a bit of FII selling over the last couple of days both in cash and futures. Do you think it is on account of India’s relative outperformance and that is why people are tactically selling this market or is there something else which could have precipitated such large selling because the figure yesterday was almost USD 1.5 billion in cash plus F&O?
Prasad: Investors should keep in mind the fact that we are heading towards the end of the year, so hedge funds and leverage funds may be just booking profits and closing out for the year. Nobody wants to go into December with large open positions in a market which is, if not overvalued, at least reasonably valued. Then you have a lot of issues on the global side. So, anything could go wrong anywhere. Why do you want to be exposed to a market which is reasonably valued? People are just booking profits before going into a vacation. People have made great gains over the years, so why not take some money off the table.
Relative outperformance of India versus others could have been the reason for people to pull back from here and then take a view later on.
Q: Do you expect more downside in the near term or the market just to consolidate in a range?
Prasad: Everything is possible. Our fair range for the market, based on FY09 numbers, is 16,000 to 19,000. It is not as if with the recent correction we have become very cheap. In terms of valuations, we are still at about 18 times March 2009 numbers, so it is still not a very cheap market. Another 10% is not a big deal from current levels.
Q: How are you approaching this huge midcap rally which has happened? Do you think some of the valuations look excessive or has it been justified? Do you expect no more than a small shave off from the top?
Prasad: Things were quite bizarre honestly. Stocks that move up 30-40% don’t make any sense to me. I can talk about oil and gas stocks and the movements over there. For example, why should Petronet LNG be at where it is? People are assuming that Reliance will find lot more gas than whatever it has announced, ONGC has already announced big discoveries and so has GSPC. If you add all that up, we are looking at a tremendous increase in domestic supply. If that is the case, then where is the other case for a business model of Petronet LNG.
People are willing to give all such valuations since it going to enter into the power space. That is completely bizarre. If Petronet LNG is not in a position to sell, as imported LNG is expensive compared to domestically produced gas, where is the question of it selling power which is even more expensive than LNG.
Anything goes in a bull market. Similarly, look what happened in the pipeline company Gujarat State Petronet. We were talking about regulations being imposed on a sector which could cap returns. But the stocks have rallied 40% or more in a matter of days. All kinds of stuff are going on in the midcap space.
Q: What would you takeaway from today’s trade and how would you approach trade now?
Gujral: We are still in that range of 5,500-6,000 on the Nifty. The previous intermediate bottom was around 5,470 to 5,500. If that gets breached, then we head into a deeper correction. The next level there could be 5,000 to 5,050. In case 5,500 is sustained on the downside, it is just another consolidation. Around 5,500, investors need to chance going long with a 40-50 point stop loss. Inspite of negative news, our markets have bounced back. In case, 5,470-5,500 gets taken out, then you probably are into an intermediate downtrend.
Q: How do you approach the liquid midcaps now? Stocks like TTML, IFCI, Chambal Fertilisers, among others that have been really creating trading gains?
Gujral: If you have gains left, you need to take profits. If you do not have them, just get out of the way because if the previous low gets taken out, then these stocks would take a much bigger punishment. Above 5,900, we had said that cats and dogs part of the rally is generally towards the end of an intermediate uptrend. That has sort of proven true. In case the intermediate downtrend starts below 5,470, you should be cutting your positions because these stocks are where futures are quite over-leveraged and could come down much further.
Source: Moneycontrol.com
Wednesday, November 14, 2007
Commentary on Today's Market
Indian shares rose almost 5% on Wednesday, posting its biggest percentage gain in three weeks, as worries over US credit-related losses eased boosting world markets. Banking, oil & gas, IT and metal stocks were star performers. The 30-share BSE Sensex ended up 893.58 points or 4.69% to 19,929.06. This was its biggest ever single day rise. The broader Nifty gained 242.5 points or 4.26% to 5,937.90. Reliance Industries surged 7.11% to Rs 2,887.50. Essar Oil surged 36.50% to Rs 120.80. Punjab National Bank soared 9.46% to Rs 601.35, Oriental Bank jumped 7.60% to Rs 256.20 and Axis Bank gained 4.20% to Rs 989.15. State Bank of India rose 2.20% to Rs 2,346.15. Hindalco Industries jumped 6.95% to Rs 217.65 on reports the company had raised prices of primary aluminium by Rs 2,000 a tonne. Neyveli Lignite rose 5.41% to Rs 214.15, Tata Power gained 4.13% to Rs 1309.95 and Reliance Energy rose 3.59% to Rs 1920.35. Fertiliser stocks soared on reports that the government will issue bonds worth Rs 7500 crore to fertiliser firms by end-November 2007 to compensate them for selling the commodity at discounted prices. Rashtriya Chemicals and Fertilisers soared 20% to Rs 72.10, Fertilisers and Chemicals Travancore spurted 10% to Rs 35.85, National Fertilizers soared 10% to Rs 76.10 and Mangalore Chemicals & Fertilisers jumped 8.59% to Rs 41.10. DLF rose 2.38% to Rs 926.70 on reports that the real estate firm is buying Singapore-based luxury chain Amanresorts for around $250 million. KEC International moved up 4.24% to Rs 855.90 on reports it had secured orders worth Rs 637 crore for transmission line projects in Abu Dhabi and Algeria.
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