Sunday, April 26, 2009

Elections - The Trend Decider

PFA the presentation for this month.

I still believe:

1. This is a bear market rally.

2. We will go higher 12500 before elections is quite possible.

4.By the end of 2009, we will see new lows, re-test of the old lows.

5. The eye-wash which is happening in America will get exposed and the falls will be much severe after that.

6. Buy only only at 10K or below, and stay out during elections.

Presentation Link:

Thursday, April 16, 2009

Infy : Guidance suggests Caution

Infosys came out with its full year results. EPS was around Rs 104, slightly above its guidance. The ineteresting factor was its guidance going forward.

Infy suggests a decline of upto 10 pc in profits in dollar terms (less in rupee terms).

Infy has also given zero increments and sharp cuts in variable pay. Its attrition was hardly 11 pc. All this means a tough year ahead for IT.

Infy results usually show the path ahead in the results. Infosys CEO has gone on record saying that these are worst times in our lifetime.

If Infy gets an eps of Rs 100, current P/E would be 14. This is the P/E for no growth. I would say Infy is more than fairly valued at these levels.

The stock markets have rallied and rallied hard. The disconcerting feature of this rally is that the cats and dogs have rallied. Stocks like Jai Corp and Essar Oil.

If the bear market had ended then it would have slow rise led by the large caps. I would still be very cautious at these elevated levels. the Risk reward ratio is heavily skewed in favor of the risk.

My strategy is simple, buy only levels near 10000, remain in cash when the election results are declared.

If the UPA comes back to power or the NDA, then we may see the rally extending to 12500 or even 14000.

The global news flow has stopped giving bad news but I still feel its only a pause. Obama admin can keep giving good news about the banks, and have the banks change their accounting to marked to fantasy instead of marked to market accounting.

I would be very cautious at levels, where the cats and dogs start hitting upper circuit.

I read 1 statistic today, saying 5 stocks accounted for the sensex gains and Reliance alone was responsible for 25 pc of the sensex rise.

If a Third front govt comes to power, there would be no time to exit and we will be back at 8000 before you can blink.

Mayawati as PM and Sitaram Yechury as FM. Ponder over it.

In a nutshell,

1. Buy around 10000, if we see the levels in next 1 week. Trade till the election results. Remain on cash during election results.

2. watch the result. Even if a stable government comes to power, we can buy stocks 10 pc more expensive.

Today DII sold 1200 crores of stock. I wonder if it had anything to do with the end of first phase of polling.

Friday, April 3, 2009

The Rally Continues.......

It was a super Thursday, the markets just rose and rose on good volumes.

Is this the new bull run?

The Markets has rallied on lots of dollars being pumped. Now, 1 more trillion is going to be pumped in as per the G-20.

Either Obama is going to spectacularly succeed or spectacularly fail.

The Toxic asset waste if the government wanted to solve it, they could have bought the entire toxic asset. Now its a gamble with the private sector being a party to the deal. So who will do the valuation. Some one will be left holding the baby again. Will it be the Buyer or the Seller?

We just need some derivatives on this bundled toxic assets to start the game again.

The next trigger points are Results season in US and India. In India, Infy will kick it off around April 10-13th and on Monday, Alcoa kicks it off in the US.

The markets in 4 weeks have gone from 2539 to 3228. I dont believe the fundamentals have changed so fast.

The auto sales have been good last 3 months on lower commodity prices. The auto results should be good so as the IT on rupee depreciation. I would like to see Infy guidance though.

My sense is the markets will take a breather come to Nifty 2800-2950 range and then take off again.

If I was an Operator thats the best trap for retail and dump some shares on them. Operators dont make money if they take markets straight to 1800 or straight up to 6350. There have to be twists and turns.

I would now focus on buying Gold in this period. If rupee strengthens a bit and world price correct a bit to below 900 dollars, I will get Gold at around Rs 14 K.

I would wait for the Elections results before diving into equity. Also, the Geithner plan results will show up in next 2-3 months.

Mid-May to end June will be interesting period. We have the election results as well as US plan results.

Next G-20 might as well have Mayawati addressing the world. Something to think over.

That time, we would see. When hope is destroyed the markets can collapse.

Too many people said in March (including myself) that the markets will hit new lows and they didn't.

Too many people are getting convinced we have hit the bottom (Not myself), the markets may surprise again. This time on the downside.