| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 14-Nov-2008 | 2111.78 | 2923.3 | -811.52 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 14-Nov-2008 | 645.7 | 670.85 | -25.15 |
This is list of 10 STRONG futures:
TTML, Union Bk, Hind Zinc, GTL, Bk of India, Dabur, CESC, Hind Petro, Bhushan Steel & Andhra Bk.
And this is list of 10 WEAK Futures:
IVR Prime, Tata Steel, NDTV, Unitech Ltd, Gitanjali, Suzlon, Amtek Auto, Tata Motors, Purva & Uniphos.
Nifty is in Down Trend.
NIFTY & SENSEX LEVELS FOR 17TH NOV
 | 2810.35 | ( -1.34 %) | -38.10 |  |
| 1 | 2 | 3 | ||
| Resistance | 2906.50 | 3002.65 | 3066.50 | |
| Support | 2746.50 | 2682.65 | 2586.50 | |
 | 9385.42 | ( -1.58 %) | -150.91 | | |
| 1 | 2 | 3 | |||
| Resistance | 9725.19 | 10064.96 | 10293.81 | ||
| Support | 9156.57 | 8927.72 | 8587.95 | ||
In an interview broadcast in 2004, Bob Prechter had said that "Bulls markets climb a wall of worry and bear markets slide down a slope of hope." Markets slid down this slope last week despite the hope held out by the massive stimulus package announced by China and sharp decline in inflation numbers. Most global indices ended 4 to 5 per cent lower.
It was a volatile week on the Indian bourses too as the Sensex initially made an attempt to rise higher but gave up at 10570 to close the week with a 6 per cent loss. Volumes perked up on days that market declined. The cautious mood among the trading fraternity is reflected in the Nifty put call ratio creeping above 1.
The daily oscillators have reversed lower once again implying that the short-term outlook is under a cloud again. The 14-day relative strength index is reversing lower from 49. The weekly momentum too remains very poor. The indecisive spinning top candlestick pattern formed the previous week has been followed by a long bearish candle which can be part of an evening star formation that portends a short-term reversal.
It is obvious that the market is struggling to hold higher levels. But the positive short-term trend that began from the 7697 has not been decimated yet. A close below 8938 is needed to open the floodgates of selling once more. Recovery above 8938 can result in a sideways move between 8950 and 11000 for a few sessions.
The half-hearted rally witnessed in the first half of last week has, however, turned the medium-term view negative again. A firm close above 10700 is needed to mitigate this outlook. Else a slide towards the June 2006 trough at 8800 or the October 2005 trough at 7657 is possible in the medium-term again. Another recovery from these supports can set the range between 7500 and 11000 for the rest of this year.
In the week ahead, Sensex can slide lower to 9256 or 8938. Buying can emerge in the support band between 8800 and 9000 causing a sharp rebound. Resistances would be at 10300 and 10940. Inability to move past the first resistance will accentuate the negative short-term outlook.
Nifty (2810)
Nifty reversed from an intra-week peak at 3161 forming a double-top in the daily charts. Immediate support for the index lies at 2630. As explained last week, the near-term outlook will turn overtly negative only on a close below this level. A rebound from here can result is a range-bound move between 2650 and 3200 for a few more sessions.
Resistances for the week would be at 3060 and 3250. Traders can initiate fresh shorts on a reversal from the first resistance. Downward targets are at 2630 and then 2595. Support will be available around 2600.
The medium-term view is now being revised to negative. This view will change only on a firm close above 3200. Else, the possibility of a slide towards 2595 or 2300 once again will remain open.
Global CuesAfter two weeks of relative stability, volatility returned to equity markets. The CBOE volatility index that had declined to 44 in the days preceding the US Presidential election, spiked to 69, signalling the return of nervousness in the investor community. Most European, Asian and Latin American indices reversed the two-week old up-trend.
The Dow Jones Industrial Average is valiantly fighting to hold the support at 8000. This index has been moving sideways between 8000 and 9800 over the last five weeks. The intermediate term trend continues to be down and a decline to 7600 or 7200 is likely on a breach of the 8000 support. The long-term trend in the index will turn explicitly negative only on a monthly close below 7200. The corresponding level in S&P 500 is 760.
Strength in dollar derailed the nascent commodity rally and the CRB index is once more at its end-October levels. Nymex crude prices emphatically moved below the key long-term support at $62, signalling an imminent decline to the next support at $49.9. —
SBI
SBI too reversed lower after a short spurt on Monday and declined to our first target at Rs 1,140. But the short-term outlook will turn explicitly negative only on a breach of this level, signalling an impending decline to the recent trough at Rs 990.
If SBI holds above Rs 1,140 next week, it can move higher to Rs 1,290 or Rs 1,380 again. Short-term investors can hold their longs with a stop at Rs 1,130.
The medium-term view on SBI is however negative. Since the stock has reversed lower from Rs 1,375, it implies that the medium-term down trend can continue to make the stock test the support at Rs 1,000 once again. Close above Rs 1,370 is required to pave the way for a rally to Rs 1,550.
Infosys
Infosys too closed with mild weekly loss after fluctuating in a narrow band last week. The medium-term trend in the stock stays neutral. It can continue to move in a sideways band between Rs 1,100 and Rs 1,400. Move beyond the upper boundary will make the stock rise towards the band between Rs 1,600 and Rs 1,650. On the other hand, the long-term support band between Rs 950 and Rs 1,050 will continue to support the stock in declines.
The short-term trend in the stock is down since the peak at Rs 1,457. Short-term traders can continue to hold their long positions with a stop at Rs 1,180. A rebound from here can propel the stock to Rs 1,350 or Rs 1,450 in the days ahead.
Reliance Ind
RIL could not make any headway last week and reversed lower from the intra-week peak at Rs 1,308. The stock is currently halting at the key short-term support at Rs 1,150.
Upward reversal from here can result in a move between Rs 1,000 and Rs 1,340. But the short-term trend in the stock is down since the peak at Rs 1,500 and this move is likely to extend further to take it lower to Rs 1,092 or Rs 960. Short-term traders can play short as long as the stock trades below Rs 1,370.
The medium-term support at Rs 970 will continue to cushion the stock in declines and we adhere to the view that a sideways move between Rs 950 and Rs 1,500 can ensue for a few weeks.
ONGC
ONGC reversed lower from the resistance at Rs 810 to decline towards our first support at Rs 700. The short-term trend in the stock is currently down and the stock could decline towards Rs 675 or Rs 640 in this period. Short-term traders can hold their longs as long as the stock holds above Rs 640. Resistances for the week ahead would be at Rs 760 and Rs 810.
The medium-term view too stays positive. We reiterate that a long-term trough is possible in the zone between Rs 500 and Rs 560.
However, the bearish engulfing candlestick in the weekly chart denotes that the near-term can be volatile for the stock as it consolidates in the band between Rs 650 and Rs 800.
Tata Steel
The chart pattern in Tata Steel is similar to rest of the pivotals. But this stock has closed below the key support level at Rs 180.
A weak opening next week will mean an imminent decline towards the recent trough at Rs 150.
An upward reversal is possible from here and the stock can then fluctuate in the band between Rs 150 and Rs 250 for a few weeks.
Traders can watch for a rebound around Rs 150.
However if this support is penetrated, Tata Steel can move lower to Rs 136. Investors with a medium-term perspective can hold with a stop at Rs 135.
Subsequent support zone on the chart is in the zone between Rs 100 and Rs 110.
Maruti Suzuki
It was a sedate sideways move for MUL last week. The decline in the stock halted at the short-term support at Rs 538 indicated in this column last week.
An upward reversal from these levels can take the stock higher to Rs 597 or Rs 635 again. But fresh long positions should be avoided if the stock declines below Rs 530.
Subsequent target for the stock would be Rs 475.
The medium-term view for MUL is neutral. The stock is likely to move in a range between Rs 550 and Rs 750 for a few more weeks before a clear trend emerges. A weekly close above Rs 800 is required to make the medium-term view positive in the stock.
5 investment tenets
Once you invest your surplus in stocks, make a commitment to stay invested. The market is bound to gyrate and there is no use reacting to its every move.
Yes, the stock market fall has given many investors sleepless nights over the past few months. But every cloud has its silver lining. Stock valuations have melted to new lows and for those looking to make a start this may be a good time to enter the markets.
Of course, you will get tons of advice from friends who have lost their savings to cousins who have made a quick buck, to uncles who feel they can predict where exactly the Sensex will be, one year down the line.
We wish to join that advisory committee too! But, we come with a difference. While the rest may tell you what you should or should not do based on their personal experience, we just offer five tenets to keep in mind when investing in stocks.
Age vs. Investment style
Stocks don't lend themselves to a 'one size fits all' approach. You are 25, an MBA with a good job in a software company.
Your neighbour is a 55-year-old man, on the verge of retirement. You want equity investments, but have hectic working hours with no time to track the markets. The uncle next door has a lot of time to do what you cannot and buys and sells stocks every day!
Don't try to emulate him. Your choice of investment may have to be quite different from his. Because you cannot track every market blip, it is best that you leave your stock market investments in professional hands — take the mutual fund route.
You can however, be quite aggressive in your choice of funds. At 55, your neighbour may be very defensive, looking more at protecting his capital and getting a return enough to beat inflation. At 25, you don't have commitments like a child's higher education or a daughter's wedding.
You may be able to hold on longer and take some risk to your portfolio. You can bet on high-growth stocks through mid or small cap funds. Ten years down the line, your risk appetite may change. That is a signal to alter your investment style again!
Long-term vs. Short-term
Imagine the thrill when the stock you just invested in, zooms! What an easy way to make money! Are not good returns over a short period very tempting? Your next move: Identify other stocks that have this potential. From now on, all your energy will be directed towards making that quick buck.
You will find yourself taking tips from every trader, reading every available material on the subject, spending hours studying charts and sighing at every small fall in the indices. Yet, with all the time and energy spent on it, you may end up burning your fingers. Stock market investing, like every other thing in life, requires discipline. First, decide how much percentage of your overall savings you want to invest in stocks. Then, create a portfolio based on your risk appetite. Phase out your investments to reduce risk.
Once you invest your surplus in stocks, make a commitment to stay invested. The market is bound to gyrate and there is no use reacting to its every move.
Fundamentals vs. Momentum
Before you invest in a stock, you must do some groundwork. Research the company. Look at what business it is in, prospects, strengths and weaknesses and how it is placed vis-À-vis peers. Penny stocks may fetch you quick returns in a bull market, but when the going gets nasty, your investments can dwindle to zero just as quickly.
If you bought a stock because you believed in the company's business, you may have greater confidence that it will rebound, once the markets do. That will also encourage you to stay invested for the long-term.
If you must log on to your trading terminal everyday and are tempted to make a quick buck, set apart a specific sum for a "trading" or "momentum" portfolio. By doing so, you can make sure that you don't gamble too much of your savings on wild impulses or "tips" from friends, that are bound to sway your day to day stock market decisions.
Big boys vs. You
Don't buys and sells by the institutional investors move markets? Is it good to mimic the moves of fund managers? Yes, it is, but you can seldom act quickly, to time your entry and exits precisely. Instead, use institutional interest as a filter for your stock choices.
A quick check to see if the stock you bought is also owned by institutions may add to the comfort factor, in owning a stock. Like we said earlier, if you take interest in the company, track developments closely and do your homework, you can also build a creditable portfolio.
Satisfaction vs. Greed
Thousands have lost money in the current meltdown. But there were a few others who saw it coming. We know of a person who had a portfolio worth several lakhs, but gradually reduced his exposures and exited the markets when the Sensex was at 15,000 levels sometime in 2007. His explanation: The market was heating up and he had made enough money.
It is a must that you have a target on the returns that you want to make from stocks each year. Once the stocks or funds reach that particular target, you must have the discipline to book profits. Equally important is the need to curtail losses.
If a 25 per cent erosion in capital is all what you can bear, don't wait for anyone else to prompt you. You can cut exposures to the investment.
--
Arvind Parekh
+ 91 98432 32381
