Sensex Technical View :
In the presentations put up yesterday lot of technical factors for long term have been taken in details so one can take a thorough reading of the same.
Current View :
Sensex has come closer to the 14100 level which is a 61 % retracement and is an important zone for which we had been waiting for quite some time . For the current 3-4 weeks the important supports are 14100 and in unusual case 13500 !. Ideally a bounce back should come from 14000-14200 itself and needs to be watched how much it retraces and stays for how much time . As explained in the presentation its a time wise phase.
For quite some time i have been maintaining the view to re deploy cash 30 % at 14700-15300 and rest 30 % at 14100-14700 but one thing to consider is this is possible for people who went on to cash at 17500/16800/16100 or higher levels when warned continously.
For people who dint cash out at recommended levels will have a prob as cash component would be very low and protecting capital should be their focus and shifting of stocks rather then fresh buying as ppl who cashed out early will have much more buffer and patience.
Stocks to watchout for :
ONGC seems to have sustained the recent dip in indices and is facing resistance arnd 900 . sustaining above it could see a quick move to 930-950 .
RPL has a good support around 155-160 zone and investors can take some exposure arnd 30-50 % closer to those levels. In case it breaks 155 we could see 140 where next 50 % can be added if at all it comes possibilities for the same looks less.
Lots of stocks in mid cap category look interesting with a fundamental view but as technically indices are in a time wise correction expectation would be mid caps would stay silent for quite some time and drift lower or stay calm. Interesting stocks K S Oils , Karuturi , GVK power etc are worth a watch as liquid too .
Market Musings :
For quite some time every dew days i get a query on BHEL ,LT , DLF , Unitech , Jp Associates and blue chips in the engg and realty sector. It has been difficult to aswer in the negative as consistently have had sell calls on BHEL n Lnt technically , suggesting crucial supports for others and these stocks have continued to break the supports quicker then expected so only answer has been WAIT and dont bottom fish.
One thing i have heard from the oldies in the market is every bull phase sees some stocks which r made to rally way beyond , rigged or sold to institutions and one needs to identify them coz as the next phase also these will continue to underperform so u can identify the new ! story . On historical observations many of the weaker bets in the sector can lose up to 60-85% of the value also.
Now the sectors which rallied the best were const , land bank , infra , realty related stocks and engg capital goods . From a comparison point of view the heavies in them are DLF, Unitech , JP associates, GMR infra and in cap goods BHEL , LT , ABB etc. and all of them have already lost 40 -70 % of market cap and overperformed the Sensex fall .
As they are the best in the sectors and fundamentally well placed they could retrace back after losing arnd 60-75% but u never know when it will stop .
Unitech 546 to 171 , BHEL 2900 to 1300 , LT 4600 to 2300 , DLF 1200 to 440.
What scares me is the whole lot of small cap const , infra plays etc would fare in such a scenario. Coz on historical analogies such stocks could see 85% + erosion !!! and would never ever come back to that price in next 1 yr or more or ever . Also the heavies may or may not see the tops again or not even half the value . but this is just a comparative basis Cements , Infotech stories before.... Will infra be similar to that u never know .
Examples - Parsvanath 600 to 140 , Sobha 1150 to 325 , Omaxe 613 to 154. etc etc .....
I had always felt that i missed out on super rallies in these realty stocks as none of THEM were discussed as investments but only traded sharp moves in them coz never understood the business , NAVs , land bank etc at times had some speculative pop up views. Capital goods also in a way is linked to Infra !! but doesnt seem equivalent to infra story as Order books lined up !! so would prefer to wait and watch capital goods stocks to get cheaper to buy .
Well it may seem why such market musings now when its all done. To look back that it was good that we did not get into lofty stocks as investments and how stoplosses would have kept us out . But important of all the comparative analysis shows in the next phase these stocks may not overperform and some may continue to slide !! so just to narrow down the choices to invest !! And being cheap should not be the reason to buy ..... I remember somebody asking me on parsvanath some weeks back at 200-215 where would it stop only answer i had " I dont know !!! ".......Still the answer remains the same technically !!