Sensex Technical View :
The preferred technical view that Sensex may take a bounce back from 10900-11500 has not gone in tandem with market moves. The next important technical levels are 9700-9500 which is the 61.8% correction which was a scenario taken in case there is much more selling seen and possibly we could give a bounce before going there. Sensex has touched 10200 almost and needs to be seen whether it goes to 9500-9700 or lower zones or gives a bounce from here and then consolidate at lower levels. On the long term charts 8799 the low made around 2006 and 2600 on Nifty are of supreme importance for the long term bull run. Continue to watch these levels and reactions.Once we see a bottom formation or hints of it we can cover views on how recovery periods were historically.
Although the timing of buying must have not been appropriate at 11k-12k levels, but as being repeated we have confined our investments to 50-60 % max which does leave us a good scope to buy on lower side in bargains or reduce investments at bounce backs for more comfort. Many stocks picked up would be down 10-30 % from acquisition pricce as buying has been looked in a staggered manner,small lots and we still do have some more apetite to buy and have strictly avoided real estate , pvt banks, capital goods in our preferred stocks and the selected ones do have the more chances of participating well in any bounce backs.
Majority of the value erosion has been seen in Real estate down 80-95 % , Pvt Banks and Capital goods have also seen major erosions. I have been very strict on avoiding these as these stocks may take lot of time to even give decent bounce backs and in real estate stocks total value erosion. In other stocks invested at sub 13k levels investors maybe seeing notional losses for the partial quantities but these stocks have good chances of coming back in stable times. But in real estate stocks the risk is going the 2000-2003 IT way. But high risk investors can take a risk buy 3-5 stocks of real estate companies like DLF,HDIL,Unitech,JP Associates etc at 15-5 % of peak slowly as somehow i feel these companies remain in business in next 2-4 years at least one or two may end up giving such returns to sidetrack losses of those who dont , and yes it will require patience and Risk.
Stocks to watchout for :
Stocks that have just made new lows have more chances of going further down technically so should wait for them to settle .
Axis Bank,BHEL,LNT, Lupin,ABB ...
Highly Oversold stocks which can give a bounce technically so one should wait for them to consolidate or bounce.
ICICI Bank,Sterlite , RCOM , RIL , Bombay Dyeing , IFCI , IDFC etc .
Fundamentally one can now look for stocks which have high cash reserves and maybe in certain cases reserves could get much higher then market-cap. Fundamental trackers can contribute on the same through mails or comments.
Market Observations and Thoughts :
Crude no more seems a consideration for market moves like before as it has already gone below and achieved a tgt of 85 which was our consistent view so no more updates on it unless something unusual comes in.
Gold technically had been seeing good resistance around 920 + zones and has taken a quick beating as money seems to be coming out of it. On the lower side 815-820 is an important range zone if it breaks could lead to 780 also.
The glossary of economics,inter-relations, coupling is just getting huge in size .
Can CRR cuts of 50 and 150 bps be followed by a repo rate cut ?? , Crude staying below 80s for months impact GDP ?? , Inflation to dip quickly by next year , Lower GDP growth targets , Are IIP nos conclusive, MFs ,Pension Funds , long term stable FIIs waiting for stability to pump money, Low delivery volumes but high M2M settlements in FNO why so , Futures still not settled by delivery in India , Bailout for Airlines and other industries , Real estate market to see a major meltdown and freebies already given, FD rates will soon peak make some for long term etc etc ... Long list for India.
US ,UK , Europe , IMF to take unusual steps to increase liqudity , unfreeze credit , Inter-Bank rates zooming can they be cooled of , collateral damage to be insured , capital injections in return of equity , Shorting malpractices found , De-leveraging of high positions in Gold to pull out cash , Scams to be found etc etc Longer list for world .
Randomn Sunday Thoughts :
The markets have tanked heavily in the last one week and suddenly there are many economists who are predicting an economic depression and some who prefer a 12-18 months recession. I am not a good judge of economics though but the view of Sept/Oct to see all skeletons out was biased with technicals and we have seen that happen to an extent more then what we thought. I do read a bit on global economic views but all the time the economist come out with excellent views but timing dont seem to match with market movements and appear prophetic in hindsight. 2006-2007 saw lot of critics of credit scenario and the boom is over but we saw the market continue to boom to get over months or a year later and then came the slowdown. Crude was a blockbuster at 120-140s with tgts of 250 and super spikes which actually got finished at 150 as per price and at 80-100s tgts of 50 as demand drop came up so maybe a demand drop is almost getting over .
Now suddenly am reading a lot of economists speaking on recession is in place and a recovery may take 12-18 months but not many give a starting point so havent understood when the rough weather ends. Can we say that the recession in market prices is almost over as the lag or early view by economists seen historically. But we may see effects of the slowddown in the industry , economy , jobs and other scenarios as generally markets factor in things before they happen. Although we are not looking from a depression point of view coz i havent seen it in my lifetime and neither know anything about it so cant discuss on it or whether we should even think about it. But yes in a slowdown or recession the best way to stay comfortable to live prudently, make contigency provisions and be ready for some temporary consequences like job layoffs, salary cuts or other difficulties which may or may not be seen but precaution helps.
Markets are a great indicator of the economic scenario is what i feel. Just looking back when markets corrected in Jan we saw corporates like ICICI and others cut bonuses , promotions in March later on further drops we saw mid cap IT cos go on a layoff mode and pink slips. So at a further correction now can we see salary cuts, layoffs in other industries, lesser job options ?? ( things to ponder on )to stabilize the over growth of opportunities we had before and then we can embark on much better times after this normalization and faster if India gets a much softer landing into this rough weather .
Although such a scenario could be beneficial for IT cos and other Manpower businesses with high attrition rate as that may slowdown and man power costs may get in control to stem business downfall. Also historically in such normalizations we do see better and bigger growth opportunities i remember in 2001-2003 IT engineers saw huge probs in job opportunities and placements ( engineering time personal experience of seniors ). But later we saw super-placements in 2004-2008. Can this cycle happen for MBAs/CAs or some other professions who got high growth ?? coz of financial boom and see a little dip then bigger growth ?? ( things to ponder on) .
All above thoughts are randomn thoughts which just came out without adequate research and could be highly amateurish and may not be conclusive enough.