EOD Analysis for 25th November 2011 and Outlook for 26th November 2011

As expected, the OI in Nifty futures dropped by almost 30% 1 day after expiry and significant premium shrinkage in Nifty futures came in. Choppy action through out as markets are still undecisive. We had a poke below 4700 again but things seemed just about ok at close with BNF showing some resilience with a flat close. I am inclined to believe that this is due to short-covering and some profit booking from the highs of the day as very few people would like to carry risks overnight.

Looking at the way FTSE, DAX and Euro-Dollar are crumbling, I am inclined to believe that another leg of steep fall is awaiting Nifty and the low of 4640 in all likelihood will be retested again. If it holds, well and good otherwise the carnage can continue to 4450-4550 in all likelihood will finally get arrested hopefully.

For December, weakness is expected to continue with 5th December and 16th December being most crucial dates. From 16th-21st December, we are expecting a base effect to take place in Nifty and then march upwards; As of now can't see upside beyond 4994 but if bulls manage to take out the 5092-5125 levels for 2 consecutive sessions then further upside can be expected.

As mentioned in Raghuji's blog, the markets might play in a tight range for a few days but here I have a slight disagreement [as we keep saying, there is enough latitude amongst our team members to have divergent opinions and that neither hampers our relationship nor stops us from learning from each other]

In all likelihood 4600 will be broken this time is my stance [supported by astrological views from garikaptiji i.e. Sarmaji]

For global markets, expecting a relief rally on FTSE [from 5k-5050 levels with eventual targets being 4800-4900] and DAX from 5250-5350 levels with eventual targets being sub-5k levels. Euro-Dollar has hit our target and should find an interim bottom at 1.3-1.3225 levels from where some short-covering can be expected. Eventual destinations are 1.3 and 1.28 but in due course of time; there is no perpetual rise or fall. GBP-Dollar has also gone below 1.56 as indicated last week and hence the stability in BNF looks very illusory. Some more pain of 250-300 points expected here.

IT companies can book one time profits on forex but the real concern is growth and with the current economic conditions, it is very clear that the order book is going to shrink for next year and this will be the main concern for IT segment. INFY 3 times in a row has managed to stay afloat 2600 levels but if this level is repeatedly pounded, has potential to go down another 100-125 odd points. HDFC can slip to 575-580 levels if 605-608 levels don't hold firm on closing basis. Only 2 closes above 2650 [for Infy] and above 625 [for HDFC] can bring some relief on these counters.

For Nifty, volumes have to go up and minimum OI of 30-32 million required to gain 150 points from here - lack of volumes can only delay the fall but not prevent it.

Dow can correct another 200-250 points from here but there is too much bearishness now; should see some short-covering from 11k-11100 levels

All markets have been covered and hence no special updates will be made over the weekend. Dow section will be updated tomorrow morning. Hope you had a profitable week and hope all of you manage to enjoy your weekend.

EOD Analysis for 24th November 2011 and Outlook for 25th November 2011

So expiry day did give us a movement in a 100 point range and closed in the positive despite some bad global cues. Lots of short-covering and OI in Nifty futures were also pretty high at 40 million. Now one should not be surprised to see a few days of low volumes as it usually happens after expiry. Is the correction phase over - well can't say anything right now; last time, Nifty hit 4720-4728-4751 [i.e. fell 3 times here before resuming the journey upwards and breaking out all resistances] Yesterday and today put together, we had 2 visits to the 4640-4660 zone and we have seen bouncebacks from there. There is a potential to retest this and if this 4640-4660 zone gives way with volume and momentum one more time, there can be a further fall to 4450-4550 zone where the correction should ideally end and a new cycle should start.

Critical levels remain unchanged; Unless bulls manage 2 consecutive closes above 5092-5125 levels, safe to assume that markets are weak and vulnerable. As we keep saying there is no perpetual rise or fall and the 4911-4944-4994 levels that were key support levels earlier will provide stiff resistance. Friday factor might come into play tomorrow. Stock-specific investments can commence in SIP format now.

Stay away from the banking segment for some more time. In the infrastructure space, IRB looks good; in the technology segment, SmartLink is now looking attractive and in the consumer side, I guess one can pick up some units of Moser Baer, Navneet Publications with a 2-3 year horizon. Whilst some correction has been seen in punter counters like Polaris, Jubilant Food etc, my personal recommendation is to wait a little more. Amongst Mutual Funds, I would still prefer to stick to HDFC Top 200 fund with about 10% investment corpus maximum spread out over the next 3 to 4 months. Likewise, though it is near certain that Nifty has high chance of testing more lows, with a 2-3 year horizon, one can start accumulating Nifty Bees in the demat account.

As the saying goes, buy low, sell high as far as investments are concerned and in a staggered systematic way. As our captain wave rider says, no point trying to pick a top and bottom; as far as investments in demat account are concerned, one should hold them for a minimum one year period and escape the capital gains tax as well.

Dow, FTSE, DAX all hit our targets this week and we hope to get better with the analysis on both Nifty and Global Markets. Hope you enjoyed the current series with good profits.

EOD Analysis for 23rd November 2011 and Outlook for 24th November 2011

Weak global cues and selling en masse right from opening bell; Nifty futures clocking an OI of 43 million plus that was enough an indication that the fall will be deep today especially after 4720-4693 were taken out in a jiffy. Has the market bottomed out yet - difficult to say but some short-covering was definitely expected from the lows of the day. Banknifty now has 3 critical headwinds going against it;

1] Euro-Dollar / GBP-Dollar [which in turn has an impact on Dollar Index and Rollar]; Dollar Index is yet to peak [80-81 is the potential target], Euro-Dollar is yet to bottom out [1.32-1.3-1.28 next potential targets]

2] NPAs surging in balance sheets of banks / Exposure to PIIGS debt to some extent by leading banks

3] Credit Growth contraction and lower NIMs as we chug along

So unless the above 3 factors don't play out completely and reverse, Banknifty will keep drifting lower which in turn will have an impact on Nifty. Even on Nifty, the premium shrinkage even on Dec Nifty was too much - until yesterday, it was commanding 20+ points premium and at one stage it dropped to 10 points and similar price action for Jan Nifty as well

FMCG, Pharma, Infy, Tata Motors gave some respite in such steep falls [no gains but some stability nevertheless] Tomorrow is expiry day and we don't know what form of manipulation will play out for the FnO settlement. We still maintain that 4450-4550 is the zone where Nifty should be able to find a bottom and then start the next leg up.

Short-covering to some extent is being witnessed in DAX and FTSE as well and one should not be surprised to see the same on Dow tonight. To the extent price remains below 11625 [11625 is very much achievable on Dow via short-covering itself], the next leg down should land around the 11250-11300 area and then we know what to expect on Nifty.

EOD Analysis for 22nd November 2011 and Outlook for 23rd November 2011

A day with lots of volatility on either side; a relief rally was due courtesy short-covering; OI in Nifty futures surged to 41 million [expiry roll-over effect??] and VIX was ok at around 27-28 [Manipulation as this kind of volatility warrants 29+ VIX IMHO - our NSE only feels falling prices = volatility!]

Nevertheless, all bourses were due for short-covering after the brutal carnage yesterday. Euro-Dollar is a shade above 1.354 as I put this and it has potential to pull-back to 1.36 levels [or a shade higher] eventual target is 1.34-1.32-1.28 in gradual phases over the next 5 to 8 weeks. Back to Nifty, INFY again went all the way down to 2600 and closed above 2700 levels - whether it will manage to sustain such levels is a big question especially with so much negativity around. Tata Motors made a smart recovery considering the levels to which it was badgered until yesterday but the rise is an illusion.

Critical levels remain unchanged; direction is down, momentum is down but weak hands will be chopped on the short side as well as long side. November 2011 in all likelihood is set to go down as Mowember! Only money printing can save the bourses and yesterdays collapse in metals is a clear cut indication of margin calls being triggered. Eventual downside target for Nifty is 4450-4550 from where the next longer term leg up can commence.

There is no perpetual rise or fall; in the short-term, all markets will tend to mirror each other; for the next 3 to 4 months; hedges are critical as there will be many gyrations on either side before going in the direction of the larger trend [which id DOWN]

For those of you who are asking stock-specific advice, please take a little time off to go through the weekend posts of mine made over the last 6 weeks; all counters, indices, entry points and targets have been given there.

For all those who want to get in touch with seniors like wwji, raghuji, harshalji etc, yes, we do have a controlled group on FB and we don't believe in more the merrier. The forum is moderated by our dear Sunny bhai and entry is by invitation only. Please send a PM to diehard39 on mmb or send a freind request to Sunny Hooda on FB [DOB 3rd August with a tiger as his profile picture]

Condition is Very Clear: You have to provide contact details that can be verified - and if he is satisfied with the same, he will provide access to our group there. His decision is final and binding.

EOD Analysis for 21st November 2011 and Outlook for 22nd November 2011

A very weak opening aided by negative global cues and a bit of short-covering in the middle session. OI in Nifty futures surged today to almost 36 million [not surprising as we head closer to expiry] Euro-Dollar is below 1.35 levels for now but the upside seems capped and it is under extreme pressure to retest 1.34-1.3425 levels that will make banks weaker; if some recovery happens there [which IMHO will see some recovery] FTSE has hit our T1 of 5300 and is edging lower whilst DAX is around 5660 [I must confess here that these were levels expected on Friday and when that did not happen, was looking for a round of short-covering today on these counters before hitting the target; next targets are 4800-4900 on FTSE and sub-5k levels on DAX with intermediate relief rallies [unless some form of QE comes in from central banks. It is interesting to note that whilst ECB is saying that it won't act as lender of last resort, it has been buying Italian notes to bring some calm on the surface!]

Back to Nifty, breach of 4880 almost has filled the pending gap and the most critical support points are 4693-4720-4728-4751

Auto counters like MnM saw some short-covering before crumbling but Tata Motors continued its losing streak. 2 consecutive closes below INFY would have made it vulnerable for retest of 2650 had been mentioned on Friday [1 close can be a false alarm at times] However, the counter has made a day low of 2626 today and has snapped back. If it manages to close above 2650 once again, good, else more bloodbath expected on this counter. Broader markets are not showing any signs of recovery.

Today was the 8th consecutive day of loss and tomorrow is critical. If the session turns negative for tomorrow as well w/o too much short-covering, we may have another 5 sessions of weakness. Expiry is on Thursday and one can never tame expiry due to multiple manipulations. FMCG and some Pharma counters are the lone crusaders on Nifty as I put this note.

Still no trace of any bullish tsunami but as we always keep saying - there is no perpetual fall or rise; in fact, on an index level, markets have not moved anywhere but broader markets are seeing levels not seen across 2011. One by one, all operator stocks like Jubilant Food, KS Oils, VIP Industries, Polaris etc are witnessing the inevitable - we have been alerting readers constantly of avoiding such stocks as they simply bungee jump for the plunges. Some counters are looking attractive to buy on Delivery Basis and the list was given last month itself. 4693 is the last hope for bulls on the downside failing which one should not be surprised to see 4450-4550 levels on Nifty [before or after expiry remains anybody's guess]

Once bulls conquer 4880 with volume and momentum, they still have steam in them to retest 4944-4994 on upside. 2 consecutive closes above 5092-5125 levels and bulls are back in action. IMHO, we are almost at the last stage of bottoming out as far as Nifty is concerned.

Special Thanks to garikaptiji [mmb id] for his astrological advice given to all followers on our private FB group. Some forecasts took a little time to manifest but when they did, the forces were even stronger

He categorically mentioned that initial transit of Mars into Leo, Saturn into Libra and reversal of retrogade Jupiter can bring a lot of political and capital market turmoil; as late as last night, he alerted all of us about Sun's transit to Scorpio today that would take a lot of toll and we can see the result on the screen. Hats off to his readings and he also constantly has been saying "This is what I see as per the astrological charts - please combine these with other techniques all of you use for your individual analysis and work out the key support/resistance levels" I am specifically mentioning this because it takes a lot of courage to speak what one feels is correct despite all the mud slinging and name calling that took place. He had categorically said that MA (Manipulative Analysis) can bring some respite on the bourses only to reverse all the gains and the falls will be very fast and furious. My salute to garikaji for his guts and courage to stick to his guns and for such an accurate forecast made well in advance!

My blog post for today is a tribute to garikaji [sarmaji as we call him lovingly]