MARKETS FOR 2-5-14

Nifty (6696) we said ‘next logical TGT and strong support zone is 6650’ the market unfolded as expected and saw the low at near our support of 6650 and closed in the red…technically the market is still weak but has seen at a crucial support and saw a technical bounce is not ruled out…

The support for Nifty is it 6650-6600 and the resistance to the up move at 6800- 6900-7000

HUNG VERDICT IN INDIAN ELECTIONS WOULD BE A DISASTER

A fragmented government of smaller parties will be the “biggest threat” to the country’s credit quality, according to international rating agency Moody’s.

“History has often revealed election outcomes to be quite different from poll data, and parliamentary arithmetic has resulted in coalition governments for about the last two decades,” the agency said in a note, adding that the Modi-led BJP is tipped to come to power according to many opinion polls.

“The biggest electoral threat to credit quality would be if a fragmented coalition of smaller parties without a common economic reform goals comes to power,” it added.

The emergence of such a fragmented government can provoke further capital flight, push borrowing costs, weaken the rupee, delay economic recovery and make fiscal consolidation more difficult, Moody’s said.

The markets have been joyously welcoming emergence of opinion polls showing a BJP victory over the past few months and rising in the expectation of a Modi government, even though the BJP has been opposing reform measures like FDI in organised retail.

“The BJP’s economic platform has emphasised increasing infrastructure investment and the share of manufacturing in GDP, and its candidate for Prime Minister Narendra Modi has a record of investment-friendly policies in the state he governed,” the Moody’s note said.

Meanwhile, in some positive news for the country, the rating agency today said the country’s vulnerability to a reduction in capital flows is limited due to low proportion of debt in foreign currencies and is also long term.

“While the country’s debt is far larger than Indonesia?s in GDP terms, the long maturity, which averages nine years, and the very low proportion denominated in foreign currency limits the country’s vulnerability to a reduction in capital inflows,” Moody’s said.

It also acknowledged the measures taken by the country to fight the rapid depreciation in the rupee in the aftermath of the US Fed’s announcement to taper its liquidity infusing asset buying programme.

THOUGHT FOR THE DAY

EASIER SAID THAN DONE

3 STAGES OF LIFE

HURDLE TO SUN PHARMA RANBAXY MERGER

The merger of Ranbaxy Laboratories with Sun Pharmaceuticals Industries has received a setback with the Andhra Pradesh high court asking both the BSE and the NSE to withhold their approval for the proposal as it hears a petition alleging insider trading in the Ranbaxy scrip.

The high court has issued orders to the stock exchanges to maintain interim status quo on the matter. It has also issued notices to the Securities and Exchange Board of India, the BSE, the NSE, Sun Pharma, Ranbaxy, Daiichi Sankyo and Silver Street Developers — a limited liability partnership firm having two Sun Pharma subsidiaries as partners.

“There shall be interim status quo, as prayed for,” Justice P. Naveen Rao said in his order.

This followed a writ petition filed by some individual investors alleging heavy trading in the Ranbaxy stock before the merger with Sun Pharma was announced on April 6.

The petitioners had requested the court to direct market regulator Sebi to investigate the insider trading of Ranbaxy shares and take appropriate action against Sun Pharma and Silver Street.

“We have not received any such communication. At Sun Pharma, we hold ourselves to the highest standards of corporate governance and business ethics. Our code of conduct serves as a compass that guide the actions of our employees and directors ensuring consistent and uncompromising integrity as we build trusted relationships around the world,” a spokesperson for Sun Pharma said.

“The matter related to the purchase of shares of Ranbaxy Laboratories does not violate insider trading rules. With regards to the petition filed, the matter is sub-judice and hence we cannot make specific comments but we would be taking appropriate action as advised by our legal counsel,” the spokesperson added.

The petitioners also requested the court to “restrain” the BSE and NSE from giving any clearance to the scheme of amalgamation or merger of the two drug makers.

“However, the extensive and sudden rise in the share price of Respondent 5 (Ranbaxy) prior to announcement of merger clearly demonstrates that certain persons had prior information about the said merger. Consequently the trading on the said shares amounts to violation of Sebi’s Insider Trading Regulations,” the petitioners alleged.

Sun Pharma had earlier denied insider trading charges against Silver Street Developers LLP — its wholly owned arm — in the $4-billion deal to acquire Ranbaxy.

Silverstreet Developers had bought Ranbaxy shares amounting to a 1.41 per cent stake by the end of December 2013. As on March 31, 2014, its holding stood at 1.64 per cent.

Mumbai-based Sun Pharma had on April 6 announced that it would fully acquire Ranbaxy in an all-stock transaction with a total equity value of $3.2 billion, along with debt of $800 million, taking the overall deal value to $4 billion.

MARKETS FOR 30-4-14

   Market Review for 30th April 2014     

Nifty (6715) we said ‘technically the market is still weak but a technical bounce back is not ruled out’ the market unfolded weak as expected…next logical TGT and strong support zone is 6650

The support for Nifty is it 6650 and the resistance to the up move at 6800- 6900-7000

VERY TRUE

MARKETS FOR 28-4-14

   Market Review for 28th April 2014     

Nifty (6783) we said ‘Technically the larger trend is still up as long as 6650 holds, however I would watch 6785 and continue long’ the market found some profit booking in the upper regions and also closed in the red just below our crucial 6785 mark…Technically I would now view 6870 as a tough resistance zone and trade short and would watch crucial support at 6650 to consider covering short if required…

The support for Nifty is it 6650 and the resistance to the up move at 6780- 6900-7000

FOREIGN INSTITUTIONAL INVESTORS------ GOD OF INDIAN MARKET

Amid hopes of a stable and reform oriented government after general elections, net investments by foreign institutional investors into India so far this year has reached USD 10-billion level, while their cumulative total inflows into the country is nearing USD 200-billion mark.

According to the latest data compiled by capital markets regulator Sebi, the net investments by FIIs into Indian equity markets since the beginning of 2014 have crossed USD 5 billion over Rs 30,000 crore), while the same for debt markets also stands near USD 5 billion (about Rs 29,000 crore)– taking the total to close to Rs 60,000 crore.

This includes net investments of about Rs 1,500 crore so far in April. This is despite a net outflow of about Rs 7,000 crore from debt markets, as equity markets have seen a net inflow of over Rs 8,500 crore this month till April 25, the latest trading session.

According to market analysts, FIIs are bullish on India and they are expecting a stable government emerging post-elections.

FIIs, the main driver of the equity market, have helped pushed up the benchmark BSE Sensex by over 7 per cent so far in 2014 and is now being seen as moving closer to 23,000 mark.

They invested Rs 20,077 crore in Indian stocks in March, compared with Rs 1,404 crore in February and Rs 714 crore in January.

There were over 1,700 registered FIIs in the country, along with close to 6,400 sub-accounts.

The strong inflows in the recent months have taken the cumulative net investments of FIIs into India to close to USD 197 billion, while their investments in rupee terms is a bit away from Rs 10 lakh crore level.

This is based on the data since November 1992 when the FIIs began investing into Indian markets and includes about USD 167 billion investments into equities and further about USD 30 billion in debt markets.

10 POINTS FOR EVERY TRADER

1. You have no trading plan – you need to treat your trading like a business and plan how you’re going to trade. If you don’t have a trading plan, then google for it, there are loads of free resources out there to get you started.
2. You have no money management rules – You can start with the 1% rule and work from there. Calculate your risk for each trade and ensure it’s 1% or less of your trading capital.
3. You’re prone to emotional swings – If you feel tremendous excitement when you win a trade, then something’s wrong. Sure at first it’s exciting, but after a while your trading just becomes a process and the emotional aspects should start to fade.
4. You’re nervous when in a trade – This is usually a result of trading too big for your account size. See point 2.
5. You try to predict rather than react – Leave the predictions for the economists. For every trade have a thesis for how you’re going to respond for different scenarios. Think in terms of “if x then y” type statements instead.
6. You revenge trade – The market doesn’t give a shit if you win or lose. Who are you having revenge on? This is more likely a result of you’re own unconscious desire to blow up your account and to go back to doing whatever it was before you played around in the markets.
7. You don’t cut your losses fast enough – Don’t just wait for your trade to “bounce back”, man up and take the loss. You can always re-enter if you see a good setup.
8. You watch every tick – Watching price action and reading the tape are important, but you should be able to multitask and not just stare at level 2 all day. Only watch the tape when you’re about to place a trade or exit, or at other levels you’ve set alerts for. Let your platform to watch every tick for you.
9. You never review your trades – If you’re an emotional trader, then this part of the process is the most boring for you. But if you’ve been trading for a while and want to get the most out of your system/strategy, then this is where you can make some good improvements. Just finding one tweak to either your entries/exists or position sizing or indicator setup can really pay and boost your P&L.
10. You’re losing MONEY – Sure, we all have losing trades (except some uber gurus), it’s part of the game. But if you’re losing money consistently, then chances are you’ve got to fix something from the list above.

GAME OF SPECULATION

ENJOY

WHAT ARE YOUR ROOTS ?

REAL FACT