SIGNS OF STRESS IN TRADING

Markets have been particularly volatile recently, at least for day traders and day trading can create a significant amount of stress. Because our bodies are designed to adapt to stress, we may fail to realize that we are stressed out.

Here’s an inventory of common trader behaviors that may signify excessive stress.

12 Signs of Stress

1. A vivid fantasy of making lots of money today.
2. Feelings of invulnerability.
3. Eating breakfast or lunch at your trading desk.
4. Hyper  focus on price bars as they form.
5. Talking out loud to the market.
6. Bargaining with the market about an open position.
7. Cursing at the market.
8. Expressing irritation at partner, kids, pets, plants, inanimate objects.
9. Sudden urge to increase position size or frequency.
10. Canceling or moving stops for no good reason
11. Adding to a losing position.
12. Trading in your underwear !

TIP: Stress degrades decision-making. If you are stressed out, shift your focus 

LEVELS FOR THE COMING WEEK

The  Sensex moved in a narrow range before closing 93 points lower last week. Down-closes in most of the recent sessions imply that the path of least resistance in the near-term is downward. That the index is moving below its 50-day simple moving average also denotes weakness.

There can be a decline to 20,277 or 19,848 in the week ahead. The presence of the 200-day moving average at the second target will lend critical support. The 38.2 per cent retracement support also helps make the zone between 19,800 and 20,000 an important support to watch out for.

Resistances for the week ahead are at 20,971 and 21,158. A close above the second resistance is needed to mitigate the negative short-term view.

The medium-term view for the index is positive. Index movement above 20,000 will mean that it can oscillate in the band between 20,000 and 21,500 for a few more weeks before the next major move.

NIFTY (6,171.4)

The Nifty, too, moved sideways before closing 39 points lower last week. The chart pattern suggests weakness in the short-term. The Nifty could break lower to 6,117, 6,040 or 5,916 in the days ahead. The short-term weakness will reduce only if the index moves above 6,272. Short-term traders can therefore go short in rallies, with stop-loss at 6,280.

A move above 6,280 will mean that the index is heading toward 6,415 and 6,582. The medium-term trend in the index stays positive despite the negative short-term view. The index has critical support around 6,000 and then at 5,925, where the 200-day moving average is positioned. The positive outlook will be threatened only on breach of the support at 5,925.

BULL MARKET IN 2014 ?

Deutsche Bank on Thursday said 2014 could be a beginning of a new bull market for Indian equities, on the back of a bottoming out of the economic growth and earnings cycle.

The European bank believes the pace of economic recovery and timing of the market rally could hinge on the election outcome.

Most key variables influencing the equity market are at an inflection point — after a long gap — and may result in 2014 heralding the beginning of a bull market for India. Economic growth has bottomed, the corporate earnings cycle is seeing a successive quarter of recovery, investment starts are seeing a glimmer of hope,” said Abhay Laijawala, managing director and head of research, Deutsche Equities India.

The brokerage expects the benchmark Sensex to touch 24,000 (Nifty imputed target 7,150) by December 2014, about 15 per cent up from the current levels.

“At our target the Sensex would trade at 15.9 times FY15 EPS, which (is) a slight premium to past five-year average PE and with earnings growth of 15 per cent valuations to stay supportive,” said Deutsche Equities in its India strategy report.

DELIVERY PICKS

GATI LTD

(Bse Ticker-532345@ Rs.52/-)

Just Watch Rs.54/-

Close Above Rs.54/- (2 Closing ++ Weekly Closing)

Door Open For Stock to Go Rs.85/-

TARGET

Rs.55/- Rs.62/- SL Rs.45/-

WIPRO

(Bse Ticker-507685@ Rs.540/-)

Considering Rs.530/- Strong Base For Stock !!

We See Stock May Soon Start Upward Journey

TARGET

Rs.552/- Rs.560/- SL Rs.518/-

 ZEE ENT

(Bse Ticker-505537@ Rs.289/-)

TARGET

Rs.298/- Rs.310/- SL Rs.282/-

OUTLOOK FOR CEMENT SECTOR IN INDIA

Cement demand recovered slightly during Q3FY14 mainly boosted by individual housing demand. Cement prices also started improving since Q2FY14 end and sustained till November 2013. However, prices witnessed a decline during December 2013 due to lower than expected recovery in demand as well as inventory clearance by large players.

Demand continues to be weak

Cement demand continued to remain sluggish in Q3FY14, with a weak October, followed by a relatively better November and again a subdued December. With demand failing to pick up post monsoon, volumes for major companies are estimated to drop 1-2% YoY. The all India average cement price inched up a mere 1.5% QoQ; and were down 0.5% YoY, making Q3FY14 the third consecutive quarter of YoY decline. Adverse impact continues in housing and infrastructure vertical, coupled with sand mining issues, delayed crop selling and politico-economic uncertainties. Capacity utilization is expected to remain low at ~70%, which is the lowest level in last decade. On YoY basis, HDFC Securities expect 1-2% volume decline for three large caps – UltraTech (UTCL), ACC & Ambuja (ACL).

Pricing Scenario in various regions during the quarter

Northern region:

Construction activity in the region was impacted by festive season as well as sand mining ban. Prices had improved during mont hs of Oct -Nov 2013 while witnessing a decline in Dec 2013. However, average cement prices for Q3FY14 were still higher than average of Q2FY14.

Southern region:

Prices recovered by nearly Rs30 per bag during Sep-Oct 2013 in southern region and witnessed declines during Nov-Dec 2013 due to lack of demand and impact of cyclones. Average cement prices for Q3FY14 for southern region are marginally lower than average of Q2FY14.

Western region:

Prices increased by Rs25-30 per bag in western India during Oct 2013 and witnessed further increase of Rs5-10 per bag during Nov 2013 in anticipation of demand revival from infrastructure segment. Howe ver, sharp decline was witnessed in Ahmedabad and Pune by nearly Rs.20 per bag on aggressive selling by players. Prices fell in December as demand did not sustain at same levels.

Eastern region:

Demand was quite low during Oct 2013 in eastern region due to Durg a Puja festival. However, cement prices increased by Rs20 -25 per bag during late Oct 2013, remained largely flat in Nov 2013 and declined by Rs10-15 per bag in Dec 2013.

Profitability under pressure

Profitability is expected to be under pressure in Q3FY14 as well, after a weak Q2FY14, as there has been weak pricing trend, continued cost push in energy and freight and no major benefits of seasonal operating leverage due to weak demand. However, due to improvement in cement realizations, EBITDA per tonne is likely to improve sequentially.

Outlook

A weak demand scenario has impacted the pricing power of cement manufacturers in the country. Thus, despite the increase in cost pressures due to higher freight fares and power costs, cement manufacturers are finding it difficult to pass on the same through price hikes. Further they also do not expect any respite on the cost front going ahead. One can expect infrastructure spending to go up in the coming months due to the elections (though not majorly), which could be a revenue generating opportunity for the sector. Cement prices are also likely to firm up from mid -Jan, 2014. They keep a neutral view on the sector

FED MINUTES - WHAT TO WATCH ?

After months of mulling the move, the Federal Reserve finally tapered its bond-buying programme a week before Christmas.

The central bank’s staff in New York are now hoovering up $75bn of Treasuries and mortgage-backed bonds a month, down from the $85bn they’d been buying since the autumn of 2012.

The decision to taper adds extra interest to today’s release of the minutes of the December meeting of Fed’s policymakers. Investors will approach the minutes, which are due at 2pm New York time, with several questions and may even get some answers. Here’s a look at three of the questions.

Why did the Fed taper?

The most obvious – and also most likely – answer is because the US economy is showing further signs of improvement. Specifically, the unemployment rate has fallen to 7 per cent, rising house and equity prices have helped rehabilitate the finances of some US households and the drag from last year’s tax rises and sequestration should ease.

Investors, though, will also be interested in whether a stronger prompt for some officials is the concern that the cost of the bond-buying programme is outweighing its benefits. Anxiety the policy had begun to encourage reckless risk-taking was on the minds of some policymakers when the Fed first signalled its intention to taper last May.

How quickly will the Fed taper?

Those expecting the minutes to reveal detailed discussions about whether the Fed will reduce its purchases by $10bn, $15bn or any other number from now are likely to be disappointed.

Instead, investors will have to piece together an answer based on how optimistic a note the minutes strike about the outlook for the US. It is worth bearing in mind that the Fed has consistently erred on the side of caution, so the minutes will have to be particularly effusive about the outlook to persuade investors the central bank will taper at anything more than a measured pace.

Indeed, the minutes are likely to underline that the Fed is prepared to slow tapering should the data deteriorate significantly.

Is the Fed contemplating more changes to its forward guidance?

As the Fed begins to slow its bond-buying programme, it is relying ever more on so-called forward guidance to shape investors’ expectations about future policy.

In practice forward guidance amounts to verbal promises and the deployment of so-called thresholds.

The December meeting saw the Fed tweak the language around its unemployment threshold – the level the bank insists the rate needs to be at before it will consider raising interest rates. December’s statement said:

It likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent.

The interest will be if the minutes reveal officials considered any other changes to its forward guidance, as the Fed seeks to convince investors that tapering will not quickly be followed a broader tightening in monetary policy.

FAMOUS FAILURES