Feb 28, 2010

NIFTY FU HURDLE 5025

nifty fu to face resistance at 5025
2 consecutive close above 5025 to create blast.


i will update more to paid members. 


updated on 28/02/2010 by profit.megha@gmail.com

WEEKLY MARKET REPORT FOR TRADERS AND INVESTORS




FUNDAMENTAL STOCK PICK:
ELECTROSTEEL CASTINGS LTD.

CMP 45, TARGET 100.

The Company is India’s largest and world’s one of the few manufacturers of ductile iron pipes.
Company’s products are used in water supply and fire fighting systems.

The Company is fully integrated backward with,

(1)  Pig iron plant(steel mining rights)
(2)  Sinter plant
(3)  Captive power plant(coal mining rights)

The Company has exclusive rights of iron ore and coal mines which will reduce raw material prices and will help to increase profits in coming years.

In India 25% of rural population and 9% of urban population don’t have water supply.

To supply water across India government has lined up investments of 1,76,306 crores for water supply and irrigation in the 10th five year plan under various programs like,

(1)  accelerated rural water supply programs
(2)  pradhan mantri gramodaya youjna

So the company has very good business opportunity in water supply pipes with backward integration of raw materials such as; steel which is main part of the manufacturing and un –interrupted power supply through captive power plants with coal mining rights.

Backward integration will help company to stand in competitions and will help to increase profitability in coming years.

Financials:
Book value stands at Rs. 45 and the P/E multiple is 10 which is quite reasonable, with such an growing economic scenario and business model of the company as well as last five year averages of key ratios.

Sometimes what happen stock trade at cheap valuation because of no great business, lower profits margin, lack of corporate governances, and inability of management to handle the company.

Is it so with Electrostel castings Ltd.? Let’s see below,

Below are the last 5 year averages of some key ratios,
Last 5 years sales growth is 27%.
Last 5 years profit growth is 17%.
Last 5 year’s dividend payout ratio is 33%.

Apart the company has good growth in sales and profit and management has translated it in to dividend and last year with bonus so company has good cash flow in real accounting.

Management has taken good step of backward integration by taking exclusive rights of steel and coal mines which it self gives confidence on management side. 

Looking at the opportunity we believe stock is trading at cheap valuation and it deserves much higher valuation.

We recommend a buy call on this company and our projected target is Rs. 100.

MUTUAL FUND PICK
UTI CONTRA FUND
Recommendation:
Avoid.
Rational:
This fund fails to deliver impressive returns and constantly underperforming its benchmark index.

WEEKLY MARKET OUTLOOK
SUPPORT AT-4750
RESISTANCE AT-5060-5150-5200

(1)  TECHNICAL ANALYSIS ARGUMENTS:
Now all is well from budget!

As we were telling 15300 should be hold after budget now that’s come true.
Now to continue this rally we need to fill the gap of 17025 very fast in terms of time frame, if we fail to fill the gap then we may see some pressure at higher levels and has to consolidate between 16000 to 17000 and has to wait more time may be till quarter 4 results.

If we manage (hope fully will manage) to fill the gap in short time then as per wave structure there will be “a-b-c common flat”   pattern and first target will be 19300/19600 and their after 22000 in 20 week time frame.

As per wave theory, wave 1st made by initial traders and investors with contrarian call on market.

When the corrective wave 2nd end and wave 3rd start with breaching wave 1st, this rally again catches attention of initial traders /investors who were holding long position from wave 1st and not exit on down wave 2nd at this time they become more confident about the market rise and the same time price and volume both rise at faster pace, because those who have left opportunity to enter in wave 2nd and those who have buy in wave 1st both will start entering in to market.

Once we complete 19300/19600 levels we may see some sort of profit booking from the initial traders and investor who have entered in wave 1 at that time the fall will be limited to the 17900 or 17500 in maximum case, once this sell off get over we will have 5th wave and again explosive wave and price projection will be 22000 with time projection of 20 week.

So one thing is clear on technical front that we have secured down side with 5 different theories (full report given before 2 week ago) support of 15300.


(2)  FUNDAMENTAL ANALYSIS ARGUMENTS
Now this is confirm that government is focusing on micro economy and has taken good steps in budget for growth of the economy as well as in the direction of fiscal prudence.

There is lots of money are on side line to invest after budget and budget has not given any big bed surprise and now we expect vary good money flow from retail, mutual funds, FIIs, insurance companies etc.

Improved indicators like industrial production, export data, quarterly results indicating recovery of Indian economy.

Life Insurance Corporation of India has planned to invest Rs 10000 crores by March end.

If we analyze the last quarter data of insurance company, they all together have collected nearly Rs 30000 crores, if assume all premiums will be paid by all policy holders the again this quarter Rs 30000 crores of money flow come to capital market.

So there is no problem of liquidity from domestic front and largely not from international front.

In India we will have good growth under insurance sector (particular ULIP) which will pump long term money in to Indian market.

Along with insurance sector online mutual fund will also help to tap the rural and urban money vary fast in long run.


We believe that there are ample opportunities available which can yield higher returns.
These have to UN covered through research and meticulous stock selection.
In such scenario active portfolio management is likely to outperform passive strategies.

Biggest Mistake Done By Common Investor Is…
…that they Don’t Buy When Stock Market Come Down At Value Buying Levels
If u wants to manage your portfolio then you can subscribe in our portfolio management service.

You can also manage your hard earn money with our mutual fund portfolio management service.

We suggest investor our MID CAP PMS 1 AND 2 SERIES who has investment horizon of 1-2 years.
We suggest investor our 7 emerging star pms who has investment horizon of 1-2 years.
We suggest investor our 4ACE PMS who has investment horizon of 5 years or more.

We suggest mutual fund portfolio management service those who don’t have time to look at the market and can not maintain portfolio and has small money (less then 1lakh) can subscribe in our this service.


CONCLUSION:
So over all on both side we says this was just a bull market correction and we have hold the last bottom despite the rally on dollar index(rise in dollar index translate in to correction in emerging markets and commodities)  and negative news flow across the world this is good sign of economy and stock market.

This will give more confidence to long term investor and traders towards our economy, government steps towards economy and in long term we believe this will be good.
But at the same time, a stock picking attitude has to be adopted by the investors because it is going to be stock pickers market who want better return out of the bull markets than just riding on the index constituents or heavy weights and so on.






INDIA BUDGET 2010:
Friends, a budget is all about numbers. It can be said to be an annual financial statement with projections for next year. Let’s take a look at some of the important announcements in this budget in brief manner.
Government expected to mop up Rs.40000 crores from disinvestment and Rs.49000 from the telecom license fee.
Increase in plan expenditure by 15% and non planned expenditure by 6%.
The clear statement that oil and fertilizer subsidy will be give in cash and not through bonds issue is good for the oil and fertilizer companies and also the capital markets. The fear that the bond market will be crowded out by the government has receded.
As per most experts the budget expects/assumes reasonable and realistic nominal GDP growth estimate of about 13% and net tax revenue growth of 15%.
MAT (minimum alternate tax) increased from earlier 15% to 18%. This tax was started with a rate of 7.5% then increased to 10%, then to 15%, then to 18% now. The education cess and surcharge added further, effective it sums to 19.93%.The corporate are already paying 16.6 percent of DDT Dividend Distribution tax, and the MAT+ DDT effectively sums to 33.6 per cent.
Reduction in surcharge on tax by 25% to 7.5% from earlier 10%. Although many business people argued that this corporate surcharge should be completely abolished. While experts say this will sum to relief of only around 0.7 percent. Even many tax  experts have sought complete abolition of MAT.
Cenvate rate has already been risen by 2 percent.

Private players to be granted license for banking and nbfc activities subject to RBI guidelines.
Amending definitions and provisions so that cold storages companies can raise fund through ECB route.
A coal regulator authority proposed for,
-benchmarking of standard of performance
-introduce competitive bidding process for allocation of coal blocks
-pricing issues

Plan outlay of Ministry of New and Renewable Energy increased from 620 crores in 2009-10 to Rs.1000. Moreover the government targets 20,000 MW of solar energy by 2022 and leading the world in this segment.
The FM proposed reducing central excise duty on LED lights from 8% to 4%.
Allocation for defence hiked to Rs.147344 crores including Rs.60000 crores for capital expenditure.
Some announcements related to housing construction is positive for builders and developers.
Also for starting hotels above 2star, the FM has provided to allow them to write off their investment such as land, financial instruments against profit.
Benefits have been announced for research and development organizations and institutes. Also the scope for R and D widened from not just pharma and scientific research but also to include social and statistical research and more.36
End to services exemption on goods, transported by Indian Railways is a negative news for the steel, fertilizers, coal and oil companies.
Government Net borrowing is pegged at 3,45,000 crores as against general expectations of around Rs.4 lakh crores, and hence the dual fears of rise in interest rates as well as inflation rates controlled to a greater extent.

The income tax breaks and slab cuts are step to put more disposable income in the consumers hand so that the economy and companies/businesses can thrive in 2010, a year when exports markets like the developed countries are themselves contracting and likely consume less due to deleveraging process, credit crunch and so on. The estimated around Rs.26000 crore in income tax breaks that the Rs.3 lakh above income groups are going to get, will be most likely to be spent on consumer durables, house refurnishing, travelling and so on. This money is most unlikely to go into buying essential commodities and optimistically food inflation will remain untouched because of this 26000 crore. If assuming 34% savings rate, we can assume that around Rs.8500 crores shall come into banking system in the form of savings and may be also in the form of investments in stock markets. Indeed this income tax break can be said to be the single largets tax relief in the history of Indian budget.
The provisions for healthcare has been kept at Rs.22300.
A sum of Rs.66000 crore has been allocated for rural development.
Excise duty increase on tobacco products.
Provisions for giving benefit to SEZ units.
Provisions of subsidy to hybrid and electricity automobile companies.
Unique ID project has been allocated a sum of Rs.1900 crores which will go in administration exp, purchase or biometric devices, data collection, security, and to other technology vendors etc.
Provision of Rs.31000 to education sector.
Announcement to make 20km long road every day.
Planned expenditure for power sector doubled to 5200 crore.
Announced Rs.1.47 lakh crore for infrastructure development.
Number of food parks to be increased to 5.
Rs.200 crores to be spent for climate resilience efforts.
Envisages reducing the combined central and state debt to 68 per cent of GDP by 2014-15.
Exemption from central exice duty for solar power plants machinery.
The excise duty on cement hiked 2% from 8% tp 10%.
Excise duty hiked by 2% on specified segment of cars.
Basic custom duty on radium used for polish of jewellery to 2%.
Custom duty on crude oil hiked back from zero to 5%, and 7.5% on petrol ,diesel from earlier 2%.
Rs.19894 allocated for road and highways development.


Reduction in the fiscal deficit sought to 5.5% of GDP for the year from 6.7% in 2009-10, 4.8% in 2011-12 and 4.1% in 2012-13. Everywhere we see is the praises about ‘fiscal consolidation’ move and an act of ‘fiscal prudence’. But this is not a that much big issue. Friends, without fiscal deficit countries like India couldn’t have achieved in terms of growth what it has achieved till date. Yes excessive deficit is something no one would want. But the present hype or whatever you say it created regarding the fiscal defitice figures and percentage and the king of mention and prime importance given to it seems exaggeration and a ‘clone-view’ phenomena where everyone would talk the same talk so as to show that are sophisticated. Friends our economy is atl east 5-10 year behind to worry about the fiscal deficite. If the government is not going to spend the mass of the rural, unemployed, and bottom of the pyramid population is not going to have to enjoy the fruits of economic growth. The profit oriented companies and you and me are not going to go and help these people. The concern for fiscal deficit is really really exaggerated in my opinion.

Please note that the positives and negatives are indicative and not perfect. If the excise duty is hiked for some sector that does not mean that some company in that sector is now negative. Yes the profitability hurts in some quantum. But this quantum has to be calculated company to company and many times it is negligible. Many times company manages to increase its sale and profitability by expanding business, markets, price rises and help of good expert accountants and tax experts. In fact knowing what coming helps is more than anything or more than commenting on what will be the impact of the gone and happened. Like guestimatig and acting on the effects of the forthcoming DTL, GST, new company law, coal regulator, spectrum sale, 3g, oil pricing policy, kirit parikh report etc. will benefit more to investors.
Send your views

Feb 27, 2010

OUR VIEW ON BUDGET


The Union Budget is a growth oriented budget leading to the next level of reforms. There is a sense of optimism about achieving 9 % GDP growth which could scale up to double digits in the coming years strongly backed by the priority accorded by the Government to agriculture, education, health, infrastructure, financial and social reforms for inclusive growth.
Posted on Saturday, February 27, 2010 | Categories:

Feb 24, 2010

GOLD COMPLETE 4 WAVE,BELOW $1040 WILL START WAVE 5

3 CONSTITUTIVE + WEEKLY CLOSE BELOW $1040 WILL START WAVE  5 
AS PER WAVE COUNT TARGET WILL BE BETWEEN $900 TO $850.

YES BELOW 1040 HUGE UNWINDING FROM HEDGE FUNDS


STREET WALKER SAYS NO IS READY TO BUY 191 TONNES OF GOLD FROM IMF!!!!!!!!!!

GOLD BELOW 16410 WILL KISS 15950 SOON

Sell in truck load below 16410 ,your stop loss 16800
will kiss 16312,16140,15950

below 15950 all round blood bath and bulls will be hang !

Feb 21, 2010

WEEKLY MARKET REPORT FOR TRADERS AND INVESTORS

WEEKLY MARKET OUTLOOK
SUPPORT AT 4700/4600/4550
RESISTANCE AT 4907/4970/5050

(1)  TECHNICAL ANALYSIS ARGUMENTS
Trend reversal or correction a million dollar question
11% correction so far from 5300 to 4700
Let’s paint the scenario to give answer of above question a trend reversal or correction by two way (1) technical analysis arguments (2) fundamental analysis arguments.

Last week we have given analysis with 5 different theories and one level was key which is 15300.
As long as we are holding this support level buy on dips is good strategy.
Hear with this report we have attach chart of sensex which shows index is forming “a-b-c common flat”/triangle formation on Elliott wave theory.
If sensex holds key levels of 15300 post budget then wave 3rd will start with target of 19300/19600 and this wave will be explosive in nature.
As per wave theory wave 1st made by initial traders and investors with contrarian call on market.
When the corrective wave 2nd end and wave 3rd start with breaching wave 1st this rally again catches attention of initial traders /investors who were holding long position from wave 1st and not exit on down wave 2nd at this time they become more confident about the market rise and the same time price and volume both rise at faster pace, because those who have left opportunity to enter in wave 2nd and those who have buy in wave 1st both will start entering in to market.
So technically we assume that if index holds 15300 without any bed news from budget then explosive wave 3rd to start for target of 19300/19600
Typical Elliott wave and Dow theory follower will keep stop loss of 15300 and will enter above 17500/17800 to catch the rally up to 19300/19600 levels.

(2)  FUNDAMENTAL ANALYSIS ARGUMENTS
Improved indicators like industrial production, export data, quartery results indicating recovery of Indian economy.
In Indian market there are lots of money on sideline to invest post budget.
Life Insurance Corporation of India has planned to invest Rs 10000 crores by March end.
If we analyze the last quarter data of insurance company, they all together have collected nearly Rs 30000 crores, if assume all premiums will be paid by all policy holders the again this quarter Rs 30000 crores of money flow come to capital market.
Along with this we have seen net in-flow in all major mutual fund houses, which are currently staying on sideline and waiting for budget.
So there is no problem of liquidity from domestic front.
Big problem at this juncture is high fiscal deficit with rising inflation.
As per government agenda –fiscal deficit will not be a big problem because government will fetch Nearly Rs 50000 crores annually from dis-investments program.
Also there are 3G auctions underway and nearly RS 35000 crores will come in government kitty and this will help to come down fiscal deficit.
Hiking petroleum products will also help to come down fiscal deficit.
Now the second big problem is inflation.
If inflation is with the higher growth then it is good for economy, as prices of goods are rising with production with rising income levels.
Price rise due to higher and genuine demand not because of lower production, rising production of goods will translate in to GDP and income levels of households so inflation will not be a big worry.
In short run market may move according to technical levels but in the long run it move along with economy and corporate earnings.
Investments guru of world BENJAMIN GRAHAM says in short run stock market is voting machine and in the long run it is weighing machine.
We believe that there are ample opportunities available which can yield higher returns.
These have to UN covered through research and meticulous stock selection.
In such scenario active portfolio management is likely to outperform passive strategies.
In India we will have good growth under insurance sector (particular ULIP) which will pump long term money in to Indian market.
Along with insurance sector online mutual fund will also help to tap the rural and urban money vary fast in long run.

MUTUAL FUND PICK
JM MID CAP FUND-AVOID
This fund fails to deliver impressive returns and constantly underperforming its benchmark index.

CONCLUSION:
So over all both on technical and fundamental arguments we believe this is not trend reversal and just a correction and trader and investor should find out value buying in market.

BUDGET EXPECTIONS:
Increase in excise duties.
Raise the service tax rate to 12% from 10%.
Increase Central Value Added Tax (Cenvat).

Road map for the introduction of the key direct and indirect tax reforms,
(1)  direct tax code (DTC)
(2)  Goods & Services Tax (GST)
Three important fiscal bills,
(1)   Pension Fund Regulatory and Development Authority.
(2)   Insurance Bill.
(3)   Banking Regulation (Amendment) Bill.

EXIT CALLS:
EXIDE IND: As per our SPECIAL TECHNICAL THEORY, this stock could crash to Rs.50.

SHRIRAM TRANSPORT: As per our SPECIAL TECHNICAL THEORY, this stock could crash to R.250.

Most of the readers following us for more than two years know HOW THE SENSEX CRASHED TO 11192, A LEVEL WE HAMMERED FOR NEARLY CLOSE TO 10 MONTHS! YES THIS WAS THE MIRACLULOUS RESULT OF OUR THIS SPECIAL TECHNICAL THEORY. WE CALL IT MIRACLE BECAUSE WE DON’T UNDERSTAND ITS FORMULA BUT THE FACT IS THAT IT WORKS.
NOT JUST THAT SEVERAL OTHER STOCK, COMMODITIES AND INTERNATIONAL INDICES INCLUDING IN CURRENCY PAIRS-WE HAVE GIVEN DOWN TARGETS AND 100% ACHIEVED, WHILE 5% OR LESS IS THE RATIO OF NON-ACHIEVEMENT.

Biggest Mistake Done By Common Investor Is…
…They Don’t Buy When Stock Market Come Down At Value Buying Levels. 

100s of Intelligent investors have purchased our READY TO INVEST PORTFOLIOS of different duration namely MIDCAP PMS for 1 yr, EMERGING 7STAR PORTFOLIO for 2yr, and 4ACE PORTFOLIO for 5 yr and more horizon.

WHY REMAIN ON THE SIDELINES?...WHEN YOU CAN ENJOY THE PARTY LAVISHLY?
Just for Information:
When the markets were sliding on thursday last week...One of our MIDCAP PMS share was making its year high! Go to your Friday Pink paper and Try to find out OR Purchase our MIDCAP PORTFOLIO NOW!

Contact Details:
09377008708,


WORLD ECONOMY:
US Federal Bank chairman announced 0.75% rise in interest rates.
Well, this was seemingly seemed to be An Event for global economy and the USA, but the capital markets hardly behaved or responded. May be they were keeping their attention on what they believe to be much important issues like the Euro-Dollar situation on what happens with the Greece bail-out development, while cats are readying or say so, to come out or bag while it is awaited when some 4 to 5 odd countries declare themselves Greece, most from the EU pack.
According to Theory of discounting, when you believe or feel that markets are not responding as it should be to certain phenomena/news/event, then deem that it has already responded to that before the official or public issue of the same or otherwise it is going to yet respond to it. In simple language either the markets have already discounted the information or is going to do so in near future. And you are merely making the mistake of WHEN WILL IT or rather WHEN SHOULD IT. And not/beware many times for reporting industry News Doesnt make the Market BUT the Markets make the news! For example after the Budget market doesnt went down for 3 days or say 5 days, and next week the declines starts. Then from the next week all the budget comments and analysis turns unfavourable and the news industry will tell you how the budget was responsible for down market.
Anyways, we were talking about the rate hike in USA for the first time after June2006. The Emerging Economies mainly China and India had already started doing that. So is Mr. Bernanke following the developing countries. It could be a subject of study if the USA is looking at emerging economies policies to set its economy right. In this world of international finance, this seems more of a tactic and game for capital flows, forex markets and currency catch-up catch-ins, than underlied with the Real economy.
The rate hike could mean some or all of the following:
1. The US economy is in recovery shape. (note, not the world economy. I dont understand why will they care about global economy? or if someone thinks so, its a misbelief)
2. The financial system there does not need liquidity support anymore, or say need of such required support is reducing.
3. Fear of rising inflationary pressure and expectation is surfaced. (this could mean a good deal for commodities prices, if the prices of commodities are able to build a strong base around the levels where they are trading now then they may have a great run for next some years, even following subsequent rate hikes to say may be up to 3pc.
4. Economy growth rate and estimates on rise.

Send comments

Feb 14, 2010

WEEKLY MARKET REPORT FOR TRADERS AND INVESTORS



FUNDAMENTAL STOCK PICK:
RELIANCE INFRASTRUCTURE LTD.

CMP 1062, TARGETS 1500/2000.

The company belongs to ADAG (Anil Dhirubai Ambani Group) having presence in power and infrastructure sectors.
Reliance Infrastructure is not only India’s largest private sector company in power but also the largest private sector company in many other infrastructure sectors of India.
In the power space it is involved in generation, transmission, distribution and trading of electricity and constructing power plants.
In the infrastructure space the company is focused on roads, Urban infrastructure which includes MRTS, Sea link and Airports, Specialty Real Estate which includes business districts, trade towers, convention centre and SEZ which includes IT & ITES SEZ and non IT SEZ as well as free trade zones.



The engineering, procurement and construction (EPC) division has an order book of Rs 21,500 crore.

In the Urban Infrastructure business, it is the country’s first and only private sector builder and operator for Metro Systems. It is already into construction of the first line of Mumbai’s Metro system stretching 12 kms from Versova to Ghatkopar. Besides it has also won the Delhi Metro’s airport express link stretching a length of 22.5 kms. The total investment for these two projects is Rs 4900 crore.

In specialty real estate business, it is the country’s first and only private sector builder to build India’s first 100 storeyed building, a trade tower and business district in 80 acres of land in Hyderabad. The total investment for this project is Rs 6,500 crores.

In Special Economic Zones (SEZs), it is developing over 180 mn sq ft of SEZ for IT/ITES, retail hospitality in Mumbai and Noida with an investment worth Rs 31,000 crore.

The infrastructure assets include six roads and two metro rail projects. The company has a healthy balance sheet, with over Rs 10,000 crore of cash and cash equivalent.
The company has plans to a JV venture for the electrical equipment manufacturing business.
In collaboration with Shanghai Electric, the company is examining the feasibility of setting up equipment manufacturing facilities for power generation, to cater to the domestic sector and to markets in the Middle East, Africa and South East Asia. The progress on the project will purely be on the basis of cost benefit analysis.



Hold your breath we have something more about this company…

This company holds 45% in reliance power which will generate 34000 mega watt powers in the next 7 to 8 years.

If we calculate the valuation @141 of reliance power then stake value per share of reliance infra will go to 1500.

Book value 525 per share (only of reliance infra and not unlisted company).

Total valuation= Reliance Power valuation + book value
                        =1500+525.
Total value=2025.

Now at price of 1062 what you are paying?

What is the value of infrastructure business?

What is the value of 981 mg power capacity?

Looking at above factors and analysis our price projection are 1500 and 2000.


MUTUAL FUND PICK:
HDFC PRUDENCE FUND
Recommendation: BUY.
Rational:
Excellent track record of equity investments.
Excellent track record of high grade debt investments.
Consistence dividends pay out.

WEEKLY MARKET OUTLOOK:
SUPPORT AT 4700/4600/4550.
RESISTANCE AT 4907/4970/5050.

Trend reversal or correction? a million dollar question.

11% correction so far from 5300 to 4700.

Let’s paint the scenario to give answer of above question a trend reversal or correction by two way (1) technical analysis arguments (2) fundamental analysis arguments.

(1)  TECHNICAL ANALYSIS ARGUMENTS

This time lest see some more theory based analysis.

(1)  FALLING WEDGE

If you look at the chart one we have drawn two trend line on lower top lower bottom formation this is called falling wedge as per general rule falling wedge gives trend reversal from falling market to rising market.

If this happen then we may see faster recovery from current levels.

(2)  FIBONACCI-RETRACEMENT

Look at the chart no two we have drawn the Fibonacci retracement from 7697 to 17658.

The value of 23.6% retracement comes at 15400 .if we manage to hold this levels and market get recovery then we may consider this support has been taken by index.

It is not necessary to touch the support levels.

(3) 233 DMA

Look at the chart no. 3.

200 dma is widely used by all over world.

But at this crucial time we have used 233 dma ,if we calculate the value of 233 dma then it is 15380.

If market continues to trade well below 233 dma for 2-3 week then main trend can be in danger.

But in our case if we manage to hold this level then it will create heavy buying from the traders who follow technical analysis.

(4) DOW THEORY

Look at the chart no. 4.

As per dow theory index need to move in higher top higher bottom formation.

Index has already made higher top at 17500 now we need to substation above higher bottom which is placed at 15300.

If we manage to hold this support and cross the higher top of 17500 then we will consider this as normal pull back from 17500 levels and main trend of higher top higher bottom is intact.

(5) CANDLE THEORY

Look at the chart No. 5.

Look at the chart no 5, on quarterly chart index has make “HANGING MAN” formation.

As per hanging man formation if next candle close below the low of hanging man on quarterly basis then bears can take control of market.

On the other side if next candle close above the high of hanging man which is 17500 then bulls will take control of the market.

(2)  FUNDAMENTAL ANALYSIS ARGUMENTS

In India we have good corporate earning along with good GDP numbers unlike most countries last year.

India has political stability and growth visibility, this thing likely to continue to be one of the favored markets.

 Indian economy is domestic consumption story rather then export oriented so we will have our own growth story on the long run.

We believe that gold price are at higher levels and may not substation at this levels for now as dollar index has start recovering and will continue to recovery till 81 which will bring more correction in gold market .

We believe that falling gold price is good news for emerging market like India and china.

Hedge fund money will find another asset class (emerging markets) to park their money to earn good return.

If we remember in 2008 hedge fund have taken crude oil to $ 147 and then it fell to $32 and this money enter in to gold-due to sub-prime crisis and falling dollar index against major currencies.

Always remember money moves from one asset class to another asset class.

Dollar index to strengthen further and gold price will correct further and this will force hedge fund managers to exit from gold and find new asset class (emerging markets) to invest their money.

At this levels India and china offers good domestic consumption story with young generation will attract hedge fund money.



WHY STRONG DOLLAR AND WEAK GOLD ?

(1)  DOLLAR INDEX

Look at the weekly chart we have put RSI and MACD-both are positive.

Along with this we have put caltner channel and this is trying to cross this channel, as per rule when index close above the upper channel, index comes in the hand of powerful bulls.

Which looks positive and dollar index can move from current price of 80.36 to 81.25/82.96/85.

Strengthen in dollar will bring correction in gold price.

(2)  COMEX GOLD

Look at the daily chart of comex chart; it has formed the “head and shoulder” pattern.

Closing below the neckline of 1060 will trigger sell of by hedge fund and in panic it will slide to 1020/990 and even to 975 levels.

So strengthen in dollar index against major correction will trigger sell of in gold which can trigger inflow in Indian and Chinas market.

In short run market may move according to technical levels but in the long run it move along with economy and corporate earning.

Investments guru of world BENJAMIN GRAHAM says in short run stock market is voting machine and in the long run it is weighing machine.

We believe that there are ample opportunities available which can yield higher returns.

These have to un covered through research and meticulous stock selection.

In such scenario active portfolio management is likely to outperform passive strategies.

In India we will have good growth under insurance sector (particular ULIP) which will pump long term money in to Indian market.

Along with insurance sector online mutual fund will also help to tap the rural and urban money vary fast in long run.


Biggest Mistake Done By Common Investor Is,


They Don’t Buy When Stock Market Come Down At Value Buying Levels. 

If you want to manage your portfolio then you can subscribe in our portfolio management service.

You can also manage your hard earn money with our mutual fund portfolio management service.

We suggest investor our MID CAP PMS 1 AND 2 SERIES who has investment horizon of 1-2 years.

We suggest investor our 4ACE PMS who has investment horizon of 5 years or more.

CONCLUSION

So over all both on technical and fundamental arguments we believe this is not trend reversal and just a correction and trader and investor should find out value buying in market.