Indian Stock Markets : Bullish!!! Bears Beware!!!

At 8:30 a.m./Monday:- Contrary to my expectations, Asian markets have opened gap down, worrying for no reasons, about the Citi Group bail out package. As it stands, Citi was down 20% in US, it is just a silver lining that a package might help to shore up the stock and the entire financial sector. Nikkei is closed today, Hangseng and STI trading just about 1.2% down. Nikkei is not there to take the lead, Hangseng may take the lead and switch to green side before we open. We have some positive news on the Infrastructure sector. Government is considering a stimulus package for this sector which will help the ailing stocks in this sector. In view of a negative start in Asia, we may open lower than my expectation, which will give yet another opportunity for buying, particularly those who may have thought that they missed the bus. Anyways, trading below 8699 will not augur well for the markets and a close below that level signals downtrend to continue. Trading above 9035 soon after opening will raise the spirits of the bulls and take the sensex further high. If that is delayed, Sensex will fall to find support at 8679, 8782 range. Buying when close to 8782 (pivot) is advisable then. Thus two levels to watch are 8782 and 9035 for buying. Euphoric buying may be expected when we cross above 9035. Revised Trading Range could be 9035, 9621 Sensex and 2731, 2898 for Nifty Spot.

At 10 a.m./Sunday: What a fantastic Friday it was? Against all odds when global markets were nose-diving, we Indians showed our might, proved that we are not a sinking ship! We have a Captain at its helm who has declared that India will stand against all storms across the global economies, weather it with strong resolve to attain 8% GDP growth. Market behaviour was of course strange, except for this statement from none other than our PM, there was no concrete backing for an uptrend except that we were down more than we should have. You may go through my last Report and see how correctly I have gauged the day when hardly anyone had any inkling about such a possibility. Yes, we have shown resilience. India along with China are on the right track to be there in the super league. Whether US will figure in that list in next 50 years is a million dollar question. In fact I would like to repeat here that the entire pall of gloom is orchestrated by the big powers to reduce India and other emerging economies to size. Sensex opened above the Pivot Point suggested by me and despite two attempts, could not break the Pivot at 8436. In fact after the second attempt, there was a 'V' shaped recovery which continued till the end, thus trapping the bears so badly as predicted by me. Sensex opened 8481, traded in 8442, 8988 range and closed at the higher end at 8915. This 5.5% surge was achieved despite FII's net-selling 706 Crores and DII's buying 46 Crores only, for the name-sake. Volumes were better but still low and AD ratio was positive after a long gap. Only time will tell whether the surge was merely rooted in short-term interest or marked a true turning point.

Asian stocks opened gap down, climbed to almost the day's high. Nikkei, Hangseng and STI closed the day with gains little short of 3%. Europe opened flat, went on green side with India, however dipped to close with modest losses. FTSE was down 2.43%, Dax 2.2% down and Cac 3.33% down. US stocks opened gap up, however switched between positive and negative zones throughout the session except last one hour when a strong rally with increasing volumes took the indices to dizzy heights and closed at the best levels. News that President-elect Obama nominated New York Fed President Geitner for Treasury Secretary, boosted the sentiments. Financials were laggards with Citigroup finishing lower by 20%. Reports indicated that the financial services giant is weighing its strategic options. Energy sector improved with a 2% surge in crude price. crude ended 2% higher, above US$ 50. Dow ended up 6.54%, NASDAQ up 5.18% and S&P up 6.32%. US Dollar was weak, 50.02 against Rupee and 95.95 against Yen. Asian markets are expected to open gap up on Monday.

SEBI Chairman has clarified that there were no anomalies in trading pattern. He said that Indian markets will take the lead and will gain more than its peers. Speaking at HT Summit in Delhi, he dug the TV Channels for propagating bearish tones on Friday morning and soon after market opened for talking 180 degrees out of phase. Mr Bhave categorically stated that nobody dared to give a contrarian call after seeing US markets bleeding Thursday. We can be proud of being unique in achieving that status of stating very clearly as to what was in store. HT Summit was an eye-opener to investor community, Mr Bhave's statements underscoring my views that Indian markets have overdone on the downside, same way as they did on the higher side. It is heartening to note that Long Term Institutions and Pension Funds are taking active interest in investing in India. Only the over-leveraged Institutions have sold stocks which was augmented by retail sales. This happened at a time when Investors with funds were scared to make a bet due to scaring rumours along with revelations abroad. This situation is changing for the better. Individual investors, particularly Non-Resident Indians and personnel of Indian Origin will have lot of surplus cash at their disposal due to Dollar appreciation against Rupee. It is 25% appreciation, not too small. Such funds are sure to take the equity route, being so attractive, in turn boosting the market at this infancy of the possible next bull-run. Please note that we have already discounted for the US recession to go on till 2nd half of 2009. Q3 and Q4 results are sure to be affected but less than perceived. Hence, current levels and 27 Oct low will remain the datum for the next bull run starting now. Investors must stop looking at channels and take valuations to decide on their investment decisions. A conservative target of 17500 Sensex for 2009 may well be a reality. Elections 2009 will be a dampener, more so if the results are likely to be a hung Parliament. Left Support or Leftist Govt will be bad for the Markets. Either UPA or NDA with support of like-minded parties other than communists is what I expect, either of this dispensation will take the markets to the target.

Aviation Minister is hopeful that the ATF will be classified as 'Declared Goods' by Dec 08. Strength of the current up-move may peter out towards the end of this week, unless some positive announcements like Fuel Price cut or interest rate cuts are not announced. However, strong possibility of visiting 5 digit sensex is very much there. For Monday, we will join the Asian peers with a gap up opening, well above 9121 and zoom up. In initial trades , the sensex if manages to be above 9225, then the 9121, 9225 range will offer an excellent support for the rest of the day. It will be wise to buy when closer to this range. Equivalent Nifty Range 2761, 2796 will form the base for the rest of the day's trading with a target of 2900. Despite such a strong base, bulls may not be successful to break above 9788, 9874 range during the day. Hence, to my friends I would advise partial or full profit booking for the day when sensex above 9600. A close above 9035 will confirm the short term bullish trend whereas a close above 9623 will take the move to at least 12K Sensex. A close above 9827 will negate the chances of revisiting the Oct 27 low for good. In all probability 10000 to 10600 is likely to be reached during the week. All my recommended scrips in last 1 to 2 weeks will fetch excellent profits. Those scrips are likely to forge ahead in coming days. ICICI (Target 395,410)and Unitech(Target 39,41) are two controversial scrips which are likely to surprise all by huge advancements. NTPC(Target 193, 198), Reliance (Target 1380, 1400), L&T (Target 840,850) and Triveni Engineering(Target 46-48) are some of the scrips that I would hold till end Dec for enjoying better days ahead. Keep your eyes and years open for any news or statements regarding Rate or Fuel price cuts, which may cause hefty surge all of a sudden. Please be warned that those who are trapped will tend to create panic by resorting to negative rumours apart from predicting doom-days ahead. Having tasted blood, now they behave worse than The Dracula.

Supports: 8782,8575,8236 Resistances: 9225,9328,9874
Likely Trading Range: 9121, 9623
Likely Nifty Spot Range: 2761, 2898