Unusual days,Unusual events,unusual outcomes and usual speeches.I would like to note two announcements which we hear almost every alternate day now.'Indian economy is on a sound wicket."-Its clean Bold."There is no problem in Indian banking system and all banks are well capitalized."-Why is ICICI BANK falling everyday."Our GDP will grow at 8%."-IIP Numbers are painting a different picture.
All Icici bank depositors Got a sms from the bank today stating"Your deposits with Icici bank is safe.Your bank is well capitalized with good liquidity.Please do not listen to baseless rumors."My only question is we all know that the bank is well capitalized with the FPO at 940 odd bucks.We all also know that the deposits in India are all safe in any Private or Public sector bank.We all know all deposits in ICICI bank is safe as there is nothing wrong in Indian banks.Why dont we hear about the exact exposure to each commercial paper of the foreign branch in each institution.Till the time we hear about the same the stock might be beaten down mercilessly.Even yesterday when the stock tanked 20+% points there was 26% delivery volume(38.60 lakhs) and surprisingly there was an addition of open interest at 33.24Lakhs.If it was a bear run and everything was fine with the balance sheet of the bank then the delivery volumes should have been at lower then 10% and open interest should have reduced.Since nothing happened there is surely fire somewhere.I have no idea on the balance sheet of icici bank and its subsidiaries but yes the stock market knows more then what I or you do.We might see an upmove in ICICI post its results are announced.One should be cautious in shorting the stock near to its Book value.
Markets react before the data is made public.We were hearing till yesterday that Indian economy is on a strong footing.We will survive the sub prime mess.Our industrial production is strong.After the announcement of the IIP data for the first time in recent history i heard about the term recession in Indian context.Markets have cracked 50% when people were painting a rosy picture for the economy and now at 3200 odd levels people are talking about an industrial recession.I will again say markets react before the actual news is out.Will like to add that IIP numbers will pick up as raw material prices have fallen considerably in recent days.
Core projects tanked 43% in trades yesterday.Stock is a product of the Bull market which might be killed in a bear phase.We had a short call in weekly positional trades only this week in it.Although our targets were not that low in the stock.Stock can see 100-70 odd levels in coming days.All products of the bull market are being consumed by the bears to enhance there MTM margins.The problem now is that instead of 12 or 24 months charts.We have to refer 120 months chart to analyze Multi year supports for the stock.For example Rel capital next support is at 600-410.Traders can use any rise to 900 to short the stock sl will be at 949.The problem now is that there is a consensus for a 20-25% pull back.Markets generally move in such a way to cause maximum pain to the consensus.As i have previously quoted i am dead scared to Buy as a Bull. I will like to give an example with a stock i have been trading in 4 years now.Oswal chemicals-25-30 used to be a yearly support level.Company is fundamentally good with net cash of more then 50 rs per share in Books and some real estate investments on its own land.Five days back stock was at 18 odd levels.A value buying time for me.Next day stock cracked to 16.70.I didnt enter seeing Nifty breakdown.very next day oswal chemical cracked to 14.75. and on yesterday to 12 odd levels.In short term there is no impact of fundamentals.Company can easily rise to 14 in coming days but supply will be from everyone who bought earlier.Markets move on supply and demand principle.So I wont enter till i am comfortable with nifty stability
Rbi withdraws 10000 crs of Bond auction.My only question did Rbi had any other option to ease liquidity.With call rates at 18-22% and banks offering 15% in 15 days deposit we are clearly heading for tough times.If you say things will improve tomorrow.get up from your dream and be awake.We might see small bounces but sadly none of them will sustain more then 3 days and if it does then it might be one of those bear market squeeze which will screw bears who only know positional shorts.Live in truth rest is your own wish.MACD indicates bottom is not yet visible.Oversold Rsi will provide some 1-2 days rallies were people will do value buying.
For all investors invest in Fixed deposits only in SBI till we see Fii sell figures reduce.It was at 2513 crs yesterday.The highest i have noticed in recent days.And if you still want to be in the vicious circle of Buy at Top and average at every downside and panic near to the bottom and then blame the markets I have nothing to say.Have a profitable week.
At the time of writing this article i have zero positions in Nifty or any other derivative instruments.I intend to limit my trading to Intraday in coming weeks.
No support is sacred in a BEAR MARKET.
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