MARKET OUTLOOK FOR 16 June – CAUTIOUSLY OPTIMISTIC

FIRST LIGHT HEADINGS

Telangana Congress leaders to pressurize govt for last time
Power Grid to bid for Rs 1,300 crore contract Coal Minister invites Czech firms to invest in Indian coal sector Lanco Infratech drops bid plan for assets of Australia’s Premier Coal MTNL receives refund order amounting Rs 177.76 crore Ramco Systems unveils Ondemand- Analytics and Gateway products on the cloud Mundra Port likely to increase coal imports

MARKET INSIGHT

On Wednesday 15 June 2011, The previous day consolidation mood of the Indian markets turned somber on Wednesday and the benchmarks lost considerable ground slipping way below their important psychological levels of 18300 (Sensex) and 5500 (Nifty). Though the start of the local markets was not that bad but the trader sentiments looked cautious from the very beginning after the unexpectedly high inflation numbers for the month of May and skepticism for continuation of the hawkish stand by the Reserve Bank of India. Initially it seemed that street has factored in the possible 25 basis points hike in policy rates by the apex bank and there might not be much jittery, but as the trade proceeded the rate sensitive’s started showing worries with banking stocks wilting much faster than other likely to be affected gauges. Banking majors like SBI and ICICI Bank dragged the index lower by declining around 2 percent each for the day. In the initial hours of trade the markets with slight cut remained range bound, extending the consolidation mood of last session, but slowly confidence started waning and profit booking intensified across the board and traders fearing further decline opted to take profits off the table ahead of the Reserve Bank of India’s policy meet. The global cues also remained feeble and some of the Asian markets closed in red while the weak start of the European markets too weighed down the domestic sentiments.

The BSE Sensex lost 184.30 points or 1.01% and settled at 18,124.36.The index touched a high and a low of 18,308.69 and 18,111.21 respectively. 5 stocks advanced against 25 declining ones on the index The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1180:1654 while 107 scrips remained unchanged. The BSE Mid-cap index lost 0.63% while Small-cap index shed 0.64%. On the BSE Sectoral front, FMCG up 0.12% was the only gainer.On the flip side, Bankex down 1.61%, Realty down 1.58%, Consumer Durables down 1.26%, IT down 1.21% and Power down by 1.17% were the top losers.

India VIX, a gauge for market’s short term expectation of volatility gained 3.40% at 19.14 from its previous close of 18.51 on Tuesday. The S&P CNX Nifty lost 53.40 points or 0.97% to settle at 5,447.10. The index touched high and low of 5,499.35 and 5,438.95 respectively. 11 stocks advanced against 38 declining ones while 1 stock remained unchanged on the index. (Provisional)

Most of the Asian equity indices finished the day’s trade in the positive terrain on Wednesday. Japanese Nikkei edged higher in the trade on report showed US retail sales were better than forecast, boosting the outlook for exporters while Seoul shares ended with a gain of about half a percent after volatile trade on Wednesday, supported by modest foreign investor buying and rallies in airlines and shipping firms.

Read more about Indian Equity Research morning report by Mansukh

Equity Research Morning Report By Mansukh 28th-April-2011

FIRST LIGHT HEADINGS

Seamec enters into contract with Swiber Offshore Construction, Singapore

Opto Circuits’ US arm secures a contract to deploy 650 Powerheart AEDs in Girona, Spain

Panama Petrochem gets Gujarat HC approval for scheme of amalgamation

Ingersoll-Rand (India) to set up additional manufacturing facility

Areva T&D India bags eBOP contract for Visa Power

Nomura pegs headline inflation in FY12 at 8.6%

MARKET INSIGHT

On Wednesday 27April 2011,local bourses started on positive note tracking higher closing of Wall street and gains in regional counterparts, however, Wipro reported its bleak outlook and as knee jerk reaction markets shaved off their gains to trade in red, however, after that mild setback the bourses did recover as selective buying by funds and retail investors in stocks having strong fundamentals and a firming trend on other Asian bourses supported the trading sentiment. But going further, in the after- noon session of trade, the benchmarks despite substantial resilience drifted lower as investors were reluctant to go for broad based buying and indulged only in stock specific activities amid dearth of positive triggers. Besides, IT and Bankex sector, metal and CG too witnessed profit booking, however, broader indices held their heads above the water. But as the selling pressure intensified equity markets started trading around their day's low, and despite some recovery failed to end in green..

The BSE Sensex lost 103.36 points or 0.53% and settled at 19,441.99. The index touched a high and a low of 19,633.63 and 19,412.79 respectively. 7 stocks advanced against 23 declining one's on the index. The BSE Mid-cap and Small-cap indices were down by 0.07% and 0.05% respectively. (Provisional) On the Bombay Stock Exchange  Sectoral front, Fast Moving Consumer Goods (FMCG) up 0.52%, Public Sector Undertaking (PSU) up 0.45%, Health Care (HC) up 0.13% and Consumer Durables(CD) up 0.04% were the top gainers. On the flip side Realty down 1.65%, Capital Goods down 1.21%, Metal down 0.97%, Power down 0.80% and Bankex down 0.68% were the top losers.

India VIX, a gauge for market's short term expectation of volatility lost 1.65% at 21.35 from its previous close of 21.71 on Tuesday. The S&P CNX Nifty lost 36.75 points or 0.63% to settle at 5,831.65. The index touched high and low of 5,892.35 and 5,819.95, respectively. 11 stocks advanced against 39 declining ones on the index. (Provisional)

Most of the Asian equity indices finished the day's trade in the positive terrain on Wednesday tracking the US markets which moved higher on good corporate earnings, boosting the outlook for Asian exporters. Japanese Nikkei surged about one and a half percent, shrugging off Standard & Poor's to revision of the outlook on its long-term rating on to negative from stable. Moreover, Taiwanese stocks closed with a gain of over a percent, lifted by surge in financial and semiconductor heavyweights as investors raised long positions in an increasingly optimistic environment.

Bankers feel that with current stance of monetary policy, credit growth in 2011-12 could work out to be anywhere between 18-22%, against 21.4% seen in fiscal 2010-11. However, if the central bank continues monetary tightening in 2011, resulting in say another 100 bps of cumulative hike in repo rate, credit growth could be around 75-150 bps lower than what it would otherwise be. This would peg loan growth estimates for FY12 in 17-21% range which is not bad for expected growth of around 8% in GDP over the FY12.

Read more about Indian Equity Research Morning Report By Mansukh

Gold Appears To Be Range Bound in the Days to Come But Silver May Be Sky Rocketing

Gold is steady in dollars and pounds but has risen again in euros as the dollar has fallen in world markets. Gold is being supported by renewed concerns of contagion in euro zone debt markets and the risk that tensions in the Korean peninsula will escalate into a war. The hesitant risk appetite of recent days has dissipated again on these concerns. This is seeing falls in equity markets internationally and gold being supported particularly in euro terms.

Euro zone peripheral sovereign bonds are little changed, with yields near record highs since joining the euro. There are reports that Portugal is being pushed towards a Ireland style bailout package. The Portuguese government said that reports it was being strong-armed into accepting a bailout, were untrue. The Spanish prime minister warned short sellers of Madrid's debt that they were "mistaken" and ruled out the need for any bailout. This is very reminiscent of the protestations from Dublin by the Irish Prime Minister and Finance Minister some weeks ago.

SILVER 

     It appears that "poor man's gold" silver will reach over $32 to $35/oz in 2011. Given the favorable supply and demand equation and the significant increase in investment demand this seems likely and may happen early in 2011.

Silver, unlike gold, remains well below its nominal high of just over $50/oz in 1980. Hedge funds and investors with knowledge of the technicals are targeting this level and will likely continue buying and accumulating until the price level has been reached. Then, many may sell, take profits and/or reduce allocations.

Silver is in effect playing catch up with gold. It remains undervalued versus gold on a historical basis. The gold/silver ratio remains favorable to silver at 50.25 ($1,367/oz divided by $27.20/oz) and the ratio is falling.

Silver could be the surprise out performer in 2011 as it was in 2010. Silver's industrial uses should mean that the gold/silver ratio will likely gradually regress to the average in the last 100 hundred years - around 45:1. If the tiny silver market was to see real funds enter it, the ratio could return closer to the historical average of 15:1. This occurred as recently as in 1968 and in 1980 and this time around could result in silver
surpassing its 1980 nominal high at $50/oz.

Silver reached $50/oz briefly in 1980 when just one billionaire family, the Hunts (one of a handful of billionaires in the 1970s) attempted to corner the silver market causing the price to surge (in conjunction with many investors seeking to hedge themselves from the stagflation of the 1970s). Today there are hundreds of billionaires and hedge funds throughout the world some of whom may be tempted to squeeze the large concentrated short positions of JP Morgan in particular. JP Morgan is now facing lawsuits and being sued for manipulation and suppression of silver prices.

Silver is priced at some $27.20/oz today. The average nominal price of silver in 1979 and 1980 was $21.80/oz and $16.39/oz respectively. In today's dollars and adjusted for inflation (government CPI) that would equate to an inflation adjusted average price of some $60/oz and $44/oz. It is for this reason that we believe silver will be valued at over $50/oz in the next 2 to 3 years.

Silver remains undervalued vis-a-vis gold and remains a contrarians play with little or no media coverage and few retail investors having any allocation to silver whatsoever. A close above $28.50/oz could see silver quickly rise to $30 per ounce.

Attention all Equity Trading Enthusiasts: Stop Dreaming-Get Real!!!

I can't understand that why people are always fantazing about doubling their hard earned money through online share trading in just two or three months. Without bothering about the credentials of a company, most small investors follow a herd mentality and invest blindly thereby adding to asset bubbles. Some people decide to invest in the stocks of a company just because they get to hear from some source that its stock price has doubled in the last two years. Don't play your hard earned money in a gamble like this. NIFTY & SENSEX are actually one of the biggest playgrounds of international speculation in the country (Although it's official). Every day, many people find their luck changing here. Some earn big and some loose even bigger. Indian stock market provides an excellent opportunity to those investors, who are ready to put time, money and energy in their investments. 

More interestingly, if you search Q&A on NIFTY & SENSEX over Google , you will find thousands of results for it. The thing which you will find common in most of the question is this ‘ Hi, I am pretty much interested in online share trading and wants to make huge money in it. Kindly tell me some scheme [Rather say it a shortcut] where I can make great amount of money quickly'. Maximum number of queries regarding online share trading display this type of tonality, which seems over optimistic. And they ask these type of questions on such public platforms where a lot of people answer as if they are the relatives of Warren Buffet. Being optimistic is not bad, but not having the patience to hold stocks for the long term is something which hurts a great majority of investors. 

NIFTY & SENSEX both require different attributes and investment strategies. No one must ever think in their wildest of dreams that their investment will double in a month or two (Okay! Until and unless something really big happens). It is always advisable for investors (Whether, novice or an expert) to direct their queries to market experts. It's not that they are far better than everyone but yes they are actually better than those, who don't have a genuine understanding of the market. Many people ask about investment schemes for reaping incredibly high returns in a short span of time through online share trading. All the media hype is just hog wash. There are no such schemes which can offer you increase in investments in just a month or two. 

There is an old saying about equity trading that ‘only those people will make money here who have the patience of seeing their money sinking and then again floating'. The idea is that one has to wait for a considerable time say at least one year for seeing the performance of their investments and to analyze the rate of returns. It is also advisable to invest the money in different set of investment options because it's very rarely happens that all options rise or crash simultaneously. Investing in different instruments not only diversifies the collective risk but it also helps in earning decent amount of money. 

So the main mantras for successful equity trading are as follows:
1. Never dream about getting your money doubled in just one shot.
2. 3 things: money, efforts and patience will help you in achieving all you want.
3. Neither be over-confident, nor be over pessimistic.
4. Invest in diversified portfolio to mitigate the risk of any sudden slide in the market.
5. Always ask your stock related queries only to market experts.
6. Wait for sometime in order to get the fruits from your planted tree.
7. Always make a strategy before investing in any option. 

So, these are the seven golden rules for getting great returns on your investment. Follow these and you will certainly make good money in stock market. For more information on investing in stock markets visit http://www.moneysukh.com
 
Till then , Keep Playing! Good Luck!!



The author is an expert in financial markets and offers valuable tips on equity trading for small investors. Keep visiting this page regularly for more tips and tricks related to online share trading and see your portfolio double in a short time! 

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