was not one of the worst weeks – it was the worst week ever. The market down 15% is as bad as it gets. It is completely unprecedented and unexpected. One does not expect to see largecap names lose 25-30% of their market cap in just one trading session flat. That’s exactly what has happened today and there are lots of reasons and lots of things which have happened in the market from Infosys, to the cash reserve ratio (CRR) cut, to the Index of Industrial Production (IIP) number, to the Finance Minister and the SEBI statements – it has been very eventful as a day.
But at the end to look at stocks like Reliance Communication down 23%, ICICI Bank down 20%, Reliance Infra down 20% - stocks in the index giving up 1/5th or 1/4th of their market value in a single session, tells you what path sentiment has come at, at this point in time. So global panic, bad local macro numbers and nobody wants to buy – there are only sellers in the market – this is classic capitulation and a bear market in full flow.
It was debilitating week for sentiment and while it has been looking oversold technically for the last couple of days, but that’s not making any difference as one can see on the screen.
On ICICI Bank:
The market has such conviction in hammering a stock down so continuously despite all sorts of clarifications coming in. Look at the sequence of events. The management has clarified not once, not twice, but thrice. The RBI has clarified; the Finance Ministry has clarified that ICICI Bank does not face any kind of problems, and yet the stock falls at the rate of 20-25% a day, which tells you that the market probably knows something that we do not.
The market is a very clever beast. When clarifications are given and the market takes it on board, then there is no reason to fall like this. You can see that ICICI Bank probably does have a fairly reasonable liquidity position if not an utterly comfortable one. It doesn’t seem to be in any kind of problem that western banks seem to be in. Yet the stock price is falling.
I doubt whether this is any kind of concerted bear hammering or anything like that. My fear is that the market knows something that we are not aware of today, which might unfold over a period of time. I hope that the market has got it wrong. For the moment, we take the management’s clarification at face value, and it doesn’t appear that ICICI Bank has any kind of liquidity problem or is about to go belly-up or anything like that – far from it. But the screen makes you worry quite a bit about how things are progressing.
On markets this week and the week ahead:
Enough damage has happened this week in four trading days to lose 15%, which is something that one doesn’t expect. I have been saying throughout this week that the market seems a bit overdone on the way down, and at least a technical pullback is likely and plausible. That has not come this week. That expectation has been belied. I hope it fructifies next week.
So, I don’t know whether next week again if there is more global turmoil tonight, the Sensex and the Nifty fall further and maybe the Sensex falls to sub-10,000 levels, and from there maybe there is more regulatory action, and the market moves back. But essentially for the moment, it appears that between 3,000 and 3,800 Nifty, and between 9,000-9,500 on the Sensex on the way down, and I suppose 11,000-12,000 on the way up, the market is probably rangebound. There could be more downsides. But on a day-to-day basis it is very difficult to predict.
For investors probably it is too late to sell. We are less than half of the index level of January. I think if you haven’t sold already you can hardly sell stocks that are down 80% from their peak values. So, it is tough to sell at these prices. Is it easy to buy? Not quite yet. So, I think investors should probably sit on cash, and not sell in a panic. They should probably not do anything and just watch the situation unfold over the next few days.
Source: Moneycontrol
Saturday, 11 October 2008
Investors should stay in cash, not sell in panic - Udyan's Comments
Accumulate frontline stocks: Khandwala
According to Khandwala Securities' Market Preview report, once can accumulate frontline stocks and wait patiently for fears to recede and risk appetite to return.
The bear is running amock when the bull is in deep slumber. The informal oil standard is now a nightmare for equity bulls. Stocks continue to fall on falling oil prices on realisation the economy is slowing down. Earlier, stocks fell with rising oil prices, disproving popular market fad that oil and equity prices were inversely related.
It’s yet getting gloomy and darkest before the dawn. Traders are looking at the regulators and law-makers to stem the rout global equity markets are facing.
On one-year anniversary of all-time high in Dow Jones, the US Prez is likely to make statement to assure nation on the economy and his plans to fix it before demitting presidency.
On Wednesday, the benchmark Sensex and many pivotals made 'shooting' star formation on charts indicating major trend reversal.
We accumulate frontline stocks and wait patiently for fears to recede and risk appetite to return.
Asian markets are in the red. Nikkei (-10.6%), Hang Seng (-7.5%), Kospi (-7.3%), Straits Times (-6.6%), Shanghai (-4.8%) and Taiwan (-1.5%).
Source: Moneycontrol
Sell Union Bank below Rs 144.50: ICICIdirect.com
ICICIdirect.com has recommended to sell Union Bank of India below Rs 144.50 with a stoploss of Rs 145 and targets of Rs 143/138/lower.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Global sell-off impacting Indias asset valuations:KRChoksey
According to KRChoksey Research, Global Markets are facing the write offs and as consequently rest of the markets of the world are in a sell-off mode. We have always believed that India is relatively strong due to its internal consumption led demand boom. However, now it is on a potential threat of losing this advantage as global sell-off is impacting its asset valuations.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy C & C Constructions, target of Rs 170: PINC Research
PINC Research has maintained its buy rating on C and C Constuctions with a target of Rs 170 in its October 8, 2008 research report. "At the CMP of Rs 120, C&C trades at a P/E of 3.1x and EV/EBIDT of 3.2x its FY10E earnings. We value C&C’s core business operations at Rs 130 (3.3x FY10E EPS of Rs 38.6) and its 49% stake in Kurali Kiratpur BOT at Rs 40 per share. Thus, on a SOTP basis we arrive at Rs 170 per share as the fair value of the stock. Hence, we maintain our ‘BUY’ recommendation on the stock with a revised 12-month price target of Rs 170," says PINC's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy Axis Bank, target of Rs 1000: Karvy
Karvy Stock Broking has recommended a buy rating on Axis Bank with a target of Rs 1000 in its October 10, 2008 research report. "In Q2FY09, we expect the bank would report 47.6% (Y-o-Y) growth in net interest income (NII) to Rs 8.3 billion mainly due to strong growth of 49% (Y-o-Y) in credit offtake; we assume around 48% (Y-o-Y) growth in deposits. At current price, the stock quotes at 2.2x FY2010 adjusted book value; we determine the bank's intrinsic worth at Rs 1000 at 3.3x ABV FY2010; we rate the stock as a BUY with a price target of Rs 1,000," says Karvy Stock Broking's research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol
Buy Bharti Airtel, target of Rs 1154: HDFC Sec
HDFC Securities has maintained its buy rating on Bharti Airtel with a target of Rs 1154 in its October 10, 2008 research report. "We expect the sales to grow at a CAGR of 26% and net profit at 26% in the period between FY 08 to FY 10. At the CMP of Rs 733, the stock trades at 9.54 times and 7.72 times its FY 09 and FY 10 EBITDA, which looks cheaply valued. Hence, we reiterate our BUY rating maintaining our target price of Rs 1,154, which translates into an upside of 57% from current levels," says HDFC Securities' research report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Source: Moneycontrol