Markets For 26-03-2008

1. TREND of the Nifty

TODAY : Some PROFIT BOOKING after yesterdays' big rise...but not a

negative

As there aren't any real triggers for either the buy or short side, expect some

profit booking in the basket this morning.

WEEKLY: SIDEWAYS to a Likely RALLY

You'll see in the F&O Trends table (in the 2 of 2 newsletter) that only four

counters are remaining on the short side trend. All the others shifted to the buy

side during the past two sessions, and that says that a smallish rally may ensue

till Friday. Do not get into any fresh shorts at these higher prices, just yet. Allow

for the rally to mature and peter out. and only then.

MONTHLY : BEARISH

The manner in which those IIP figures of Jan 2008 shocked one and all, expect

that reality to come back to haunt stocks when the Q4 results start off from

around the 10th of April. We stay super bearish for our stock markets during that

month and see trading-profits mainly from the short side.

NOT the long.

RECO:

Nifty trend: LONG...... Stop 4725

Bank Nifty trend: LONG........Stop 6840

CNX IT trend: LONG....... Stop 3615

2. Yesterday

Positive for stocks: (+) The dollar slipped on the euro from 1.5400 as of Monday

to trade this morning at 1.5648. When the dollar slips, all other currencies of the

world rise. When they rise, monies shift over to those rising-currency-countries.

At least for the day. And since all forex traders are essentially day traders, they

also go buying stocks for that day when they bring in the monies to the stronger

currency.

Positive for stocks: (+) Nifty-March-Shorts who carried over those positions

since the first week of March, came to close their positions in yesterdays' rally.

That helped the big move. Maybe some more due today and tomorrow?

Negative for stocks: (-) US Consumer confidence fell the most since Nixon's time

in '73.

Negative for stocks: (-) The Case/Schiller House Price Index fell -10.7% in

January.

Negative for stocks: (-) Goldman expect Wall Street to book another $460 billion

of subprime-related losses.

3. View

A. Your trading strategy need never depend upon the "news".

Keep examining the "fear factor" in times like today, or the "arrogance factor" in

times like till last December. Check that mood inside your broker's heart. They're

usually good at masking truths when speaking rationally. Check the mood in the

talking heads on TV channels. And the mood in the newspapers. All these will tell

you what would happen months ahead from today.

You don't need to wait for the "news" in April's result-season.

You should already know how the mood is about what those Chairmpersons

would look like on TV when they guide for the next quarter, or for the full year, IF

they can see that far this time.

B. Global Executive Confidence ...Free fall

A LONG, ugly, deep recession.” That was how Chrysler's chief financial officer

Jerry York described his outlook for America's economy at a recent gathering of

fellow finance executives. The latest poll of over 1,000 chief financial officers

conducted by Duke University, Tilburg University and CFO, a sister publication of

The Economist, largely supports this view. In America economic confidence is in

short supply, with pessimists outnumbering optimists by a nine-to-one margin in

the first quarter of 2008. In Europe, pessimists outnumber optimists by six to one.

And to add to the gloom, finance chiefs in Asia are now more pessimistic than

optimistic for the first time in five years.

http://www.economist.com/daily/chartgallery/displaystory.cfm?story_id=10903325

Click that link above and see the declining trend of confidence amongst

those key people who make decisions on capex. If they're bearish or feeling bad

about the future, then get it that some of those feelings emanate from their own

homes where spouses and children get influenced by the same mood. From

there on, it becomes a virus of a bad-mood.

C. There is NO PRICE DISCOVERY at this stage of the market

A play like that seen yesterday is always going to be a one-day or at best, a twoday

wonder. All that talk about buying-great-businesses is all hogwash. Let

Warren Buffet say and do that. You needn't get dragged into the lies and bluffs of

all these talking heads on TV. The Indian fundamentals are getting steadily into a

slowdown and so even the weighing machine has started to re-adjust its

"valuation" of Indian stocks. It'll do more after it hears the Q4 numbers and

guidances of the bosses of the top twenty companies.

A bear market is one which sees three-steps down, and one-step up.

Yesterday was one of those one-step up things.

Nothing to get excited about.

It IS the year-end and all know that there is buying of "loss entries" that happens

this time every year, and then there's the F&O-expiry-of-tomorrow short covering

to cope with.

Existing risks:

>Credit-inflation funded by petrodollars and cheap-interest money

>Housing loan defaults in the US

>Credit card default in the US

>Sub-prime blowups of banks, brokerages and investment banks in the US

>Personal-spend dropping in the US

>Consumer confidence in the US falls to a five year low

>US home sales fell to their lowest in nine years

>The S&P Case/Shiller Home Price index at 20-year low

>Construction loan problems for banks in the US and India.