Markets Snapshot

1. Trends
NIFTY trends
TODAY : BULLISH
Pivotals likely to see a trading recovery after those two bad days. Buy the Nifty with a 45 point stop.
WEEKLY : BULLISH
Bear-rally awaited by all. Stay long with 200 point stop.
MONTHLY : BEARISH
Players expect that the Fed will not satisfy markets with whatever they say on the 18th. We stay bearish about the medium term trends in our markets. The reversal stop here has been revised to 5025 - 5100
GOLD trend
MONTHLY : BULLISH
The reversal stop stays at 11896. Close longs when this stop is broken, and then short it too. The stop for overseas postions is $926. Be totally prepared for this stop to get taken. Gold finally fell off from its peak of $989.50 to close yesterday at $963.00. It was at $965.30 in Singapore this morning. The manner in which gold went from $900 to $989 within 40 days tells you it was on the back of huge leveraging by individuals and Hedge Funds. Such a big upmove reflects the desperate acts of euphoric buying when froth sets into any asset. Just when every fund manager is telling you to buy Gold ETFs and gold stocks, and when Indian MF managers are going around on road shows for an NFO in Gold ETFs..is the time to get your warning lights set to blinking-hard-and-strong. The froth in gold, silver and every other commodity which flared up in February after the stock market selloff in January, is ready to come off. Be ready to earn
profits soon on the short side. Not just tyet. Watch those reversal stops to get in on shorts.
EURO trend
MONTHLY : BULLISH
Reversal stop stays at 1.48
The dollar also fell to a five year low on the yen. European ministers are grumbling away about the end of exports from Europe. Henry Paulson of the USA says his government "wants" a strong dollar though his currency is dying everyday. Political pressure, citizen pressure and the generally terrible mood amongst the investing community, could change this falling-trend in the dollar.
The manner in which the euro is shooting up tells us that froth here too topping. Stay long in the euro, but be ready for a change after 18th March. Bernanke will not make anybody happy after what he does, and importantly, says, on the 18th.
2. Seriously negative risks to the long side in stocks.
New:
>Unitech needed $1.5 billion as of yesterday. They thought till January that a $1.5 billion QIB float would get lapped up. It would have, provided they and their merchant bankers knew their history-of-the-markets. And about the "collective mood" of the investing community consisting of ordinary individuals who manage anything from ten thousaand rupees to five thousand crore rupees.
Both of them didn't know this most-important factor when raising cash. The mood had already soured, not in January, but the seeds had been sowed since last July when Bear Stearns, USA decided to stop redemption in those two submerged subprime-Hedge-Funds. Unitech have NOW decided to scrap the raise. See today's BS for a nicelyworded one by the newspaper. Quite naturally, the paper wrote as sweetly as possible without wanting to blame the promoter or their merchant bankers. They get ad income from real estate companies, you see !
Why put anyone off with frivolous words?
The BS just went and blamed "instability in domestic markets and global liquidity crunch".
Is that right? Really?
>ICICI's total exposure in credit derivatives paper is $2.2 billion. They've only written down $264 million as a marked to market loss. This is not the same as booking-a-loss. That day will come in the future. Right now, it's about writingdown- as-an-MTM-loss. Expect plenty of heart attacks from this bank, and its ilk in the industry, this year and next. Plenty, plenty of it.
Which credit derivative have ICICI bought? Do they really think its value is safe? Really? And isn't it the depositors monies that were used for taking all those exposures by ICICI's bossman and his spice-girls? Cowboy banking has ended. You know. We know. It was only yesterday that ICICI knew that. Their MD had won some award last year for bravery and courage from a liquor company. Her brave and courageous face in those ad hoardings didn't quite reflect much
bravery or courage on the TV channels yesterday.
>Pune is seeing an exodus of skilled workers. It's relatively easier to replace unskilled workers. But the educated and skilled types?
So long as the "mood" in Maharashtra stays disturbed and nervous because of all those divisive actions and words of extreme-right-wing politicians, Pune's factories will suffer. Auto component suppliers are worrying auto majors like Bajaj Auto, Bajaj Tempo, Volkswagon, General Motors etcetera.
Try and figure out the impact of this kind of a problem on productivity in Pune's factories, six months down the road. And co-relate that with the "collective mood".
>Citibank's share fell to a nine year low. Merrill Lynch cut their full year forecast. They say Citi may have to write down another $18 billion. When will anyone tell us how much loss Citi would take, after all the writedown thing is over?
>UK nationwide consumer confidence fell to its lowest since 2004-
Bloomberg.
Food and energy costs. Both hit the consumer. Mood is bad, bad, bad. Exopect this to show in weaker stock markets three to six months from now.
>Bernanke Urges Banks to Forgive Portion of Mortgages
March 4 (Bloomberg) -- Federal Reserve Chairman Bernanke,battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting. ``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in a speech to bankers in Orlando, Florida, today. ``Principal reductions that restore some
equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''
When central bankers start talking like Janardhan Poojary, be sure there is BIG trouble ahead.
WHAT is Bernanke asking banks to do? To take losses? Is there any capitalist who does this willingly? Especially Shylocks-for-bankers? Bernanke is telling you of the disaster in future months.
Are you ready to face this bear market?
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.
Issues
>Now it's the turn of another Fed member. Richard Fisher, quite an important opinion maker within the Fed, who said inflation is more important than slowing economic growth. If he's reflecting what the Fed is worrying about, then you have a hint of what the Fed might do on the 18th. Will they cut just a little or not?
However, another Fed member, Mishkin, said the economy is slowing because of the housing crisis. This was interpreted as a hint at yet another rate cut on the 18th.
>Polaris says orders are slowing down from their American banking customers.
Is this a hint that so are ALL other techies in India? Does the CMD of Polaris
have to let the cat out of the bag at THIS point in time of the stock markets?
What to expect going forward
>The rally hasn't yet happened. Two bad days will see some trading recovery
today and tomorrow, but that's not enough to push prices higher than before.
>We will say that next Friday the 14th is your last day to hold amny more longs in
deliveries or futures. Stay clear till the 18th gets over with the Fed.
>And then go short in the Nifty, bank Nifty, chosen banks and land shares too.
>It's going to be a brutal bear market. We should profit from it.