The Era Snapshot

BEAR MARKET STRATEGY
>Expect bear rallies: Three steps down, One step up
>Reduce debt and no more leverage

NIFTY Bank Nifty CNX IT GOLD
Next five days Profitbooking Bullish Sideways Sideways to Down
Short term
(weeks to month) Bearish Flat-toweak Sideways Sideways, then BADLY down
Medium term
(1-6 months) Bearish Bearish Bearish UltraBearish
Long term
(6-12 months) Bearish Bearish Bearish UltraBearish

Market Waves..
Forewarning what to expect in the next sequence of...
Waves Up 1-2-3-4-5....to.... Waves Down 5A-5B-5C
Wave 1......Up........ .Rebound from recent Bottom. Mass pessimism ebbs here.
Wave 2......Down.....Test of Lows...But previous lows not hit
Wave 3......Up..........Powerful Wave...Strength, Breadth, Easy-Credit , Real
prosperity
Wave 4......Down.....Surprising disappointment...Signals that best part of
growth over
Wave 5......Up..........Final Advance...Psychology creates overvaluation.
Leverage at highest.
Wave 5A....Down.....Breakdown...Inexplicable fall. Viewed as buying opportunity
Wave 5B....Up..........Narrow, Emotional Advance...Aggressive euphoria+ denial
<--You're HERE
Wave 5C....Down.....Worst of Bear market...Strength, Breadth, Fundamentals
collapse

(From Frost and Prechter)
Nifty
Next five days....The RBI on Tue 29th and US Fed on 30th: Nervousness back
Short term............April's results-rises...Will see profit booking in May
Medium term......The markets will go back to being obsessed with subprime issues
Long term............Serious blowups ahead in bank and manufacturing businesses in the US.

Bank Nifty
Bank stocks haven't participated in this two-week rally. If the RBI hikes next
Tuesday, it'd be another deep fall for bank stocks and this Bank Nifty. But if the RBI doesn't hike, then banks stocks will see some trading recoveries. However, the larger trends stay bearish for bank stocks due to a slowdown in economic growth, delinquencies in housing borrowers..both individual and corporate... and crises of varying degrees in Indian corporates this year.

CNX IT
Satyam and TCS have put paid to all the excitement generated by Infosys and Wipro. Tech stocks didn't really rise as much as they'd have if this were a running bull market. It's a secular bear market right now (with the three steps down and one step up kind of bear rally running right now during the results season) and that's why the rises in Infosys and TCS's stock prices were muted. Expect to see a quick round of profit booking in tech stocks from hereon.

Gold
Gold had fallen by $120 in March and that was the single biggest fall in it in over ten years ! That itself tells you of extreme leveraging in gold futures all over the world and their extreme nervousness when perceptions change about global inflation. We see gold going into a multi-year bear market from here. Recall its slow rise from $250 in April 2001 to $650 in July 2007. That was a rise of 400 dollars in a space of six years. But after that Bear Stearns crisis since 24th July 2007, gold saw a spectacular rise from $650 to go all the way to $1033 in March 2008. That was a rise of 383 dollars within nine months ! THIS will end. It will. So stay short in gold futures and add shorts when its price rises on given days. We see the $900 and then the $850 levels being taken in the next eight-to-ten weeks.


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.


The Mood
>Anger:
The newspapers say that super-luxury apartments aren't finding buyers in any part of this country. Those above five crore rupees.
Five crore and above has no buyers?
A million dollar flat has no buyer?
Why?
Why aren't these super luxury buyers not behaving as idiotic as they were till last year?
When did they get hit by so much intelligence as to stop buying flats which came with the highest price tags?
Or have the builders gone overboard and over-built?

Answer: Both.

And the truth remains that euphoria and froth was mostest in houses and flats and condos and gated communities and what not American names that were imported during the past five years.
Today's Financial Chronicle newspaper says prices have fallen 15% in the last eight weeks.
Withing eight weeks tells you that there were no buyers during the past eight months, but when a buyer did come, he bargained for and got that 15% discount !
Not that the purchase makes him any smarter.
He's as much an ass as much as the buyer who bought furiously last year at 115% more of today's knocked-down rate.
This middle class fantasy of making "easy" money by simply buying a flat...is just that: A middling class fantasy.
Now soon becoming a nightmare!
Topping this news is also that rentals are rising for office space in Gurgaon and Bombay.
This means that corporates prefer to rent and NOT BUY.
They were doing the exact opposite till last year !
Can you see where the share prices are going for DLF, Unitech, Parsvanath,
Omaxe, Peninsula, Mahindra Gesco, IVR Prime and whoever else the markets
said in 2007 were the "Gems" of Modern India?
They now sound more like the "Germs" of India.


>Lots of anger:
All know that Axis Bank had ripped off Rajshree Chemicals and Nahar Industrial
of Ludhiana into selling them some fancy and exotic derivatives for forexhedging.
Axis collected fat fees and rolled on the ground for ripping off the stupid
Accountant.... or CFO's, of those companies, as they like calling themselves with
American terminology nowadays.
Then...The managements of Rajshree and Nahar got a fix on how deep in the
creek that their
Munim-ji-the-biggest-Oaf-in-the-land had gotten them into. Managements
then told Axis to either annul the contracts and make up those losses they had
incurred, or they'd take the fight to court.
Axis said...Let's-meet-in-court.
Now Axis have admitted they've provided for a "contingent" loss of Rs.72 crores.
Next goat in line for the hack: ICICI


>Resignation:
The ECB President, Jean-Clod-Trichet, said banks aren't yet lending to each other and thus the financial markets crisis is not over.
He's implying that trust is YET to come back in this only-trust industry.
It went out of the window since 24th July when Bear Stearns told their $900 Hedge Fund clients to go to hell. It also went out when the inter-bank lending rates rose above LIBOR for the first time EVER since Libor was invented in the '80s.


>Newsflows no longer about India-Shining...Which means the media is no
longer able to sustain that stupid HYPE that they helped generate since
2005-06
...Indian Finance Minister Says Economic Growth May Slow, WSJ Says
...TCS, India's largest software-services provider, reported the slowest profit growth in three years after the rupee's record rally eroded sales from overseas and some clients delayed orders.
... Reliance Industries Ltd., India's biggest company by market value, reported profit that missed analysts' estimates for the first time in nine quarters after earning less from making chemicals.


>Anger:
IPL is trying to set off you against some other city chap. This is a classic case of
brewing anger amongst communities or urban animals when none exists.
Or does it?
Are the people of this country running in the anger-mode about their economic
future?
And so has IPL only reflected this mood in their stupid ads?

We think... YES.

And when the mood is angry about some nebulous thing called "my economic
future", then where's the case for you or me to go and buy shares and mutual
funds?
Track these kind of soft things to get a fix on where the problems of stock
markets emanate from.

>Cynical:
In the UBS balance sheet :
On the left side, nothing is right.
On the right side, nothing is left.


Buy in the Investment a/c for 6-9 months holdings
STRONG BUYS
1. Hindustan Unilever ( with a SL of 220-225 )
2. ITC ( with a SL of 195-199 )
3. Ranbaxy( With A SL of 435-440)
4. Suzlon( With a Sl of 270-275 )
5. Cairn India ( with a SL of 225-230 )
6. Nicholas Piramal..........Buy now ( With a SL of 1220-1225 )
7. Sun Pharma...................Buy now ( With a SL of 225-230 )