Sensex Technical View :
Sensex has almost retraced 50 % of the current bounce from the low of 12550. 61 % of the current pullback comes to 13200 . So till markets stay above 13200-13300 on a closing basis markets could take a shot at the upper range of 14300. Traders can continue to be stock specific and look for investment bets in fundamentally sound stocks with a medium term view.
Only on a close below 13k or above 14500 could we see good momentum in markets or we could remain sluggish for some days and one will need patience.
Market Observations and Thoughts :
Crude :
Continues to remain in the range of 102-110 . Till its below 120 crude can continue to remain in a tight range.
Gold :
Gold as being seen is quite volatile with the swings on economic bailout etc. As mentioned yesterday a dip to 865 should see support and it made a dip to those levels. On the downside there is a good support at 840.
Lots of mid caps have lost 60-85% from the highs and many of them are available at 2005 price but one needs to be selective and choosy about the stocks as circumstances have changed so have to go with a fresh view! . Be selective and patient as the turnaround time would be more from current levels and one will need to graduallly build an investment position.
Stocks to watchout for :
AXIS Bank looks set for a quick move to 750 -770 levels if market sentiments remain good . Can buy with a stop of 704 .
HDFC bank if sustains 1325 could see 1400 in quick time but a risky call .
Rolta hold on for 280-290 zone to book profits. Guj Ambuja stop 82 tgt 90-93.
Some thoughts :
In the last few months have been meeting lot of investors who just have a standard line i am stuck in xyz stock at high price of 20-21k. Some of the traders kept on carrying positions which finally had to be closed coz of margin pressures. All through the last 6 -8 mths from january markets gave bounces to 18900/17735/15580 which could have been used to exit and re-enter at lower levels to reduce average or losses. But many investors continue to wait in hope for the acquisition price!!!!
All through this period we had been mentioning about generating cash in Jan 1st week then around 18900/17500 to reduce leverage and exit totally below 16800. Those who have made use of the views have been able to pick good quality stocks at dips to sell on good 30-50 % bounces. But those are gone things now lets c what can be done in case one has not exitted /booked partial losses/stuck at higher levels and seen a portfolio detoriation from 10-60 % .
Markets have come down from 21k to 13k which in itself is a 40 % drop and the downside from here could be limited to roughly 11500-12500 which is just an assumption. So on a price correction there may not be much but for the recovery the time correction may stretch quite long. So one will need to strategize differently now !!! Also in the longer run upside potential is much more then the downside from current stage but one will need patience !
Many of the hopeful people are trying to expect they may get their stuck prices 20-21k very soon which implies more then 60 % returns on the INDEX !!! !!! which berates logic and imagintation although markets can surprise but in business u dont bet on surprises!!! .
There are two ways an investor can turnaround and recover the portfolio in next 6 mths to 2 years .
A) Increase the portfolio size by allocating more cash
B) Shuffling of portfolio and not making same mistakes again
For some investors who are down 30-50 % it would be difficult to allocate fresh money but for many with good cash flow should definitely do so as markets have certainly become attractive as lot of stocks may have over corrected.
Some points to take care where one may tend to make mistakes :
1) Averaging
This is the standard mistake one tends to make!. In business one never puts in more money in a losing business or a wrong idea which dint take of as expected but rather tries to shut it to start afresh. So here one needs to decide whether the stock is WORTH IT or one is just buying coz acquisition cost is high. Coz some bad ones may continuing goin down and strong ones may give a quick bounce. Be selective !!! Why not start a business FRESHLY then be bogged down by old mistakes 🙂
2) Leverage
Normal tendency of a losing investor/trader is to bet more heavily as losses are too big to cover up easily and end up losing watever is left. Never make the same mistake twice. Leverage trading could be highly rewarding or highly dangerous so one needs to tread safely or avoid.
3) Money and Risk Management
Investors never tend to look onto money management and risks involved with their finances and goals from equity investment. One needs to be aware of financial goals , risk apetite , cash flow. FOCUS more on risk then on REWARDS ! 1:3 is preferreed Risk:Reward ratio.
B)
1) Shuffling
This could be a tricky thing to do as dud stocks may also give 50 % bounces and then again die. IT stocks never cameback after 2000 boom only Infy etc did . Will realty come back u never know. Dont make the same mistakes again start shuffling and make a stronger portfolio. Every bounce in a dud stock could be used to shuffle !!
2) Selling and Re-Entering
All manufacturers,retailers,stockist and business-men have a stockout sale to shut business or in a revamp. !! An investor never has a stockout sale !!! ever why SO ! i still dunno.........But in such markets one may need to time a bit exit bad ones on rise and buy fundamentally sound stocks on dips.
This is just a few possible points which could be covered in a quick post and would need lot of INDIVIDUAL investor thought and process as every one has a different apetite/finances/goals .
If u like the ideas posted on the blog pass it to other investor friends.
Its better to pay a fractional % ge of ur investment for a little professional and disciplined approach to investing and trading to generate gains with lesse risk then erode the portfolio without any help or rather learn the process of technical analysis and be independent in your decisions . We can help you in the process by stock specific advice or training course . Check https://analyseindia.blogspot.com for more details or mail to noorrock2002@gmail.com .
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Best Regards,
Nooresh
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