Sensex Technical View :
After some narrow moves arnd the 50 dema level Sensex has just closed below the extreme short term channel. Sustaining below for 2-3 sessions would mean testing the next trendline support around 9000-9200.
The recent lows arnd 9600/2900 would be the levels below which the momentum on upside will definitely slow down. Sustaining below 8900 would be a level to watch for trend reversal in extreme short term.
Only a strong move beyond 10300-10500 /3150-3200 would imply a positive move back or markets would remain sluggish.
The strategy remains the same to watch after booking out at 9900-10500. Continue to watch the reaction close to 9k before taking fresh positions. Sometimes no trade is also a good trade 😛
Stocks to watchout for :
Certain large cap stocks which may lose momentum on upside on particular levels if broken for 2-3 sessions.
BHEL below 1330 , LnT 765 , ONGC 650 , Tata Steel 205 .
Market Observations and Thoughts :
The company has seen a severe beating because of a decision to buyout or say bailout Maytas ( satyam = maytas ) infra n maytas properties. This would have meant transferring shareholder money into promoters pockets indirectly whatever be the valuation given.
Although such a move has been a major sentimental and reputation blow to the stock and would continue to hamper any face saving move from the management. In such markets nobody likes uncertainty from management side.
Upaid has a case of around 1bn dollars pushed against Satyam. Although this is an old story but still continues to linger.
Those were the negatives .
Now some positives :
The market cap of Satyam is roughly around 9500 crores.
The pure cash or asset side is 7000-8000 crores . They were going to give around 7.5-8k crores for Maytas infra and Maytas properties.
So it implies the cash component is around 90-100 rs or more per share for every share of Satyam. The debt is nominal.
The IT business continues to be decent enough with decent earnings growth although i am not an IT fan in current scenario.
The stock has corrected as investors are worried that the cash is not safe with this mgmt !. In such a scenario any face saving measure would mean management may possibly try to transfer cash into shareholders pockets through dividend , buy back or any other method . FIIs hold more then 45-50 % and promoters 8 % . Can FIIs dictate the mgmt ! , Will there be a mgmt change etc are favorable turns.
So the idea is if one buys at dips frm 140 to 110 or lower in a pyramiding method. the risk to reward is favorable in the medium term for a decent return of 20-50 %.
The risk component is any litigation , suit which may hit the cash otherwise the cash is much more secure then before as the management may no more try another coup.
This is just a personal view and can be wrong too ( numbers are not exact but an estimate ) . Investors may do their own research and take exposure with keeping in check of your risk profile.
Sensex Technical View :