Can the Sensex be at 15000 even if the Dow drops to 5000 ! ? That’s a decoupled View

So the Sensex surged,ten days consecutively, to 11284 yesterday, and then quickly corrected sharply down to 10947,down 337 points today…It was just above 8000 in early March,a little over a month ago

What do you make of it ! ?

Two camps here :

The First Camp is Bullish and  talks of a Bull run happening…We’re not going to see October end Lows again….Supporting their view are two powerful indicators

  • Sensex has just breached the 200 DMA and has a long way to go…China is already 14% above it’s 200 DMA…so it’s drawing Inspiration from this
  • FIIs, who had reversed over US $ 2 billion in the first two months in 2009, have being buying into India in March and April to bring this figure down to close to a Billion now

This Camp clearly believes that upward Momentum will continue…They would probably affirm that the Sensex can be at 15000 even if the Dow drops to 5000!…that’s a decoupled view emerging 

The Second Camp is clearly worried and cautious at this rise in the Sensex…It’s at best a strong Bounce back in a Bear market.

They are more concerned with Valuation,both Macro and Micro, rather than Momentum…At 13 times,both Current and Forward, the Sensex is not really great Value…Looking outside the Sensex,the risk, as measured by Volatility, is getting higher.

Their fears are largely founded in the two “E’s” 

  • Earnings  : Clearly Declining…Infosys has already issued a strong caution…Reliance is an exception
  • Elections : No Clear Mandate Expected…If The Coalition is not headed by Congress or BJP,the stock markets will react

  Which Camp are you in ! ? 

MOMENTUM or VALUE ?

TRADER or INVESTOR ? 

TECHNICAL or FUNDAMENTAL ?

Go ahead with your Strategies…as long as you’re aware of the risks involved…I won’t grudge  you,your profits !…you took the risk for them !..Not I ! 

Sensex at 11200 ! Risk to Continue Riding the Momentum is High…Caution Indicated

Sensex has climbed above it’s 200 DMA Levels and is currently 11200,pushing upwards…Nifty too is at 3450 levels

Caution is advised…We’re now at 13 times…Elections are on us and the mandate is unclear…Infosys has just announced lower earnings expected for FY 10…Satyam legal hassles begin playing up in June with the Upaid Trial….India’s Fiscal Deficit is already way beyond target at Rs 330000 crs + for both FY 09 that has just concluded and even that estimated for FY 10….Global Crisis continues to play out

Too many Low Cap and Mid Cap scrips continue hitting upper circuits…some would say this is a broadbased rally….I would say it’s a sure sign of being sucked yet again

Would be well advised to consider selling off into strong rallies and higher levels that this upward momentum is driving markets to,ignoring valuations

Essar Oil is a one off situation…Look what happened to Akruti

Don’t get sucked in yet again !

Assess Valuation Risks before Buying in 

Conflicting Technical Take predicts a bull run of 42% to a Nifty of 4250 inside six months

Ooof !…Yes,I’m not a Technical Guy…but just received another Tech Report from a leading listed Broker,who just laid off 70 people on Thursday….It’s a conflicting and bullish view

It predicts that the Nifty will surge 42% to 4250 within Four to Six Months from now….that would mean a Sensex Level that goes past 14000 again in the first half of 2009

Such Conflicting Views at either end of the Opinion and Prediction Spectrum are the Challenges one confronts often in Equities….That’s the Beauty of Equities…there is always a Buyer and a Seller at a point….as Warren Buffett would say “Who says Market’s are Efficient !?”….and that’s the reason he finds Value at times…such as like this  

TOP TECHNICAL TAKES : VERY SCARY INDEED !

I’m not into Technical Analysis…more a Fundamental Guy…but count as some of my close friends and associates,some leading Technical Voices in our Stock Markets

So as this week closes with the Sensex hovering around 10000 and Obama winning the US Presidential Elections , I was taken aback  when these Technical Voices made some very intense,bold and scary Long Term Calls

  • A leading Technical Chartist ,who heads the Derivatives Desk at a leading Institution and who appears on Stock Channels regularly and is known for his macro calls,more than specific scrip calls has warned that for 9 years Stock markets will remain challenged and whatever big fall will happen…. will happen now in November itself

  • A Rare Technical Report from a leading Securities Entity has studied the Sensex trends for the last 30 years and made a call that the Sensex shows weakness as it has breached earlier in 2008 a five year support line and in early October has breached the 50 months average….Sensex has now entered a structural bear market….It will fall to a range of 5720-6750,eventually finding support in the range 6150-7150…Pull Back Rally can first take it to 11500 before it resumes the fall again…This is their BOLD STRATEGY recommended

               Only Trade and do not Invest

                         Do not average purchases

                                  Aggressively Sell off Portfolio

                                         Short the Market at Higher Sensex Levels

                                                Trade Long on further 10%-20% upside with Strict StopLoss

  • Another Technical Chartist,a Lady, who breathes the markets daily before she even breathes in oxygen, and who depends on Time Series Analysis, has said that the Sensex will tank in November,pull back in December and after January 10,2009 will resume it’s fall big time in 2009….Sell and Short significantly in the December rally is her advice  
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