Mixed signals from the Asian markets, a near negative one from the Dow ( despite better than expected results by financial firms for the quarter) and the political impasse at the centre (India, I mean) bode no good for a market that in the recent past has been amongst the most beaten ones the world over. All said and done, my personal thoughts are that the UPA government at the centre should get a near comfortable majority (maybe around 8-10 votes) and that should propel the markets up. Though the vote will happen possibly late in the evening, a clear picture seems to be emerging as to the fate of the government.

Taking all the above into account, I believe, there may be a good bit of buying effort today not only on the deliveries side but also in the F&O segment too. A few positions made today also maye be erased in a sell off tommorow, in the wake of a positive vote at the centre.

The BSE shold today move for a 14,000 plus scenario and stabilise in the 14,100 to 14,200 region by the day end. Volatility in the markets though is not ruled out ( Not a day to enter the market I would think). The Nifty is seen in a 4,180 to 4,240 range with a likelyhood of both markets making it even higher if the UPA is seen making a comfortable victory. The stocks of the day should be the Banking, metals, PSUs and the fertilizer scrips. The logic solely resting on the assumption of the government staying. Though, the RBI's July 29 date for the rate hike is nearing and may impact sentiments in the bankex somewhat, it will in all likelyhood take a backseat for the day.

Where Now?

Oil touched a six week low and is currently sub 130. The Dow is perhaps stabilised just above 11,000. The market cues though not positive yet, are not overtly negative too. That the Nasdaq closed friday in the negative may indicate a tough day for the IT stock in particular, and the current political impasse. But overall, the current market sentiment seems to be positive.

Expect the markets to open on a positive note. Crossing 14,000 is not ruled out for the BSE. The closure also should be near 14,000 and possibly above it. The Nifty should also open near 4,160 and close near the 4,200 mark. The stocks to take a beating will be IT and the ones to go long indeed are Banking ones. Oil will also see a heavy interest, though overall market may remain subdued in terms of volume for the day. A clearer signal may be had tommorow at the parliament.

Good Signals

The Oil and the US cues seem to be suggesting a hope for a better future of the markets. The Dow ended 207 points up. Asia started in the green but seems slipping now. Oil is stuck below 130. Overall a better day today than most of this year. Good signs I would say.

Expect the BSE to open a couple of hundred points above yesterday and trade in that region mostly. It should ultimately top 13,500 or nearabouts (+-50) by close. The Nifty should open near 4,000 and close a little above it. The only dampners as of now can be the RBI's 29th July rate hike fears and the political jitters. The Stocks to be watched will be Oil and Banks. A good showing on Tech should also continue while Steel and metals may get beaten a little. Overall should be a slightly volatile day. But then, what is a market that doesn't allow for a bit of a volatility.

The Dow closed yesterday 276 points up on the back of a $11 drop in oil on 2 days and a 10% down in 4 days coupled with great news from, Intel, Wells Fargo and the Likes. The Asian markets are also up today between one to two percentage points. So where do we land? Especially with the continuing political turmoil and the impending confidence vote and the Inflation figures for the week also due?

For one, the political turmoil will take its toll, irrespective of the government's fate on the 22nd. Inflation for the week should just cross 12 percent and will dampen sentiments to a good extent. But the opening we may have will be in the positive with a 150-200 points above yesterday, going above 13,000 (possibly 13,100 or so) before settling near 12,900. Watch out for a lot of volatility in the Banking stocks and gains to be made in Tech and Oil. Nifty should open near 3,900 and try breaching the 4,000 mark briefly before settling below it. Amen.

Bungle, bungle, all the way

Way back in January I had opined on the 12,000 mark of the Dow and the impact it may bring if it gets broken convincingly for even a week. (Read my blog http://forexpredictionstoday.blogspot.com/2008/03/quite-in-line-with-what-was-being-said.html ). I had also written about the BSE in my blog on 15th April 2008 ( http://themarketstoday.blogspot.com/2008/04/nervous-signs.html )
And I quote “Eventually.....I stick to my 13,400-13,800 levels to be reached in the coming months although the 14,000 might be a tough psychological barrier to break.” Unquote. Period.

The world has gone for the worse in those couple of months and it seems now that the 13,400 – 13,800 is more of a resistance level than a support (for all the optimists!). The current immediate downside is at 12,500 followed by a further support at 11,600 and 10,500. though my personal belief at this point is that it may be difficult breaking 11,600 if at all. There may be skeptics with their formulas on the 50 percent retrenchment and the likes, but I believe the world (and not WORST) is not over yet. Yes, we have bungled a lot and in lots of places at the wrong times. Yes, Things back home are not that great. And we have lots of things to blame for it. The political saga, the oil saga, the global crisis and so on…. That the RBI is using all weapons in its arsenal to rectify matters is true, but one tends to believe that it is too little too late. Fiscally, we have dug a few small graves ourselves with the Farm loan waiver and the delayed and inadequate decisions on petro price hike. And now you hear of the RBI boldly announcing that things will return to normalcy within 6 months. That, I believe is more akin to acting like an ostrich. Put your head deep in the ground and hope no one will notice your flabby body outside. We as an economy today, are not delinked to the global economic scenario (This one liner that the 10th grader also knows, was for you Reddy Sir). And if economic pundits globally are to be believed, we are in a short recessionary loop of around 2.5 years and starting its timeline in mid 2007. Which actually means we are still left with more than a year upto 2009 end maybe.

So, as I have said above, expect a downslide, that is more and more linked now to the happenings outside as well as within us. Taking cues from not only the domestic political turmoil but also the petro prices and the global (clichéd) “meltdown” (Not to forget the various bunglings at the regulatory and the governance levels). An Oil or political meltdown ( Oil corrected yesterday night to the 138 region) may help in resurrecting the market for a while, but by and large expect a pessimistic market in the days to come. The BSE 30 at 11,600 (on the lower side) to 13,800 is a given with a more stable range of 12,200 to 13,400. The Nifty50 on the other hand should rule in the 3,600 to 4,100 range and more specifically in the 3,800 to 4,000 with a downward bias in both over the week.

Happy Beariness (WHERE IS THE BOTTOM??)

Some time back when the Inflation in India was on the rise and prices of essential commodities were rising, The Indian Finance Minister was heard saying that one of the major reasons for the rise in prices of essential commodities was the unabashed speculation that the Commodities Future market afforded and that to curb the tendency of these items to be dearer would be to curb the use of Futures trading in these items. Perhaps he was right to some extent. The Inflation as we are observing in our economy today is, as I can read, a Demand side Inflation and supplies are not sufficient to appease the soaring demand. Perhaps for that too, the Finmin is to be blamed. Last year, when the economy was expanding (and expanding way beyond expectations) the Finmin in its enthusiasm was supporting the banks in affording even more credit (read loans) thereby helping innocuously, the overheating of the economy and thus the present state.

Moreover, the Government kept silent on the oil issue when the global oil prices were rising and it was wise enough to increase prices of oil products in those good times. A one rupee hike in the prices of crude products every quarter if not earlier would not have made matters as worse as it is now. And to spill oil over the Inflationary flames literally, when there arose a moment to soothe the Inflationary flames, the government had no option but to raise the prices of oil.

But then, that is all history now. What is in the news though is that yesterday, the US House of Representatives approved a bill aimed at curbing “excessive energy-market speculation”.
The bill, which passed 402-19, would require the Commodity Futures Trading Commission to consider using position limits, or constraints on the size of the stake each speculative investor can own, and raising margin requirements, the money required to trade (Our Finmin has scored a point here).

While it helped in easing the steam off oil by around a dollar, that it will not rise again and rise up to 150-170 as the OPEC President said, is a scenario only with the “Koop Mandooks ” or the frogs in the well as we say. The demand for oil has been on a rise ever since man can remember. That the speed of price hike may slow down by a mere 10% or odds is a given. But the impact this oil business is having on the world economy is devastating especially when it comes on the back of a back breaking Sub Prime crisis. While we were all watching the markets world over stabilizing post the Sub Prime crisis, the oil bomb hit us all hard and now it seems has taken over the stage from the Sub Prime in eating all the economic growth the world over.

The Dow yesterday fell a whopping 358.41 points, indicating that it is poised to remain sub 12,000 unless and until a wholesome recovery occurs in the economy (p.s. rephrase and read it as oil too). The S&P 500 fell by 2.93% (a higher than DOW fall in a long long while) while the NASDAQ fell by 3.33%.

The Indications are no good. With Asian stocks also falling like nine pins, it is time India followed suit again after the smart recovery in the last two trading sessions. Expect a bear day (range 13,650-14,100 with closure near 13,900 on the back of some oppurtunity buying) and a Bear week in the days to come (WHERE IS THE BOTTOM??). Especially with the Inflation figures expected to worsen………Happy Beariness (and I am not being pessimistic you see…..just flowing with the current).

The Bears Rule

The markets since I last wrote have been in a swing .....up down up down. But what happened on friday 20th June was what I had been expecting for some time, though not entirely for the reasons it happened. The trigger was the Inflation figure of 11.05. But what will follow in the next downtrend should follow what I have been saying so far. The US is not having a great time and if you look at one of my earlier posts on Forexpredictionstoday (http://forexpredictionstoday.blogspot.com/2008/03/quite-in-line-with-what-was-being-said.html) I was talking of the Dow breaking the 12,000 levels and a slippage of the BSE below 15,200 simultaneously. Now that the same has happened convincingly (after testing it for a couple of days) and at the risk of sounding pessimistic, I go back to my forecast of a 13,400 to 13,800 for the BSE in the very near future. The only saviour can be some godsend like some good news on the Inflation front (single digit even if it is 9.99) or a renewed interest of Investors in a more affordable market. That I may be proven to be wrong (and I pray for the same) may be because no government/regime wants to be in a negative growth pattern and will strive to do all to reverse it. But then one look at the negatives in the markets and the gut feel comes..... It may be difficult to get out of the rut in a hurry. Any revival may take months to come. As of now...the Bears Rule.