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.

Down Today, Up Tommorow??

Negative cues from overseas in the Asian region and the weak sentiments when it comes to Banks and Tech should drive the market down today. The main drivers should be the Banking and Tech stocks. Expect BSE to be volleying in the 16,500 to 16,600 range mostly with a negative bias, ending the day in the 16,500 region and possibly below it. The NSE should trade near the 5,000 mark mostly with a small chance to break below the level and settle near 4,990. In case it defies so, expect it to still make it just above 5,000. But overall, I expect a positive march up for the markets this week. Fingers Crossed.

On a roll

The Asian markets seems are on a roll now ( 7 week high) and should brush the Indian stock market positively too. Expect the Tech and Bank stocks to take the market up. BSE at 17,000 now suddenly looks very convincing. Expect the 16,900 mark to be scaled here. Like wise, NSE at 5,100 is also on the cards, though expect the NSE to trade mostly in the 5,040 to 5,085 range for the day. Have a rosy Monday fellas......

Up Today

Expect the BSE to move in a range of 16,400 to 16,700 today with an upward bias. The NSE should do well in staying near the 4,950 area, though nibbling at 5,000 briefly is a possibility. The cues from US and Asia are very positive and point towards a steady rally up in the days to come. Seems like my expectation of the BSE doing sub 14,000 is not likely so soon. But you never know.....The next negative cue may take the markets down again.

Backfire

The Indian market is one that will time and again do things that will make you sit up and take notice. It will do it off and on. Won't take any cues from happenings elsewhere and chart its own course. And that's what it did yesterday. Did not even respond to the 2 day deceleration on the Dow. And shoved aside the record 7.41% inflation figures too......now that's interesting. Instead took cues from the Asian markets and the robust results of Infosys. That Infosys news was the correct thing to follow, I think there needs to be some correction to reflect the global weak sentiments. The negatives of last friday though local to US ( not so great results for GE), should have given a negative sentiment signal globally too. That we are majorly dependent on the US not only on the trade side, but also when it comes to political influence, Resources, Currency pairing, et al, not forgetting the growing oil bill, thanks to the rising oil prices, should have made us adjust/align to the happenings in the US to some extent. But we went hay wire. Started in the red and shot up quickly to end the day on a high. And possibly I am not the only one who saw their opinion being rebuffed by the market.

The Idea for today?? Should continue the up swing and be in the above 16,300 level (BSE) and 4900 (NSE) for the day. Will wait and watch for now.

Ouch.....its pinching everywhere!

Since I wrote last, there has been a nervous slowdown in the markets all over with the Dow itself going down by a whopping 257 points in one day last friday. This was followed up by a nervous show by most markets yesterday. The Dow itself, when it opened yesterday after the weekend, was unsure of its next move. It went up a little initially, only to settle back in the red just by a trickle, suggesting the nervous uncertainity in the market and the wariness for further bad news if any, to come. The Bank stocks were patircularily down a few notches. they have been so in fact throughout this past week. The main contributors for their bad show would have to be put on not only the sentiments that the market is carrying, but also due to some reasons that have come to stay in the last year or so.....credit squeeze, High cost of funds, dwindling spreads....Not a healthy picture at all. That valuations have come down drastically in the past year is of grave concern. Ouch.....its pinching everywhere!

Coming to the Indian markets, even though it showed a positive swing on friday, expect it to go down today in the light of the Dow meltdown, although not by much. The major Asian markets are up today after a dull day yesterday and it should rub off on us. The net effect thus should be in the range of a downslide in the range of 150-300 points. The market should be seeing the levels in the range of 15,500 during the day before settling down near the 15,650 mark. This, provided the European markets are in the same near neutral gear as the Dow was yesterday. Else the 15,200 mark may also not be a safe bet today.

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.