Is the world coming to an end in 2012?

The things happening right now around the world are certainly making people believe that.
First off all the recent sudden rise of crude oil prices to $100 even though the world economy being in shabbles is a clear sign of some people in the commodities market might have started believing that US would certainly go to war against Iran. But Iran is not Iraq so certainly this time it is going to be worst.
There is a big division in Arab league after Syria was thrown out of Arab league. Syria open to fall under the influence of Shia dominated Iran. Shia Sunni divide might again come up in this atmosphere of conservatism.
The hailed unification of Europe into Euro is failing its objective. Euro region is showing fresh cracks. Citizens of nations effected sovereign debt mess like Greece,Spain, Italy, France, Germany have started to doubt the intentions of their Euro leaders and about the advantages of their staying anymore in the Euro zone. Euro leaders are running out cash, clueless of saving which nation first. I hope some country like Greece doesn't get thrown out of Euro which will result is relations among Euro countries going back to WW2 low.
Except Pakistan, Taliban region of Afghanistan and North Korea the whole of Asia looks peaceful and Prospering. The only concerns are an unstable Pakistan with unprotected Nuclear weapons, fresh bout of natural disasters all around Asia. Another natural disaster like Japan in countries like China or India and the whole continent will be taken 10 years back in time.
South America is suddenly suffering with a big drought making the world food production to go to a new low.
The world's biggests nations in stress will stop the development and rescue of the African continent and Africa might totally fall into the hands of rebellion mercernaries withincreasing the no.of people dead due to civilian distress taking it easily 20 years back in time.
Financial markets which I have been keenly watching since last 4 years are certainly factoring worst situation ever. Usually Financial markets factor in any scenarios which might occur 6 months down the line well in advance. Right now markets are already factoring a financial crisis which might occur by coming January caused due to european debt problem.

The above mentioned and many more scenarios certainly makes the whole world look like its moving fast towards its end.

But I don't want to look at it like that. I believe the world and the humanity will never end. I have this belief because even if we think our political leaders are irresponsible, we the citizens will not let them be irresponsible.
Look at the peaceful Occupy Wall street protestors fighting for social fairness, the peaceful protestors of the Arab Spring who introduced the idea of democracy in the Arab region mostly ruled by dictators and royal families, the peaceful protestors of the Lokpal movement inspired by Anna Hazare fighting against corrupt politicians eating on their taxes for years. All such peaceful fights in the current violent world remind you that many people still believe in the Gandhian principle of Satyagraha.

US govt is neglecting them, greedy corporates are paying the police to force the protestors to vacate the Wall Street but protestors are not giving up peaceful ways.Even the winter season is against the protestors occupying the wall street.Wall street protesters are not giving up no matter what. They just want their voices to be heard. Tired of unemployment, thrown out of their houses for not paying the debt that was forced upon them, neglected by the government they have no where else to go but the irresponsible Wall street firms. The US Govt instead of bailing out the debt burdened people bailed out the same Wall street financial firms who were the reason for the crisis which has not ended yet. These defiant protestors have inspired protests against corporate greed all around the world.Government is not lending its ear to them, many labelling these protestors as ill informed. Hope this negligence by US govt. doesn't become a reason for a new revolution in US.
US govt. is thinking of another war with another islamic nation. But this time I wish the educated citizens, family and friends of soldiers at wars and who have lost their lives in war stop another war. US govt has been successful in avoiding anti war protests by limitting live war news telecast by keeping the citizens blindfolded about the lives lost in war. I feel certainly this time the public inspired by occupy wall street will protest against another war.

Situation around the world worst. Food prices rising due to shortage of food, poverty more then ever, social gap between rich and poor more then ever, situations as such should have resulted into world rampant riots like the ones we saw in london this year. But still we rarely read about riots. Gandhian principles of peaceful protest is  followed more  then ever. I feel all future protests should and will be peaceful because such protest only yield the maximum benefits and certainly people are getting aware of it. Another financial crisis is imminent and it will come by next year as result of irresponsible capitalism, unchecked lending and irrational financial activities that have been conducted in last 20 years. If you have protected and nutured a poisonous snake over the years its for sure it might bite you back some day. Along with the negative consequences there are huge benefits this time if there is a crisis. This time the governments won't have the money to bailout the irresponsible financial institutions because govt. themselves don't have enough to spend on public. And this time voters won't entertain bail outs as 2012 is the election year for many countries including US. All the irresponsible corporate houses will be wiped out in the next financial crisis.
The famous Mayan civilisation and Astrologer Nostradamus predicted 2012 the end of the time cycle. Many pessimists interpretted it the end of the world in 2012. I am not a pessimist but even I believe it will be the end of the world but the world that was irresponsible. Next financial crisis is going to be worst then ever but responsible investors like Warren Buffet, Mark Mobius and many more will still previal. Responsible countries like China and India will benefit from it. The whole humanity will benefit as irresponsible politicians and leaders will be thrown out and peoples true representatives will be elected in coming elections as the citizens are participating more in political process through peaceful protest. I wish capitalism itself doesn't end as capitalism was the reason of our technogical advancement. Capitalism is good.
Coming year is testing with full of confusion and turmoil. But I feel its going to be the most important year, which decide the future. Its in our hand how we make it through the end of time cycle into the next time cycle.
Atlast the question, will the world end in 2012? Yes, the irresponsible world.

Note: I would welcome constructive critism on above article. Please do comment about your ideas on this matter.

Nifty facing resistance at 5000 on downside

Nifty is facing stiff resistance on the downside around 5000. So traders can buy call options of 5100 whenever nifty goes to 4980-5000. expect a return of nearly 30% on those options.

False closing again - 2/8/11

After a long gap I am back. The recent movement in Indian and World stock markets have been so unpredictable that the investors all around the world and even trader like me is left in a fix and confused which way to position them selves. Last month Nifty touched 5700 and now again its back to 5400 which is almost a 4% up and down which is not a good signal for long term investors. 

Since last week the debt-ceiling drama was played very effectively by US politicians and like in hollywood where the hero diffuses a bomb at the last second, US politicians passed the controversial debt-ceiling bill yesterday which was the deadline for the fed to raise the limit above $14.3 trillion but with a guarantee to cut US budget expenses by $1-2 trillion in coming years. This budget cuts will add more pressure on the already faltering US economic recovery. Then came the all important manufacturing data which was dismal. This data confirmed that the manufacturing all around the world has slowed and thus raising alarm bells of a new global recession. 

Since Monday stock markets around the world are falling because of this fear and so is our market following the trend. Today market closed almost 1% down like yesterday. Yesterday was also a false closing at 5454 and thus the market fell today. Today was a perfect False closing at 5404 and hence another negative day for the market tomorrow can be confirmed. But the magnitude of the negativity will be decided by the US markets closing and the opening of asian markets. US markets today started with a big negative tick losing more than 1.5% but as I speak the US markets have recovered and are flat with nasdaq gaining 0.5%. If US markets close flat then most probably our markets tomorrow will be up at the opening and than slip in to the red along the course of the day.

What should investors do?

The best advice for the investors at this point of time is to sell off 50-60% of their existing holdings and wait for better prices as markets have confirmed a downward trend as Sensex has dropped below 18000 and Nifty is on a verge of breaking 5400, an important level. Over the next month long term and short term investors will find good stocks at cheap prices.

What should traders do?

Traders should short sell the market and companies with global exposure like Infy, TATA Group etc., at every rise in the prices and square off at the lowest point in a day. Buying should be minimum and maintained only in Healthcare stock and FMCG stocks. Though the market fell today the open interest in the Nifty PUT options did not come down and open interest in Nifty CALL options actually increased indicating a short selling in Call options of even 5400 clearly indicating that the Options traders expecting a sudden fall of atleast 100-150 points in coming days. So put options of Nifty can be bought with a target of 5300 on the nifty.

Coming trading sessions are crucial and tense as these trading sessions will indicate if the BULL market of INDIA is intact or the sentiment is turned BEARISH.

Have a nice trading day.

KS Oil --- Target 32, Time horizon 4-6 months, stop loss 16

KS Oil an Edible oils and Solvent extraction company has been slipping lower and lower since last 6 months. 6 months back it costed Rs.45 and today it is at 22. More than 50% down. The reason for such a big fall can be attributed to FII selling in this stock. Goldman Sachs a big investor in this stock had sold heavily since few months. Now as the markets are improving and traders ready to take risk, FIIs might again start buying this stock. Below are the reasons to buy this stock.

1. Book value(total assets of the company divided by no. of shares) is Rs.32.51 . Fundamentally share value is always above Book value. So logically Rs.32 is achievable.

2. Its closest competitor Gokul Refoil has sales and profit less then KS Oils but still Gokul commands a Market Capitalisation(no. of shares * Price of share = value of the company) Rs.1200crores and KS Oils has Market Cap of Rs.940 crores. So logically KS Oils deserves a market cap of more than 1200 crores for which its share value should rise by 27% which gives us a value of Rs.28/share. Then again the Total assets of KS oils are Rs.2929crores. Taking the assets under consideration the value of the share should be Rs.68/per share which was its 52 week high. But looking at the market condition Rs.32 looks like a safe target which is 45% above the present price.

3. P/E ratio(price of share/earnings per share) of KS Oils is at 4.88 . Whereas Gokul Refoils has a P/E ratio of 19.39 which again gives a huge potential for upside. Even if we justify P/E ratio of 10 for KS Oils, share value should be Rs.45.


My target for the stock is Rs.32 for next 6 months and Rs. 45 till march 2012. Even if we buy now and the stock doesn't increase, we can hold the shares as KS Oils is the second largest company in Refined cooking oil in India and has good business.

Happy investing :):)

Bears are back!!! And this time with more strength.

Since 2days whenever market opens, it makes and attempt to cross 5300 on the Nifty but whenever Nifty crosses 5300 there will be fresh selling and short selling in futures market. Its seems to be that "Bears are back!!"
(Bear is a market participant who have negative view on the market and believes market will fall. Bears are mainly people who short sell stocks and make profit).

I predict market to fall to 5100 by end of june. Here are the points which make me believe that.

1) Most of the prominent stock market analysts have started giving out bad picture of the market. Usually major analyst make use of complex mathematical charting softwares which display the key trigger points of an event in the market. These trigger points show whether market is going to rise or fall. Right now Sensex and Nifty have come down below a key trigger point. This has confirmed the stock market participants belief that market is going down.

2) Indian Met dept. has brought down their monsoon forecast predicting a "below average" rain. This will mean that inflation might stay up for a while not allowing the RBI to think about bringing down interest rates.

3) FIIs have been net sellers since last 10 trading sessions clearly suggesting that they are not interested in buying at this point of time.

4) Govt.'s inability  in making favourable market policy inspite of having majority parliament vote is giving negative signals and causing irritation to not only FIIs but also Indian investors.

5) European problem is getting worse as one nation after other is getting on a verge to default its international debt. People are observing Spain closely as Spanish economy is 10 times bigger then Greece and failure in Spain might cause collateral damage for world economy.

6) Federal Reserve of US has cut down the GDP estimate for second time in a row confirming the slow down in US. Economists have again started debating the possibility of double dip recession in US making US investors and global investors more nervous.

7) Indian stock market sell off of tuesday has got every market participant worried. In search of answers, people are coming out with every possible kind of theories and conspiracy theories.

Indian markets are so vulberable right now that markets are starring at a scenario in which one bad news from US or Europe, One more scam in India, One more downgrade and may be a terrorist attack or natural calamity away from a major sell-off.

I am keeping my fingers crossed and justing retail investors to stay away from markets for a while.

Panic on Dalal street

Today was on of the most panicky days for stock markets which reminded me of the days after the Lehman Brothers bankruptcy. 

Before the open of the market today there was a news that Reliance Communications and Reliance Infra were removed from the Sensex index. Reliance ADAG were expected to open down by atleast down by 3%. After the market opened, there was a panic and there was only selling at one point of time which took market down more than 3% in a straight line. The news that Indian Govt. is going to negotiate the tax treaty with Mauritius spooked the market. As we all know that most of the black money from India goes to Mauritius or Switzerland and over 35 per cent of India's FDI and close to 70 per cent of FII inflows are routed through Mauritius, and hence the announcement triggered a selloff that took the BSE benchmark Sensex over 550 points lower in early trade. GTL and GTL Infra which has maximum investment from Mauritius saw a loss of 50% on stock price immediately. Govt. later came out and clarified that it was not negotiating any treaty with Mauritius. Market recovered almost 50% of the fall but then again drifted lower. This shows that the news was just a reason for sell off that was due. There was another thing going on in the market. For the big investors(High networth investors-HNI) who usually trade on margin(for example, if for 25% margin then a HNI can trade for Rs.4crores by just paying Rs.1crore) , the sudden fall resulted in margin call or stop loss getting triggered. As the stop losses on their buy positions got triggered, the shares which they held on margin got automatically sold in the market causing more selling in the market.

The Biggest question, "What will happen next?"
First Scenario: The volatility in previous trading days and the suddenly fall today has scared the retail investors who are net buyers in the market. These investors who deploy their savings in the market and are long term investors will not put their money because of sheer scare and would opt for FDs or gold investments. The retails investors who are holding will also opt to sell their investments and sit on cash to buy again at substantial lower level. This will mean a very low participation in the market.

Second scenario: The FIIs and HNIs who are the key participants in the market. Many of their margin calls might have got triggered because of the panic fall today and might be at substantial losses. To cover their losses and make the payment to brokers who provided the marginal money, they will sell their other stock holdings. This will inturn create more selling pressure on the market. The ones which have some money left will actual prefer short selling then to buy in this uncertain environment. Short selling will create the additional selling pressure of the market.

If these scenarios turn out to be true and which seems to be the possibilty, markets will go down lower.
Today was another False closing. Sensex closed at 17506 and Nifty at 5257 which are perfect False closing points. Out of previous 12 occasions , 10 False closings  have resulted in sell off the next day. This time I expect a bigger sell off.

What about tomorrow?
Tomorrow if Asian markets open up because of the US cues which are positive(US market up by 0.6%) then we might also see a bit of green on our market but then again the selling will begin and a minimum of 1% and maximum of 2% downside can be easily expected on the market in next 2 days.

Previous recommendations
I had suggested to buy put options last week after thursdays closing. Those Nifty puts options have increased 3 times as of todays closing. I suggest holding them for another 2 days for better returns. I suggest buying 5200 put option available at 52 for a target of 80 in next 2 days and a stop loss of 45.

Happy Trading :)

How will be tomorrow for the Indian stock market?

As I speak US markets are down by 1.8%. 1.8% down on US is very huge. This slide comes mainly due to the fears of Greece defaulting on its international loans. The news on greece and the worst condition of global economy has been coming in since many days now but Indian markets are not moving in accordance with global markets. This is possibly because of India's own worries of inflation and rising fiscal deficit of the government. Indian markets are waiting with its fingers crossed for the RBI's decision tomorrow. Nifty is oscillating between 5450 and 5550 for over 2 weeks now. Market is uncertain where to go from this range. Today Nifty closed at 5447 which is almost a False closing. Markets might take decisive direction only after RBI's meeting tomorrow.

Tomorrow the whole nation's Industrial and financial establishment will be staring at the News channel to get what the RBI has decided. Expectation is that RBI will increase only 25bps on the rate. Last months RBI meeting surprised everyone when RBI raised rates by 50bps against the expectation of 25bps and markets sold off heavily. Tomorrow traders on the dalal street might be hoping nothing as such happens. 

What if RBI raises rates more than what is expected?

There will be a big sell-off in the magnitute of 2% down on Nifty and sensex. Over the next coming days also the markets will keep going down as Indian markets are due for correction in relation with Global stock markets which have fallen a lot. 

What if RBI doesn't raise rates?

 This will be a sweet surprise and market will go up heavily and it could be in the magnitude of 2% on both Nifty and Sensex. But the chance of this is very very low as the latest inflation data suggests that inflation is still high and uncontrollable.

What if RBI raises rates in line with expectations?

Markets will be satisfied as its expectation is met and markets will go up a bit say at max 1%. But soon traders will look at other important data coming from Europe and US which is negative and market will resume down turn. This sell off will be huge as Indian market were holding up well since 2 weeks whereas all around the world markets were falling.

I predict a level of 5300 on nifty by this month end if RBI raises rates.

Buying Nifty puts tomorrow is the best possible trade for tomorrow.