Live Intraday Calls - 20.09.07
Market outlook
Morgan Stanley stepped into the earnings confessional this morning to report a 17% decline in quarterly profit. The investment broker added that it lost $480 million through its quantitative strategies alone. But the champagne continues to pop on wall street the major as markets extended yesterday\'s Fed-inspired gains the Dow up 76,The S&P 9, the Nasdaq 15.
Overseas markets were also broadly higher yesterday with Shanghai \'s Composite the lone decliner The Hang Seng stole Shanghai\'s thunder to close at its own record high after the Hong Kong Monetary Authority cut interest rates by half a percentage point to 6.25% before the start of Wednesday\'s session. In Japan, the central bank decided to hold its own interest rates steady at 0.5% .
The U.S. dollar was perhaps the lone decliner amid Tuesday\'s rate-cut-happy session, sliding to a new record low against the euro and posting significant declines against most of its other major rivals, as well. Oil remains at 82$ , Gold adding $5.80 to close at $729.50 an ounce. . Other metals were also higher, with silver climbing 18 cents to $13.105 an ounce and copper closing at $3.5755 a pound, up 3.7%
Yes, we admit we got the intensity of the Asian rally wrong as it blasted through resistances. The Hangseng was expected on the back of the rate cut from the HKMA but local markets still give you the sense that something is not quite right .Back home,the high yielders rallied like there was no tomorrow on the perception that money will roar into EM\'s! Scary to say the least...considering it comes from stalwarts on the street. ?
A market watcher mentioned that the Fed\'s move was not about equities and more about systemic crisis and LIBOR concerns and many others wisely pointed the Fed primarily is concerned with the credit markets... fair enough.
But as another watcher puts it ...and I quote " Those that do understand just how the global economy works have now been given the tools to pump and dump and to retire to that fuhrer bunker with funds intact to await tomorrow. Like Rome, while the heroes partied, the big boys left town (with their gold and other belongings) and by morning, it was all over. Bailout Ben\'s cut will become known as Ben\'s Betrayal." end quote .
Is this is the last gasp of the sucker\'s rally or is there genuine strength ? Was the 666 rally a bit like Yuvraj Singh\'s sixers - just for the day?Give it a day look for signals that the worm is turning. Till then we abstain from taking home any positions except the puts we bought on the Nifty.
Asia mixed so no great cues from there . Flat to sideways session expected with bias towards profit taking. Support 16120/4650 Resistance 16540/ 4775. PCR 1.65 . Weak below / strong above 4735 Nifty Fut
Failure to correct at the 76% retracement level positive news from overseas saw the Sensex gap up to the 100% retracement level of the fall at 16140 and continue to trend higher for the day. We now have a 468 point gap on the sensex from 15669 ( previous close ) to 16137 ( open) The. Nifty gapped up at 4665 and moved upwards right through the day closing with 4% gains. Interestingly, check the uptick stocks most closed well below their averages for the day . Add to that despite strong inflows from FII\'s provisional figures indicate + 2500 crores , the PCR jumped from 1.53 to 1.65 indicating a clear tilt towards the bears.
The wave extension is in momentum and increased volatility going ahead is not ruled out. Put quite simply there is a gap on the charts and it has to close for the rally to sustain.
The Left impasse continues pushed to Oct 5th /Oil is still at 81$/ the banking and sugar pack have rallied on anticipated news flow. Does the follow through buying come if so, we will rock higher , if not expect gains to be shed substantially.
High Risk/ High Reward
Nifty Sep Fut - Trading Range 4707-4767. Above 4735 Target 4762/4797 Below 4735 support 4707/4682. Sell the break of 4735 stop 4755 Target 4707/ 4682 or lower.
Swing trades
FTech Sept Fut Sell rallies stop 2570 Target 2470 or lower
Sesa Goa Sept Fut Buy above 2220 stop 2198 target 2298
MCDowell Holdings Buy above 250 or buy declines stop 235 Target 275+
Hind Zinc Buy above 733 stop 700 Target 755/790
