Oct 212011

Nifty(5091): Perhaps the most significant price action yesterday was the movement of INR. We have already seen during this results season how the treasury departments of many companies are so ill-prepared for the weakness. TCS and Bajaj Auto are glaring examples.

INR - triangle breakout

Now with the rupee set for further weakness to 52 the problems are going to compound. Use a stop below 48.6/48.3 as a stop if you are going to play for the short-term.

So far Nifty has been all over the place this week, probably the currency weakness is coming at the right time and can provide the kicker needed to provide the short-term trend shift. The zone of 5125-48 should not crossed in today’s session, if it does, this market is still not YET ready to go down.

As pointed out yesterday on CNBC, if the Euro drops below 1.3670 it will be a good confirmation signal that the stock markets including Nifty are heading lower. Incidentally, the low on Euro yesterday was 1.3672!!

Keep an eye on L&T in today’s session. This stock has a potential to surprise to the downside given the position at which it is in charts. Yes I did say it might spend time between 1450 and 1300 before heading lower (in the comments section). But be prepared, today it is set to announce its results.

LT -Daily Charts

The clue comes from wave 4 shown on charts. It is just a couple of points above 25% retracement. That is a very weak signal. If the wave 4 has ended here, the next wave 5 push should take it to at-least 1235. Either use 1450 as a hard stop (punch it in the system) or play an Out of the money November put or just sit out.

 Posted by at 3:08 am

  22 Responses to “India pre-market Oct 21st”

  1. Dear Jai,

    With Rupee heading towards 52, does it decreases WIPRO’s chances of coming down?

    Best Regards – Parag

    • There is no 1 to 1 correlation for IT stocks and rupee weakness. In fact, in the last 3 years a weak rupee has been bad for IT companies. As I have said in my note, the treasury department of many Indian companies are going to hand huge forex losses due to bad hedges. If Rupee is at 51-52 region by end of month, which is when Wipro reports, Im sure the hedges will be a big disaster.

  2. LT Results have come out better than expected and the stock has bounced off from its days low. Should we short around this level.

  3. hi
    since your view on market is bearish, and we have gone long on ambuja will it swim against the tide? after L & T positive result do we still hold the shorts

    • Guys please step back and do things unemotionally. Not just you Shabbir. See what has happened. Tanked to new low after the bounce. Stop respected. 1344 would you take profits now? 🙂

      Ambuja has been a outperformer over the term. So take it easy.


      • jai
        with all due respect i am not doubting your expertise, the anxiety is because of bit of a communication gap, since there is a problem accessing your site, would have been better if there was a sms based, or other faster communication

        • Shabbir,

          Understand your anxiety completely. Obviously, the entire morning note cannot be sent as sms. What can be sent as sms is being sent(I’m sure you got one today). If you use Iphone/Ipad or Blackberry or Android or windows phone or Nokia smartphones (like S40), we can be connected through whatsapp.

          Every morning, between 8:15-8:45 IST, the pre-market note will be posted. So make sure you check the site around that time.

          Have a good weekend.

  4. Dear Jai,

    Excellent call.I bought Novemeber Puts to hedge my Dads ESOP.The 1350 Put at 31, now trading at 60 i think.Wont sqaure it till your target is achieved.

    Rahul T

  5. Jai,

    Great call on L&T. Made a good trade. Thanks for your help.


  6. My view:

    When Jai gives a call or a view it is upto us to trade to the best of our ability. It is possible we may make mistakes but we have to learn from them. Also, one should never aim for the highest or the lowest rate. Take profits/losses as we are comfortable. It is after all our money we are trading with.

    As an example I would like to submit my trades in LT for the day: The view is Jai’s which he had given in the morning to all of us – the trades are mine:

    Sold futures at 1390 in the morning and held till end of day with stoploss at 1452.50 – squared off at 1335.
    Bot 1350 Puts also in the morning which I am holding.

    In between additionally traded as follows:
    Sold at 1390 bot at 1383. (Profit)
    Bot at 1402 sold at 1411. (Profit)
    Bot at 1405 sold at 1396. (Loss)
    Sold at 1388 bot at 1397. (Loss)
    Bot double at 1404 sold at 1416. (Profit)
    Sold double at 1388 bot at 1381 and 1372. (Profit)
    Sold quadruple at 1368 bot at 1360, 1350, 1340 and 1332 (Profit).

    Happy Trading to all. Have a good and rested weekend. Keep in mind Tuesday and Wednesday are both big days.

  7. hai

    pls send sms on important calls.its because i have an option in trading in mobile .
    very good call
    thz jai

  8. Hi Jai,

    Have u checked the charts of Shanghai …. yesterday i think it made multiyear low and broken 2011 and 2010 lows and gone to very close of 2009 lows !!!!! 🙂 ..It looks like fallen dragon….Is BRIC’s story coming to end which lasted for almost 10 yrs now….. Is this the shape of things to come in india too…..

    What exactly is happening in china… is this hard landing as mentioned in media is true…. may be you have better knowledge being in singapore…. pls enlighten us with ur comments on this..

    Yesterday results of few companies and commentry of managements made me feel real jittery…I think all the boarders here shd be very careful …… what is ur advise as we all have stocks also in portfolio.

    Vipan Gupta

    • Dear Vipan Gupta,
      Yes, I have been following it quite closely. Whether it is coming to an end or not, the picture is definitely not pretty. Shanghai composite will atleast do 2100 if not 1500 and change. It is possibly in its powerful third wave on weekly charts.

      The data that is coming out of China is fully “managed”. So the smart guys are actually measuring the number of ghost towns by the electricity usage etc and other unconventional methods to see if the govt data matches 🙂 Long story short – such measures are revealing startling data. Hard landing for sure.


  9. Dear Jai,

    The global markets are in no mood to give up their gains.The Dow has given the highest closing in 3 months i guess.With a lot of important events lined up this week and nobody wants to believe that the Nifty can actually rally to 5500, can that not be a possibility? Do give me your precious thoughts on this.Some directional move may come in the next 2 weeks, how to play it if we do not have an idea where it is headed ? And in which direction will be your bias looking at the global markets?

    Rahul T

  10. Hi Jai,

    I also would like to say the same thing as sara2002. Please send sms on important calls. I may add that i have not got any sms so far after subscribing though my number is not in any blocked list. For example, I am getting regular automated sms from my broking firm for instance without any hitch


    • Dear Desikan,
      SMS delivery status for your number have been coming back as delivered. Please check if ur incoming messages are under “clickatell” by any chance.

  11. Jai –

    Any thoughts on Raymond. The trend appears to have started reversing .. or is it too soon to short?


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