Basics of Sensex

SENSEX - The Barometer of Indian Capital Markets

Market will Bounce Back...

The market opened weak and sustained selling pressure saw the benchmark indices, the Nifty and Sensex, lose their crucial support levels of 5,150 and 17,300, respectively. The spot Nifty closed at 5,094 while January futures closed at almost 10 points discount on profit-taking and short build-up.

Put and call options data suggest that the 5300 call continues to hold the maximum open interest (8.18 million shares) while the 5,200 call has added significantly high open interest in the last couple of days. The means the Nifty has resistance at 5,300 and 5,200, which was a strong support, is turning into a strong resistance level. The 5,000 put hold the highest open interest (6.48 million shares), indicating strong support base for the index. The India Volatility Index (IVX) rose 5.43 per cent to 23.20 on account of increase in premium for put options, indicating fresh correction.

Technically, the market has been trading in choppy waters due to formation of a Doji pattern and narrow trading range in the January series. The Nifty slipped below 5,180 and closed at 5,091, indicating a downward breakout

Heavy selling in opening trades saw the Nifty break the psychological 5,000-mark, but regain it at close on good quarterly numbers from market heavyweights

The Sensex opened in the red on weak cues from Asian markets. The index slipped to a low of 16,608 - falling below the 17K mark after 19 trading sessions. Strong quarterly numbers from Reliance and ITC lifted market sentiment and the index recovered to touch a high of 17,000 - up 392 points from the day's low. However, the index eventually ended at 16,860 - down 191 points (1%).

The NSE Nifty, which, broke the psychological the 5,000-mark and touched a low of 4,955, recovered partially and ended with a loss of 58 points (1%) to 5,036.

The BSE FMCG index, led by heavyweight ITC, bucked overall trend and jumped 1.5% to 2,772. ITC added 2% to Rs 249 following a 27% rise in Q3 net at Rs 1,144 crore.

However, Q3 results helped some stocks to gain in an otherwise volatile market. BHEL gained 3.2% at Rs 2,373 on a 35% jump in the third quarter on FY10.

Market heavyweight, Reliance ended flat at Rs 1,053. Earlier in the day, the company announced a 16% increase in net in the quarter ended December 2009. The net profit stood at Rs 4,008 crore as compared to Rs 3,462 crore in the year ago period.

SpiceJet, Jubilant Organosys and Visa Steel gained on turnaround results in Q3.

Some Tips..

Market ends at positive of last 20 month. So many of my frineds wanted to know about stock market so this might be useful for them.

Stock Market:

First you have to understand what is stock market. If you are not knowing any thing, then before investing, observe market for few days. Monitor every up down movements. Make a list of some stocks and observe chart regularly. After that you will be able to understand when to invest.

Entry and Exit:

This is most important. Believe me, I lost my profit so many times because of my mistake in past. Entry and Exit timings are most important in stock market. Always enter the market or in any stock at lower level. And exit at higher level. Now if you buy something and market crashes, thn just hold for some time. Never exit at lower level. Because if you will exit, market will go up and you will buy same stock again at higher levels.

Support and Resistance:

Always look for Support and Resistance levels. Support levels are lower levels which holds stock price at lower level. And resistance is higher levels which dont allow prices to go high.

How to know Support and Resistance??

Observe stock for some days. These levels can easily identified. Lets take an example of Tata Steel. From So many days, if you observe daily chart, it goes up to 585 and can not go higher than that. After some days it goes up yo 550 but stop going down from this level. This process repeated so many times. It goes at 585 for 3-4 times and 550 at 2-3 times. So in this case 550 is Support and 585 is Resistance.

When to Enter and Exit??

Enter at Support level and Exit at resistance. If Support is broken then it may go further down. So exit immidiate in such case if you can not hold for long time. And exit at Resistance level. If you have hope about breaking resistance then also must book partial profit. If it will break this level, then it will go higher.

Like in above example, Tata steel had broken that resistance so now its price is 615. Now new support level is 600 and new Resistance is 625 so book profit at 625 and again enter at 600 level. That should be strategy.

Bulls Rocks....

After opening with a marginal positive gap, the markets surged on the back of strong cues from the global markets. The Finance Minister's comments - on GDP growth forecast and continuation of the stimulus till Budget - fimed up markets further. The Sensex soared over 500 points to regain the 17,000 level after six trading days

The Finance Minister reiterated that the economy's growth will be at the earlier projected rate of 7.75%.

Global cues also gave a fillip to the Indian bourses. US markets rallied on Tuesday as a better-than-expected home sales data was reported. Asian markets also ended in the green today.

All sectoral indices were in the green as the metal index shone. The index jumped 4% to 17,075. Oil & gas, power, IT and capital goods gained over 3% each.

Reliance was the star performer in trades today and surged 4.6% to Rs 1,066. Other heavyweight - Infosys, ICICI Bank and Larsen & Toubro rallied 3-4% each.

Metal stocks shone. Hindalco soared 8% to Rs 153. Sterlite surged 5% to Rs 847. Tata Steel added 4.5% to Rs 603.

PSU stock NTPC advanced 7% to Rs 230. Relaty stocks - Jaiprakash Associates, Reliance Infrastructure and DLF jumped.

Other gainers included BHEL, Mahindra & Mahindra, HDFC, Tata Motors, TCS and ITC. Reliance Communications, SBI, Wipro, Grasim, Maruti Suzuki and ONGC moved up 1-2% each.

The BSE market breadth was positive. Out of 2,922 stocks traded 1,902 advanced while 927 declined.

FM Announces today...

The government today said the fiscal stimulus given to the industry to combat the adverse impact of the global financial meltdown will not be withdrawn before the Budget to be presented by Finance Minister Pranab Mukherjee in February.

"You have to wait till the budget," the finance minister said, replying to a question, when the government proposes to withdraw the stimulus packages

After the collapse of Lehman Brothers in September 2008, which triggered the global financial crisis, the government had provided three stimulus packages to spur growth in a slowing down economy. These were in tandem with the measures taken by the Reserve Bank of India to make available more liquidity to the cash-starved industry.

The fiscal packages were mainly aimed at sacrificing tax revenue and raising public expenditure with a view to generating more demand for industrial goods.

With the economy recording a growth rate of 7.9 per cent in the second quarter (July-October), it is expected that the government may start withdrawing the stimulus, especially to contain rising fiscal deficit targeted to go up to 6.8 per cent of the Gross Domestic Product by the end of the 2009-10 financial year.

Addressing the captains of the industry here, Mukherjee said, "green shoots (of recovery) are now firmly taking roots. The recent data confirms it".

The factory output has recorded a growth of 10.3 per cent in October, Mukherjee said, referring to the recently Index of Industrial Production (IIP) data.

Besides, the export growth rate turned positive in November, recording a 18 per cent growth after a gap of 13 months.

Also, the mid-year review of economy, tabled in Parliament last week, had said that economic growth rate could exceed 7.75 per cent during the year. The recent growth projection is much higher that 6 to 6.5 per cent estimated earlier by the Reserve Bank of India and the Prime Minister's Economic Advisory Council (PMEAC).

Although the RBI had already kicked off the exit by raising Statutory Liquidity Ratio (SLR), the portion of amount banks put in government securities, by one percentage point to 25 per cent, the finance ministry has been maintaining that the stimulus should continue till there are signs of a sustained recovery

Forex Rate

Following is Forex Rate as on 28-11-2009

Currency Rates  in INR        

Name                                              Rate

Australian Dollar (AUD)                   42.35

British Pound (GBP)                       77.02

Canadian Dollar (CAD)                    43.94

Chinese Yuan (CNY)                       6.83

Danish Krone (DKK)                        9.40

Euro (EUR)                                    69.95

Hong Kong Dollar (HKD)                  6.02

Iraqi Dinar (IQD)                              0.04

Japanese Yen (JPY)                        0.54

Kuwaiti Dinar (KWD)                       163.49

Omani Rial (OMR)                           121.20

Pakistani Rupee (PKR)                     0.56

Qatar Rial (QAR)                             12.82

Saudi Arabian Riyal (SAR)                12.45

Singapore Dollar (SGD)                     33.62

South African Rand (ZAR)                  6.28

Swedish Krona (SEK)                        6.70

Swiss Franc (CHF)                           46.40

UAE Dirham (AED)                           12.71

US Dollar (USD)                                46.68

Great Recovery in Indian Market

Well it was a wonderful day for treaders. Buy on dips and Sell on high is a good strategy in this kind of market. Due to Dubai debt effect, indian market crashed and hit the days low at 16210 down 644 but after that, it ended at 16632 down 222 and nifty at 4941 down 64

As I said in my earlier post, RBI announced that none of indian bank has exposure to Dubai, indian market recovered very sharply under Bank's leadership

Dubai's debt crisis has put Indian equities as well as global markets on fire since yesterday. The crack across the globe emerged when emirate said two of its flagship firms planned to delay repayment of billions of dollars in debt. The markets feared that this debt default could affect other countries as they are trying to recover from global meltdown.

But the benchmark indices as well as European shares discounted most of the news, due to which Indian equities recovered more than 2/3rd of losses in the last couple of hours, led by buying from insurance companies. The Nifty closed the day above 4,900 level while the Sensex above the 16,600 level.