US BailOut effect

The US  Financial Bailout was just like and injection given to the dying patient; the patient survives but if you are expecting the patient to get up and start running immediately, you are then just fooling your self. How do the fundamentals change within the Day? we have seen yesterday the market was confused it was moving up and down and up and down didn't knew where to go. As the effect of injection goes out after some time, i see the effect of Bailout injection also going out completely today.

I believe we should keep buying for long term only and in small small quantity. We should research and then buy the stocks which have more potential to grow in future rather than just buying the current Blue Chip companies.I feel investing in power companies which are going to get benefit from nuclear energy would be the good deals to buy now. I suggest NTPC,Rolta,GVK Power,BHEL among the some which would get benefit out of this deal.

I guess because of the good policies and actions of RBI regulation the PSU banks are having the least exposure to the bad mortgage debts and are least affected by the big falls seen in the market currently.So in coming day i think the PSU banking stocks will ride, but there is exposure in Private sector banks and bank like ICICI and other banks which have exposure will definitely see the effect of the US fall. On the Banking index technically i see the inverse head and shoulder in picture but unless the neck line is crossed it won't move up and it is good for pattern to complete because some times incomplete pattern are dangerous.

Get Ready for the Big Fall today, its time for all bears to celebrate.

Financial turmoil in US in short……

IT all began with the sub-prime crisis. 

If you lost you money in the market crash of January 2008, here's the route to your loss, in chronological order.

2001-2005: House prices in the US begin to rise rapidly. Banks lend aggressively and create a sub prime industry.

Sub-prime lending refers to lending (at slightly higher interest rates) to people who may not be eligible for a loan under normal circumstances. Maybe they don’t have a regular job or income, or have defaulted in the past. 

Banks traditionally did not lend to such people due to high risk of default. But since these loans were mortgaged against property and property prices were rising continuously, banks started doing so. If customers defaulted, they good sell the mortgaged property.

2005: The booming housing market halted abruptly in many parts of the US.

2006: Prices are flat, home sales fall.

February 2007: Sub-prime industry collapses in the US; more than 25 sub-prime lenders declare bankruptcy, announce significant losses, or put themselves up for sale.

While they were lending, banks did not factor in the possibility of a fall in property prices. When the Federal Bank (the US equivalent of RBI) started increasing interest rates, the sub-prime borrowers started defaulting and banks started selling off the mortgaged properties. As more and more properties came into the market for selling, the property prices fell.

August 2007: Many leading mortgage lenders in the US filed for bankruptcy

March 2008: Bear Sterns falls.

September 2008: Lehman Brothers file for bankruptcy. Merrill Lynch sells off to Bank of America. 

Between 2001 and 2006, the US financial markets had developed a new product – a bond securitised against the mortgages.

In simple terms it means that the mortgage banks borrowed money against the mortgages on the condition that they would repay to lenders as soon as they recovered their mortgages. The lenders in this case were financial institutions (like Bear Sterns, Lehman and Merril Lynch) who in turn sold retail bonds to individuals. 

Sadly, the repayment never happened. And institutions like Bear Sterns, Lehman, Merrill Lynch and AIG were the casualties. Since the mortgage was not honoured, the banks could not repay these financial institutions who in turn could not repay retail investors.

Get Ready to Short ....

The market is just bouncing back after the continuous fall so be ready for the another fall may be on Monday end of day or from Tuesday till the expire of the month. May be we can see 3850-3900 on the expiry date. Today Dow made a good 410 point rally also on SGXnifty we closed quite +ve. But there are rumors that the Short selling can be banned so wait and watch.

Intra day can buy any stock all good.

 

Nuclear waiver sentiments went off in a Day

There is support at 4200 level which if broken the market will be cheered by Bears and then we will see a rally down .... Rupee is getting weaker and weaker against $ ... for today i think that market will bounce back today against last todays fall but overall the market seems to be bearish. I feel once we complete the rally downwards then there we would bottom out and then only we will take the fresh ride.

Nifty Jumping Back

Yesterday Nifty was outstanding .... we have cleared the 4500 mark so it seems that we are now going towards the 4620 level which should be the next target. The oil is drifting down so is seems that the 4600-4700 level should be easily achievable . Happy trading ...