Deflation more dangerous than Inflation

Inflation This term has been the maximum time used by most of the investors, traders, experts and almost everyone related to market. So emphasizing on this will be just a wastage of time, and straightway i will discuss the impact.

Inflation

Inflation certainly have a negative impact if it raises beyond the purchasing capacity but to some extent it is required for the ecomonic development and to maintain the strength of currency.

Deflation

Major topic to discuss is about deflation which is certainly more dangerous to the economy as if the purchasing power increases and the product is less in that ratio the strength of currency decreases leading to a topple in macro- economic system.

Let me add a story there were two people one was habitual drinker and lost everything but he had a collection of bottles of the drink, other was a miser businessman and made heavy cash by its business, suddenly there were deflation and all the cash collected by businessman was much much less valued than the bottles collected by the drinker.

Several countries like Japan, Brazil have a very high inflation number but developing very fast and the market are on the run, Zimbabwe has very very high inflation no.

Affect of Inflation and deflation on economy

Conclusion is that inflation is certainly not good due to variation in the income group, but deflation is much more dangerous as the value of your money gets down. Thus a balanced inflation rate is always good for growth of the countries economy.

HAPPY INVESTING

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Technical Analysis of stocks

Market moves on speculations and technical analysis, there is no way to study the speculations than to be a regular watcher of news and sites at net but there are some way to analyze a stock technically.
Technical analysis of a stock is based on the following

ATR (Average True Range

ATR is how much a stock moves in a day. It can be calculated from the previous close to the next day’s high or low. Or it can be calculated from the range form high to low in a single day. Whichever is greater is the “true range.”

MACD (Moving Average Convergence or Divergence)

It is a momentum indicator showing the momentum which is indicated for up ward move or downward trend by relating the average of price movement of the stock.

The MACD is the difference between a 26-day and 12-day exponential moving average.
The MACD on 9 days movement indicate a buy or sell opportunities.

RSI (Relative Strength Index)

By seeing the history of a stock and present performance the strength is analyzed.
50 is the index and 30-70 indicates the flattish movement or constant movement while above 70 indicates excess buying and below 30 indicates excess selling.

HAPPY INVESTING

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Support and Resistance in Stock Market

Often it the market we come to a word called support and resistance. This article explains the exact meaning and how to estimate it.

Support is the point where buying power faces difficulty in the in the current downtrend and resistance is when the selling power faces difficulty in the current uptrend. In easier term

Support is the price point where new lows cease and prices begin to once again rise. Prices will approach the line of support from above. And Resistance is the price point where new highs cease and prices should revert and begin to fall. Prices will approach the line of resistance from below.

Factors Responsible for Support and Resistance of a stock

Market psychology is the most important factor for support and resistance based on the P/E and EPS the valuation of a share is calculated and any ups and down in them depends upon.

But when market runs the traders remember where prices went up so they purchase at support, and they remember when prices declined so they sell at resistance. Their emotional attachment to prices creates these levels of support and resistance. Fear and greed causes them to buy and sell at these points.

How to Derive support and Resistance of stocks

If we draw an imaginary chart of the movement of a stock the area of maximum congestion while going up can be assumed as resistance and the area of maximum congestion while falling downward can be assumed support.

For example if a stock ranges between 1000-1200 and during its movement we have seen that maximum time it ran at 1020 and moved up and maximum time when it went to 1240 if fell. So the support may be derived at 1020 and resistance at 1240.

Advice to Investors

In the current volatile market it is risky to derive any conclusive support or resistance so one should be careful while watching the movement of a stock.

HAPPY INVESTING

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Market Today on 24.10.08

As I had mentioned market breeched it 3000 crucial mark in Nifty for the first time since 24July 2006. It was again the bad global cue doing all the damage, today we may see a flat opening with an extensive volatility. Nifty may test its 2900 support but may not likely breech it. Dowjones closed in positive and Asian market are expected to have some recovery. As FII has been told to reverse its short position, some short covering is expected which may lead to a positive direction, again Nifty may hold it 3000 mark and Sensex may reach 10000 level. Inflation has further cooled down which may add advantage to the market.
The total traded turnover has quite improved; stood at Rs 67,918.19 crore. This includes Rs 10,544.45 crore from NSE Cash segment, Rs 53,624.95 crore from NSE F&O and balance Rs 3,748.79 crore from BSE Cash segment.
Nifty support is at 2900 and then at 2600 technically, and we may see Nifty touching 2900 today. Similarly in Sensex 9870 is the support level and next support is at 9400. Market range whole day is expected to be between 2890-3100 in nifty and 9600-10200 in Sensex.


HOT NEWS
*FII has been asked to reverse their short position, some short covering is expected.
*Inflation came in at 11.07% for week-ended October 11 as compared to 11.44% (WoW).
*Reliance Industries Q2 FY09 net profit was up 7.4% at Rs 4,122 crore as compared to Rs 3,837 crore. Net sales were up 39.8% or Rs 44,787 crore as against Rs 32,043 crore. Gross refining margins stood at USD 13.4 per barrel vs USD 15.4 per barrel QoQ..
*Crude oil is at about 69 $ per barrel. Support at 60 $ may be seen. Fuel price cut is on the card.
Sectors to Watch-
Banks, Realty may gain after initial jolt, Oil and Gas may have a good day. Auto will be firm. Fertilizers will have a fertile day. Power and Infrastructure may gain. FMCG, Consumer durables and Healthcare is expected to remain flat.
Stock to Watch-
On the upside we may see Aban offshore, Reliance Industries, RPL, Axis Bank, ICICI bank and Jindal steel.
On down side we may see Ranbaxy, India infoline and Tata motors.

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Market Today on 22.10.08

Though we had two striaght sessions closing in green but the volatility and market breath was not favorable at all, in spite of all necessary measures we have witnessed a time when market went in Red even in last two days, global cues remains the key which indicates a gap down opening. Nifty the gap may not be big but nifty is likely to open 30-40 points down and may fall further, the way European market crumbled today after a good run, indicates further trouble, baring a few companies Q2 numbers are not very inspiring clearly indicating an economic slowdown.
The total turnover was at 64,789.63 crore. This includes Rs 11,069.48 crore from the NSE Cash segment, Rs 49,845.05 crore from the NSE F&O and the balance Rs 3,875.10 from the BSE Cash segment
Nifty support is at 3200 and then at 2900 technically, but we may not see breeching 3000 at least for this week. Similarly in Sensex 9870 is the support level. Market range whole day is expected to be between 3100-3300 in nifty and 10100-10800 in Sensex.


HOT NEWS
*Both RNRL and RIL agrees for Indian Government to be the third party in the case.
*Punj Lloyd wins a contract at Indonesia.
*JP Associates piled an exceptional Q2 numbers and profit is almost doubled, while Chennai Petro number came out to be in loss.
*Short selling may get a ban, Sebi will scrutinise the P-Note short selling data for sometime before arriving at a decision.
*ICICI Prudential shows positive growth rates despite financial crisis.
Sectors to Watch-
There may be profit booking in Realty, Autos and Metals, Capital goods and Consumer durables may too see a down fall, Banks may remain firm for one more day, Oil and Gas sector will face pressure after initial gain.
Stock to Watch-
On the upside we may see Reliance Capital, Indiainfoline, ICICI bank and JP Associates.
On down side we may see JSPL, DLF, Reliance Industries and Sun Pharma

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Market today on 20.10.2008

After the end of another bad week when Sensex breeched its 10000 level for the first time since July 2006, we are heading towards another week, the start or the opening may be flat and Nifty may approach to breech its 3000 level but as the market is oversold, some good news like cut in CRR by 100 bps may show its affect and some buying may take place in selected sector. US market having a good last week may be a positive factor for us. But if Nifty breeches 3000 level significantly we may head towards another blow, volatility will be on extreme as usual.
Total market turnover on Friday stood at Rs 58,370.46 crore as against Rs 72,822.47 crore on Thursday. This includes Rs 10,477.78 crore from NSE Cash segment, Rs 43,767.13 crore from NSE F&O segment and balance Rs 4,125.55 crore from BSE Cash segment.
Nifty support is at 2900 and then at 2800 technically, but we may see some buying at 3000 level. Similarly in Sensex 9870 is the support level. Market range whole day is expected to be between 3000-3200 in nifty and 9800-10200 in Sensex.

HOT NEWS
*Sensex breeched 10000 level for the first time since July 2006.
*Indication for a cut in Repo rate is on the floor of news.
*Infosys is still an over weight as per Morgan Stanley.
*Mphasis came out with fair Q2 FY 09 number.
Sectors to Watch-
Healthcare and Auto may remain flat, Banks and Realty may gain after initial jolt. Metals and IT may still remain in pressure. Capital goods may recover. Oil and Gas may enjoy fall in crude specially Oil marketting Companies.
Stock to Watch-
On the upside we may see DCB, Axis bank, Reliance Capital, Aban offshore, Mphasis and Reliance Industries.
On down side we may see Satyam, Indiainfoline and JSPL.

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Market Today on 16.10.2008

A further chop in CRR will certainly be a morale boosting but the immediate effect doesn’t look on the scene as the global market is crumbling and our Market is following the same foot step, we may see a flat opening which in turn may proceed in green but the selling pressure will soon start as the investors not willing a single oppurtunity to sell and book profit, so some fresh shorting may be on the card leading to another fresh day with same old story. Though fall may not be freely but negative biasness will certainly be there. Participation is still very poor as the turn over indicates and it may take time to recover from this trauma.
Turnover traded in markets stood at Rs 57,406.46 crore. This includes Rs 9,838.99 crore from NSE Cash segment, Rs 43,996.07 crore from NSE F&O and balance Rs 3,571.40 crore from BSE Cash segment.
Support of 3500 in Nifty was broken as expected and the next support is at 3240 and then at 2900. Similarly in Sensex 10600 and then 9870 is the next two support level. Market range whole day is expected to be between 3240-3450 in nifty and 10300-11300 in Sensex.

HOT NEWS
*RBI cuts CRR by 100 bps to 6.5% to infuse more liquidity in market. Bankers and MF welcomed the move.
*RBI may also provide 25000 Crores to lending institutions.
*L & T came out with poor number in Q2 FY09. Margin was 8.8% vs 9%.
*Rel Cap to synergise insurance, MF, Money products.
Sectors to Watch-
Banks, Realty, Capital goods may be flat with positive biasness on CRR cut, while Metal still looks weak, Infrastructure will be under pressure on L&T numbers, IT and Telecom will be on negative side on crumbling US market.
Stock to Watch-
On the upside we may see Reliance Capital, DLF, SBI, Bank of India and Hero Honda
On down side we may see JSPL, Infosys, RCOM, TCS and Tata Steel.

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