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1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Snapshot of the previous issues on market outlook A lot can happen over 3 months Is this a pre-budget rally in the markets? Most likely market move in very short term? What is Smart money, who are Market-makers? How we recognized the end of a rally in Nov10? Expected market move for next 4 months Expect bottom around Nifty 5000 & SENSEX 16K Top 10 stocks to buy in SIP Way from Mar-June11 Lifetime Opportunity for HNI/NRI Clients Next market peak expected during Jan-Mar13 Economic Cycle, Market Cycle, and Business Cycle Sectors performing well during diff phases of EC Expect fall in DOW ahead of QE2 ending in June11 U.S. market qualifies as a bubble ready to burst Historically, global markets do tend to move in tandem Pricing the market [Price/Earning Ratio] Technical Views : Budget Rally may be short lived Pain is not over on a medium term perspective Money Making Mantras
For health check of your portfolio, please e-mail your portfolio to Info@hbjcapital.com or Speak to our research analyst.
Nov10 Issue
We issued a CAUTION NOTE / RED ALERTS (to all our members) anticipating correction of 20-25% (from peak) in the Indian markets during next 6 month period. It was strongly recommended to keep 4050% cash in hand.Till today, we have already seen correction of 15-17% during last 3 months.
Dec10 Issue It was communicated that bounce back in Dec10 will be an opportunity to raise cash levels
& one should avoid any fresh buying, we also anticipated the fall in Jan11 onward. We re-iterated our stand on holding 40-50% cash in hand in order to take advantage of ongoing correction. So far market moves were in line with our views & we are expecting that our members are in good cash positions. Time has come to start looking for best investment opportunities/stocks available @ huge discount during next 4-6 months time frame.
Finally our conviction has come true - If Indian markets were to be stopped, the show stopper has to be from with in. And now, there are show stoppers everywhere around. While most of the downtrend can be directly or indirectly attributed to the reasons with in India, the attractiveness towards developed markets has also been a key reason. But then, even this attraction comes from the unattractiveness of high inflation, high interest rates, lower geo political stability in the emerging markets or developing nations. As we all know, trend comes first followed by news, in the current scenarios market started falling from Nov10 onwards followed by lots of bad news.
The dark secret of the stock market - Identify and Follow The Smart Money
To put it simply, a professional trader can see the balance of supply and demand far better than anyone else can. However, you do need to recognize that professional traders can do a number of things to better their trading positions: Gapping up or gapping down, shake-outs, testing, and up-thrusts are all money making maneuvers helping the marketmakers (liquidity provider) to trade successfully, at your expense it matters not to them, as they do not even know you. You hear little of these activities, because these traders shun publicity. The last thing they want is for you or anybody else to know that a stock is under accumulation or distribution.They have to keep their activities as secret as possible. They have been known to go to the extremes, producing false rumors (which is far more common than you would perhaps believe), as well as actively selling the stock in the open, but secretly buying it all back, and more, via other routes. Top professional traders understand how to read the interrelationship between volume and price action. They also understand human psychology. They know most traders are controlled in varying degrees by the TWO FEARS: The fear of missing out and the fear of losses.
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Ultra-high volume + Narrow spread + Upward move in the market during Nov10 was a clear sign for trend reversal.
In Systematic investment plan (SIP), an investor dont need to put a lot of amount at one time but require small amounts on a monthly basis. We advice all our members to start investing from March to June 2011 in systemic manner every month. Restrictive Monetary Policy Leads to Declining Stock Markets History shows that most bull markets die when central banks shift to a restrictive policy.Yet rising food prices are of greater concern than declining stock prices for emerging economies politicians. Therefore, we expect even more interest rate hikes to come, no matter how the stock markets react. So instead of propping up stock prices like Ben Bernankes Federal Reserve has done, emerging market central banks have made controlling inflation a top priority. Opportunity in the Making in the emerging economy.. At the end of 2008 emerging economies stock markets showed relative strength compared to the U.S. and Europe. They didnt fall to new lows in March 2009. This relative strength was the harbinger for the huge rally that was to come. Now they exhibit relative weakness and are not joining the U.S. and Europe in making new cyclical highs. And todays relative weakness may very well turn out to be a harbinger of the next cyclical bear market in the offing which is nothing but the opportunity in making. The stock indices of Hong Kong, India, and Brazil have just hit key support levels. Consequently, a short-term rally may pop up. If so, you should consider it an opportunity to profit from the continuation of what looks like the early part of a cyclical bear market.
Dear HNI/NRI Members, We are glad to inform you that we have an opportunity in hand for you. HBJ Capital on its journey towards becoming India #1 Equity Research & Investment Company, has launching one of the most innovative initiative especially designed for High Net worth Individuals. Just to brief you, the initiative called HBJ CAPITAL VENTURES LLP is a partnership firm with limited liability based on the similar structure followed by ace investors Warren Buffett. HBJ Capital Services Pvt. Ltd will be one of the designated partners of this firm along with other partners who will bring in funds for the purpose of investment. By Feb11 end, we are going to close our first round of fund, an asset under mgmt INR 5 CR (minimum investment amount of Rs50 Lacs from each partner). This is one of the highest priority ventures for us & also a growth engine of HBJ Capital, hence the success of LLP is not only our motive but it is our religion. We would like to thank all the partners who has contributed & became an integral part of LLP. If you are interested and willing to know more about this fund. Please drop an email to Info@hbjcapital.com Regards, Kumar Harendra, CEO, HBJ Capital
Economic Confidence Model shows maximum extent of weakness in real economy by mid June 2011. Usually Markets moves 3 to 9 months ahead of real economy hence as we predicted earlier in Nov & Dec10 reports, one can see bearish period in the market from Jan to June 2011. Just to brief you on Martin Armstrong who discovered ECM. Armstrong is most known for being the developer of the Economic Pi Cycle, also known as Economic Confidence Cycle, that aims to predict major turning points in the market. He may be one of the most interesting and out-of-the-box thinkers on the markets. He supposedly predicted the 1987 crash, the Japanese crash and the top of our real estate market to the day.
The Fed continues its plan to inflate the equity markets as part of QE2, and it has said that outright several times, so manipulation is now a Fed tool and that puts the US on par with the Zimbabwe market. You don`t want to be standing when the musical chairs game stops the music. Markets go from fear to greed and economists/politicians are always debating and predicting Deflation or Inflation. Bernanke was significantly worried about Deflation 6-8 weeks ago and now that agricultural commodities have continued to rise the politicians are all over him about inflation. The bottom line is that QE 2 has failed to stop interest from rising, because he can`t fool the bond market with his jaw boning and Treasury Bond buybacks, but it has inflated the equity markets, but now he is getting heat to end the game in June which is the QE 2 end date unless extended. Mid-June happens to be a very significant long term Pi date so it is a key time period in the business cycle and very often for the market[s].
Expect S&P 500 to correct 12% from its current peak between March to June 2011
As we are nearing the end of FY 11, it will be safe to say that markets are currently trading at 18 times FY 11 earnings, while going forward the direction of SENSEX will also be guided by how FY 12 earnings shape up. Talking about FY 12, we will be again very conservative in our estimates at an expected EPS of 1150 assuming a 15% growth in earnings (UBS SECURITIES had predicted SENSEX earnings at 1345 for FY 12 and similarly other brokerage houses are suggesting in the range of 1200-1300). As per the long term trend, the markets on an average trade at a multiple of 16 on 1 year forward earnings. So, we are at just about those levels (1150*16 = 18,400) but with Global and Indian macro economic scenario not being very favorable, we expect the market to trade with a downward bias in the range of 13-15 times earnings i.e. 15,000-17,250. Considering the above range in perspective, we would suggest everyone to start investing in SIP manner in some of the best recommendations suggested by us at around SENSEX level of 16,800-17,000 and increase the allocation towards equity as we move southward. The above strategy is being suggested in the wake of the fact that bottom of the market can never be predicted and thus its always better to go SIP way when one finds valuations apt.
The equity markets are considered to be the leading indicator ahead of the domestic as well as world economy. The Indian bourses succumbed to the complex macroeconomic factors popping over the domestic horizon at regular interval. On the other hand, the world economic diaspora performed relatively better than expected, providing a conducive environment to attempt for all-time high on the charts.
In the shorter time frame there will always be some minor corrections while some major corrections but if you are ready to remain invested in good companies bought at good valuations, mark our words, you are already a winner in the stock market because if a small saver can multiply thousand rupees eight times vis-a-vis two times, we can imagine the kind of difference it can make to his post-retirement life, standard of living and also to that of his future generations. It is a pity, that today only 4% of the savings of Indian households get invested in equities. We however hope that people realize the potential of equities over a period of time and also benefit from the same.
Your Team
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The recommendation made herein does not constitute an offer to sell or solicitation to buy any of the securities mentioned. No representation can be made that recommendation contained herein will be profitable or that they will not result in loss. Information obtained is deemed to be reliable but do not guarantee its accuracy and completeness. Readers using the information contained herein are solely responsible for their action. HBJ Capital, or its representative will not be liable for the recipients investment decision based on this report. HBJ Capital, officers, directors, employees or its affiliates may or may not hold positions in the companies /stocks mentioned herein.