Stock Observatory India – 2011-04 (April)

 

Commencing from 1st April, 2011

Following are the daily brief on the Indian Stocks and related items. Many of the items being of trading nature, no reply will be posted by the author. While the comment box is open for the readers, but it is meant for the readers to voice their feeling at any time. Kindly use our Confused Mind Clear Answers section to post comments for reply.  All comments are in descending order (date wise)

We are resuming from 11-April-2011

Readers,

We are resuming the old popular series – Indian Stock Observatory – from 11-April-2011. This will be meant for short term traders and also for long term traders who may wish to cash their gains or losses due to subsequent events. We would try to pick up stocks based on last 7 days movements, news or other policy related developments.

We would not write more than 4 lines, similar to Kabir’s Chopai. This is why we have sub titled it “Kalidas Chopai”. We will make a standard format with first line being a header that contains Stock name (in brief), date, time and headline. Last item will be on top.

The headlines will be time based – no sorting. At month end, they will be consolidated and kept in html (searchable) or PDF format. We will also database it in FileMaker program. We will figure out ways to publish this database on web so that it becomes searchable criteria on line. If it is achieved, other html/PDF format will be discontinued.

The comment box is open but we will NOT reply. It will be only one way street. The reason being that day to day movement depends on hosts of factors, previous day’s Dow, current day’s Asian performance ahead of India, currency market movements etc. In short, use our comments on “AS IS WHERE IS” basis. It may be updated twice a day, if required.

There are no guarantees either. Consult your professional adviser, broker or banks before acting on our Chopai. Do it at your own risk. We are sure that this will prove to be as popular with the readers as Confused Mind Clear Answers series. Good luck. –

Kalidas (Anil Selarka)


Stock Observatory India

Ref: ISO/11/17 of 2011-04-30 (India Time 06:30 am) – Markets Closed

Yesterday’s Events and Effects

  • They report that S&P reported higher profits by 22% in last quarter, but this is an eyewash. Many leading companies like GE and Bank of America have reported higher profits in billions of dollars but did not pay a cent in taxes. That is, they could afford to show higher profits to boost the share prices. When home sales are falling, foreclosures are rising, gas prices are rising, unemployment is still strong, wherefrom these companies are reporting earnings.
  • Midwest states, 6 in numbers, faced over 170 tornados in less than 2 days, causing worst ever destructions in decades. Thousands of homes were destroyed. There will be marked increase in unemployment rates in coming month.
  • Midwest states are green bowls of food grains. Alabama state alone produces 120 million chickens, meeting 30% of national requirements. Most of Chicken farms were destroyed. Can you imagine several hundred millions chickens dying within 2 days? There will be marked rise in food prices in United States but Bernanke who consider only inflation numbers without Oil and food prices would say that the inflation is benign.
  • Kalidas was again right on target in that he mentioned few days ago that Gold will rise faster than Silver which is the case now.
  • It is said that more than 2 billion people watched Royal Wedding. Wherefrom they bring this figure we do not know. While people were dying in Alabama in nature’s fury, the Royal Couple was celebrating. Raj Kapoor, the legendary film maker, gifted us a very solid song in Jis Desh mein…”Begani Shaadi mein, Abdullah diwana…”
  • Among western nations, only Germany is doing well with unemployment rates 19 months low. Germany is a sign of stability for entire Europe. Sarkozy, the French President, is more like Vijay Mallya of United Breweries and Kingfisher Airlines. Both love beautiful models.

Stocks:

  • By the time this report reaches you, the Markets are closed except Nikkei. Dow closed up 47 points at 12,810. In my personal opinion, Dow has only 25 to 30 more points to go before it corrects. The driver for Dow push is the local liquidity. T

 

  • Only yesterday, Bank of America, the most desperate banker informed its credit card clients that they would be charged interest rate @30% if there is single default. When the interest rates are low, bank deposits do not even yield 1%, where is the question of levying 30% interest on single default? The American banks are simply f***ing the consumers.

 

  • Do not stay in the market place longer than first week of May, 2011 and take a holiday for about 3 months. Stay long in Gold and Silver however.

 

Currency Market:

  • US$ Index: With US $ plunge continued and once it broke through 73 to almost 72.80, all time low, but rebounded to close at 73.05. We reiterate our yesterday’s view that US$ is slated to lose 5% to breach 69 level. That is full loss of 6%.
  • The currency that rose most was South African Rand (now at 6.56) and Russian Rouble (27.34) which are not tradable in India. Japanese Yen also closed at 81.18. If it breaks 79.35 level, it may shoot up again to 76 level but may correct again thereafter.
  • New Zealand dollar rosé to 0.8092, near term high, with target of minimum 0.92.
  • Rise in Rouble portends higher Palladium price because Russia is the largest producer.
  • Rupee stronger slightly at 44.20. It is having upward bias. You can not anticipate what RBI will do. Gold and Silver prices will therefore move higher in different proportion India too due to exchange rate policy favorable to gold/silver.
  • Commodity Market

GOLD:

  • Gold rosé majestically by $33 at one time before settling at $1556 (after hitting$1570). It has decisively broken on the upside, and our judgement that Gold will rise by $50 to $100 in a single day nearly came through with intra day high up at $in single day.
  • April settlement is on 29/4 with delivery scheduled two days later. Gold is therefor very firm and heading into $1600 within 10 days. Ride the rally.

 

SILVER:

  • Silver is shown at $48.60 but real close was $47.80. It appears that higher close shown is to entice the people to buy Silver at higher level (so that short sellers can sell short) and then bring it down. In all probability, Silver may come down on Monday upto $46 or thereabout which will be a good opportunity to buy. In India, there might be intraday correction to Rs 67,000 to 68,000 intra day only.

Oil prices and Middle East situation:

Oil prices may continue to rise due to higher Euro that translates higher dollar prices. Oil prices may rise by 5% in next few days placing lot of pressure on Subba Rao of RBI to raise the rates again or raise the cash reserve ratio (CRR).

 

Asian Markets today

Closed today due to Saturday. Except Japan

NIKKEI: at 9849 (+157 points)

HANG SENG INDEX, Hong Kong: Closed today

SENSEX/NIFTY: Closed today. Monday may open higher due to muhurut trading for May.

 

Our Observations and Comments

  • Income Tax departments have no other work but to harass the tax payers. It has decided to run after HNI (High Net Worth Individuals) for payment of Wealth Tax which is nothing but a form of “double taxation”. When the wealth is accumulated after payment of Income Tax, why should it be taxed again. Wealth Tax should be abolished.
  • IT department wants to chase all people who have wealth in excess of Rs 30 lakhs. In good city and locale, even the toilet cost over Rs 50 lakhs. When one is pissing, he feel like wetting Rs 50 lakhs. Even Pranab Mujkherji and Manmohan Singh have gone crazy.

Kalidas One Liner

  • nothing today

Kalidas Chopai

PEP = Preferred Entry Point

Stock CMP Rs PEP CMP
NOTHING TODAY. Markets closed so lie down and relax. Spend time with your family
Ref. No. 11/KC/10 Date: 2011.04.30 Target (6M) Rs. SENSEX at

Stock Swap:

None today. Look for Monday edition. There will be no edition on Sunday

OVER


Stock Observatory India

Ref: ISO/11/16 of 2011-04-29 (India Time 06:30 am)

Yesterday’s Events and Effects

Stocks:

Dow rosé by 72 points to close at 12,763. It has only 37 to 72 points to rise further before retreating. The reason for rise is affirmation of FED to retain low dollar policy. Watch more at LIBOR than in USA which is a rigged interest rate market. Dow may see gain to 12,800 when it will be a massive sale. One may buy Put on Dow or S&P at that time, especially 6 months put. Buy Puts to out of money level, say 12,200, 11,800, 11200. The lower the level, higher the length, that is long dated put for farther than market index levels.

Do not stay in the market place longer than first week of May, 2011 and take a holiday for about 3 months. Stay long in Gold and Silver however.

Currency Market:

  • US$ Index: With US $ plunge continued and once it broke through 73 to almost 72.80, all time low, but rebounded to close at 73.07. We reiterate our yesterday’s view that US$ is slated to lose 5% to breach 69 level. That is full loss of 6%. The currency that may rise most will be South African Rand (now at 6.59) and Russian Rouble (27.83) which are not tradable in India. They are still firm and holding their higher level.
  • New Zealand dollar is still a good buy at around 0.80 with target of minimum 0.92.
  • Rupee weakened to 44.43 (now at 44.23) You can not anticipate what RBI will do. Gold and Silver prices will therefore move higher in different proportion India too due to exchange rate policy favorable to gold/silver.

Commodity Market

SILVER:

  1. Rebounding to 48.37 on huge volume in spite of heavy spurt in Short Interest which now stands at 76,355 after touching 78,000 contracts, almost rise of 25000 contracts (=125 Mln Ounces or equal to US$ 6 billions or Rs 27,000 crores)
  2. What does it mean? Two major forces are operating. One the short sellers who have some definitive information that the Silver prices may fall, and another Bullish buyers that any selling will be taken up by the buyers in physical delivery.
  3. There is an article in Barrons today that “In order to meet rising demand for the popular iShares Silver ETF (SLV), the trust set up to guide the fund is making plans to offer 50 million more shares to institutions. In a filing with the SEC dated Wednesday, the ETF’s managers list a proposed maximum aggregate offering price of nearly $2.2 billion. The ETF’s parent is the world’s biggest money manager, BlackRock Inc. (BLK)”
  4. It means that this ETF will raise US$ 2.5 billions which will be used to buy Physical Silver (they have to). The short sellers will be hard pressed to deliver so much of silver to a single institution.
  5. In other words, physical silver will be mopped up to the extent of 50 million ounces from the market.
  6. It means that the Silver prices which we thought might consolidate at 53.50 may change direction on the upside, and this could be leaked information that was causing huge price rise from $ 42 onwards.
  7. Silver may therefore skyrocket. There is another article today (28 Apr, 2011 US time) in Barrons that values the Silver at inflation adjusted value of US$ 131.49
  8. We found short sellers in silver again with short interest shooting up to 76,355 or rise of 27,000 contracts in a single day. In other words, the short sellers do not want to cover their shorts but are interested in enlarging their position. Silver is therefore more vulnerable. What information they have which we do not know or even Blackrock Funds (world’s largest Fund) does not know or ignores that information.
  9. It could be legslative move. If United States decides to impose ban in owning Gold or Silver, then all ETF who have lot of Silver in inventory may be forced to sell them at the market that may drive down the prices. It is not possible now, but such actions were taken several decades ago. We do not think that may happen but that is the remotest possibility. ETF is nothing but giant warehouse of physical silver which is not put to industrial use. The government might decide to legislate that such “hoarding” is illegal.
  10. For the time being, the Silver might zoom again past all time high and cross the hurdle like an equestrian horse galloping at fastest speed.

Gold: As projected only last week, the Gold rosé and steadied to our exact target US$ 1535 The debt limit uncertaintly is only two weeks away and as such it is slated for rise by another $50 to $100 ($1585 to $1635) in few days. We are still a buyer upto $ 1535 level and become trading seller only around $1685 in less than 2 months. (or even eariler)

 

Oil prices and Middle East situation: Oil prices may continue to rise due to higher Euro that translates higher dollar prices. Oil prices may rise by 5% in next few days placing lot of pressure on Subba Rao of RBI to raise the rates again or raise the cash reserve ratio (CRR).

Asian Markets today

not open at the time of writing.

NIKKEI: at 9849 (+157 points)

HANG SENG INDEX, Hong Kong: May rise in sympathy with Dow. It is also important day when Li Ka Shing’s new IPO in Yuan for its property venture which may make debut today after successful property auction yesterday, but both are not related. One is a property in China and another in Hong Kong. The Yuan based IPO did not attract proper interest, so any lukewarm response might cause some selling of HSI

SENSEX/NIFTY:May respond higher with US and Asian indices.

Our Observations and Comments

  • Thailand will start trading Silver on its exchange from June 20. In other words, Silver has claimed frenzies all around the world. It is now so popular that its downside is getting more and more limited.

147 TORNADOS, 292 KILLED in USA and Kalidas Solution In Chapter 16 – US should Bomb Itself in his best book “SUB PRIME RESOLVED”

  • How prophetic Anil Selarka (Kalidas) was when he wrote a Chapeter 16 in his best book “Sub Prime Resolved” in 2009. If that solution was heeded, many lives would have been saved today.
  • Almost a mile wide tornado ripped through many states in Mid West America. The most affected was the state of Alabama where the tornado killed 202 people in just one day.
  • There were 147 tornados recorded in last two days. Tornados usually result when there is lot of heat on the land which creates hot air which rises in the air to create the powerful tornado.
  • I have provided solution in Chapter 16 of my book. The title of the chapter was “US Should Bomb itself” which was a catchy title. I have suggested using “Cluster Bomb technology to dig the artificial river from water surplus state (Mississippi and Ohio) to all the way to Colorado and California which would cost only a few billion dollars. Using this technology, the river digging became easy with almost 10% of overall cost in normal circumstances. By digging the river across the nation, the idea was to create the water resources in the heat treated states. As soon as the tornado hits the water, its energy would die down preventing serious damages. By cutting the river through the east-west cross country land locked states, trillions of gallons of water would be transferred from giant Mississippi and Ohio river towards dry regions in California where the lack of water would create forest fires. In USA, there is either surplus water or total lack of water. My solution was to balance the ecology and bring the semblance of order.
  • It is said that the tornados that ripped through Alabama was worst in last 60 years.
  • Those who had the privilege to see the TV report from Weather.com, one would have noticed that the tornado desroyed the town just before the river. That is, as soon as the tornado touched water, it died down in intensity and the town beyond river were saved.
  • In other words, my Solution was very practical and could have not only saved thousands of lives but also created $300 billion export industry for USA to sell its “Cluster Bomb technology” to third world to save them from frequent flooding.
  • I challenge if anyone in the world could have provided such extra ordinary solution. Those who had bought my book “Sub Prime Resolved” should read the Chapter 16 “US should Bomb itself” and apprecite its relevance today.

Enter & Exit points

Silver: We are raising the bar for the Silver to 78,000, 83,000 and 88,000. It is possible that Silver might hit our magic target in India – Rs 1 Lakh in less than 32 days. There could be major short recovering in May contracts which expanded to 76000 contracts. Actually they rosé by 35,000 contracts. Silver is now a major stake game. There is bound to be Government intervention may come only after Debt limit issue out of the way. One may buy even now with possible 7% downside and 40% upside (US$ 58 to 61) in less than 32 days

Gold : Be a buyer even now upto $1535. It will sail past $1685 in 2 months. In India, it will reach to Rs 26000 easily within 2 months, inflation or no inflation.

Palladium: It is still a buy <800. It has risen smartly from our earlier recommended level around $ 710. Since Russian Rouble is rising who is a major supplier of Palladium, the dollar value will be higher. While evaluating Palladium, also look at Russian Rouble. Rouble today is at 27.51 or 2% from a few days ago, that is, $ effect is nearly $15 due to exchange effect.

 

Kalidas One Liner

  • In India, two PM are important. One is Prime Minister, another Pranab Mukherji.
  • IMF downgraded India’s GDP to 8.2% to displeasure of PM No.2 – Pranab Mukherji
  • If PM No.2 allows Rupee to appreciate by 33%, GDP will rise 15% due to exchange rate
  • Petrol prices will be raised by Rs 3 per litre. ET reports. So inflation higher and rates.
  • Watch for the final numbers of IOC, BPCL, HPCL and Satyam. Do not sell them now.
  • Idea Cellular may gain due to well received 3G response.
  • aMobile telecom business has become a Foras Road business. Clients are teased into shop
  • If Kamath (of ICICI fame) becomes chief of Infosys, dump the stock and never look back
  • They say rentals in Mumbai has risen by 11% while Real Estate slowed down to 10 kmh
  • RBI to deregulate Savings Bank interest rate. It wants to kill the savers. God Save India
  • Vedanta-Cairn deal might be approved next week. Corruption cost fully met.
  • Among metals, only Sterlite Industries is best followed by Hindustan Copper
  • Non ferous metals (Copper, Zinc, Lead) are more attractive than ferrous (steel companies)

Kalidas Chopai

PEP = Preferred Entry Point

Stock Eveready Industries India CMP Rs 50.15 PEP 48.50 CMP
One of the cheapest stock in the market trading at about 40% discount to book value, this otherwise profitable company is trading at cheapest PE ratio. The stock is in accumulation stage and medium term investors may take position now. The company makes battery, tea, fluroscent lights (not doing so well) and other solar storage products under development. Good to accumulate slowly
Ref. No. 11/KC/10 Date: 2011.04.29 Target (6M) Rs. 82 SENSEX at 19448

Stock Swap:

Any stock below Rs 80 to Eveready Industries India (Rs 50.15)
OVER


Stock Observatory India

Ref: ISO/11/15 of 2011-04-28 (India Time 06:30 am)

Yesterday’s Events and Effects

Stocks:

Dow rise due to maintenance of low interest rate. However, it will be the market that will dictate interest rates. Watch more at LIBOR than in USA which is a rigged market.

Dow may see gain to 12,800 when it will be a massive sale. One may buy Put on Dow or S&P at that time, especially 6 months put. Buy Puts to out of money level, say 12,200, 11,800, 11200. The lower the level, higher the length, that is long dated put for farther than market index levels.

Do not stay in the market place longer than first week of May, 2011 and take a holiday for about 3 months. Stay long in Gold and Silver however.

Currency Market:

  • US$ Index: With US $ plunging to 73.07 now after Big Ben meeting, it appears that US$ is slated to lose 5% at least to test the level of 70 and may try to breach 69 level. That is full loss of 4.5 points of 6%. Euro may be rushing to 1.56 and Aussie Dollar to 1.12 at least. The currency that may rise most will be South African Rand (now at 6.59) and Russian Rouble (27.83) which are not tradable in India.
  • Euro, Aussie dollar were biggest beneficiary. Japan as usual docile but may gain below 80
  • Aussie dollar may improve to 1.12 level. It has already reached our first target of 1.08 (currently 1.0947). New Zealand dollar is still a good buy at around 0.80 with target of minimum 0.92. Start taking profits in AUD and do not take chances in volatile exchange market. Aussie dollar is also reaching our target of 1.08 (currently at 1.0777). Sell some now or in next two days rally. It may go higher in overshoot or Bernank’s affirmation that easing will continue. We would take profit in current rally and avoid buying back so soon.
  • Rupee weakened to 44.43 (now at 44.23) You can not anticipate what RBI will do. Gold and Silver prices will therefore move higher in different proportion India too due to exchange rate policy favorable to gold/silver.
  • Commodity Market

SILVER:

  1. Rebounding by 6% to 48.37 before setting lower in 47.40 to 47.80 range. There was an article in Wall Street that trading in Silver ETF has risen nearly 5 times of late. This is a good product to sell short in USA where you can keep the short position open for 12 months. If you own Silver on paper or physical, you can short in on NYSE and go on buying back on correction. It may not be leveraged as future contracts are, but safe for small investor where fund involvement is less.
  2. We found short sellers in silver again with short interest shooting up to 68,528 or rise of 27,000 contracts in a single day. In other words, the short sellers do not want to cover their shorts but are interested in enlarging their position. Silver is therefore more vulnerable. It is safer to sell first and buy back later rather than buying first and selling later. Silver will certainly go higher during next 12 days to about $53.50 but may remain in consolidation for a long time.

Gold: It is a strong buy now trading at $1527 (Up $18 or +1.24%) It may rise to $1565 at least by May 10,2011 in all probability. We are still a buyer upto $ 1535 level and become trading seller only around $1685 in less than 2 months.

Oil prices and Middle East situation: Oil prices may continue to rise due to higher Euro that translates higher dollar prices. Oil prices may rise by 5% in next few days placing lot of pressure on Subba Rao of RBI to raise the rates again or raise the cash reserve ratio (CRR).

Asian Markets today

not open at the time of writing.

NIKKEI: 9,823 (up 131 or +1.3%). It is not our market.

HANG SENG INDEX, Hong Kong: 24,016 (+ 124 or 0.52%) May open higher due to successful property action and assurance from US that interest rates may not be raised anytime soon.

SENSEX/NIFTY:May respond higher with US and Asian indices.

Our Observations and Comments

  • Petronet reported good numers which will be englarged in days to come. However, we are more in favor of GSPL which is trading at 33% discount to Petronet with same level of earnings or EPS. Petronet is still a buy but only in correction below 108
  • Troubles at RIL Gas fields help the Petronet. It plans major purchases on spot basis due to lack of supply domestically. It now has tie up with Qatar, Australia and now Spain. The stock may be bought on trading basis for the time being

Enter & Exit points

Silver: Be a seller between 68,000, 72,000, 75,000, 78500 and 81,000. Do not buy back for the time being. Be a buyer between Rs 58000 to 61000 (or when the Silver is at $44.35 or below). We have same position as yesterday

Gold : Be a buyer even now upto $1535. It will sail past $1685 in 2 months. In India, it will reach to Rs 26000 easily within 2 months, inflation or no inflation.

Palladium: It is still a buy.

Kalidas One Liner

  • Petrol prices will be raised by Rs 3 per litre. ET reports. So inflation higher and rates.
  • Watch for the final numbers of IOC, BPCL, HPCL and Satyam. Do not sell them now.
  • Sugar prices may rise smartly in coming two months. Currently at $23.35, may rise to over $ 29.85 to $31. China is turning in as big buyer due to shortages there.
  • Everready Industries is a reasonable buy, tea prospects are good which is its major asset.

Kalidas Chopai

PEP = Preferred Entry Point

Stock GSPL CMP Rs 102 PEP 92 or CMP
Since Petronet is doing well, GSPL will do even better than in the past. The stock which used to trade at 10% premium to Petronet is trading at 33% discount to its peer and its profits and EPS almost match Petronet. We consider GSPL cheaper than Petronet.
Ref. No. 11/KC/09 Date: 2011.04.19 Target (6M) Rs. 132 SENSEX at 19448

Stock Swap:

SELL Petronet swap to BUY GSPL

OVER

 


Stock Observatory India

Ref: ISO/11/14 of 2011-04-27 (India Time 06:30 am)

Yesterday’s Events and Effects

Stocks:

US Stocks rosé ahead of Bernanke’s Open House meeting shortly. To make him feel better, so friendly banks (JPMC) and brokers (Merril Lynch, Morgan Stanley) pushed up the market higher to accommodate the positive feelings. Down Jones closed 12595 (+115) highest since June 2008. It is world’s most overpriced market today. With US $ plunging (See the following chart). It is now due for massive correction with plunge in dollar. It could drop more than 4800 points in matter of weeks ahead. It will plague the other markets. Do not stay in the market place longer than first week of May, 2011 and take a holiday for about 3 months. Stay long in Gold and Silver however.

 

Currency Market:

  • US$ Index:Not holding above 74 level. currently at $73.79 – down 0.24%. It is a new low. Geithner is talking up the dollar today reiterating Rubin era statement “ Stronger dollar is in best interest of the United States”. It was also meant to help Bernanke to deflect question on dollar at real time questioning.
  • Euro, Aussie dollar were biggest beneficiary. Japan as usual docile.

  • Aussie dollar may improve more due to Equinox being sold to Barricks. Although Equinox is Canadian resource company, it is listed in Australia. So the money will go there, selling USD and buying of AUD. It is over $7.6 billion equivalent much higher than normal trading volume in Aussie market. Aussie dollar is also reaching our target of 1.08 (currently at 1.0777). It may go higher in overshoot or Bernank’s affirmation that easing will continue. We would take profit in current rally and avoid buying back so soon.
  • Rupee weakened to 44.49. You can not anticipate what RBI will do. That Subba Rao deserves to have pants down and thrashed with cane stick. He is simply an idiot, totally alienated from the global currency scene and various statements of highest monetary officials of Bank of England, Reserve Bank of Australia and China.


Commodity Market

SILVER:

  1. Rebounding its lower level of $45.10. (now at 45.50) COMEX reported over 50% surge into Silver trading. Marketwatch reported “On Monday, trading of silver futures reached 319,204 contracts, surpassing the prior record of 201,216 contracts set on Nov. 9, 2010, the CME said. Open interest in silver options also reached a record of 240,344 contracts, versus the prior record of 235,992 contracts set on April 21, 2011”. In fact, the May Open interest has dropped from 57,000 contracts to 41,008. In other words, the COMEX allowed massive short position to spill over to next months. How long this will continue we do not know. On Monday alone, the May volume surged to 118,136 contracts. In other words, the paper derivative market has turned into giant casino where the rôle of house is played by COMEX.
  2. This will not succeed. However, there will be more selling to test the level of $44.35 and then 42.85 or $43. The silver consolidated for long around $43 level so it will be the strongest level to enter. At current level of $45 or about it is good to enter with potential 10% downside risk and upside upto $ 53.50, 56 and 58.
  3. The silver may start rising again from April 29 again. It may correct or so because the main silver contract is expiring in May, not in April. In April, only Gold contract is expiring, so Gold has better chance to run than Silver.

Gold: It is a strong buy now trading at $1509. We are still a buyer upto $ 1535 level and become trading seller only around $1685 in less than 2 months.

 

Oil prices and Middle East situation: Oil prices stable.

 

Asian Markets today

not open at the time of writing.

NIKKEI: 9,666 (+107 or +1.3% on opening)

HANG SENG INDEX, Hong Kong: May open stronger

SENSEX/NIFTY:May respond higher with US and Asian indices.

Our Observations and Comments

  • Tata Motors say it will cut down its Auto production by 18% to 20%. Why? if the demand was so strong? Something is happening in TM – some excessive build up of unsold cars. Also debt problem due to hardening of sterling pound by 12% increases its debt burden. TM may drop sharply. Weakness of Auto sector is a major indicator of recession ahead. Lower profit of Maruti, now Tata Motors plan to reduce Auto output, also suggest that there are financial problems within Tata group.
  • 19 banks were penalized by RBI for violating norms in selling derivative products. The fine ranges from Rs 15 lakhs to Rs 5 lakhs, Good logic of RBI – let the banks deceive the customers to thousands of crores and let them get away with Rs 15 lakhs, which is not even the size of a mole. Such token punishment will be laughed upon by all banks in private parties which may have been attended by Subba Rao raising the glass of drink in celebration. In Hindi “Sab saale chor hain” or all of them are crooks.
  • Aditya Birla is on buying spree in era of rising interest rates. He has still not learned the lesson after Hindalco’s take over in Canada and also in promoting MRPL in thousands of crores and selling dirt cheap to ONGC at just Rs 2 per share (current price is 74.85 or nearly 37 times)
  • A report says that Mumbai property prices rosé 10% due to slowing approval of government of many projects. It is a news for me that prices rosé when it actually froze. According to CLSA, new launches have declined by 48% on a QoQ basis due to lack of approvals and affordability concerns. Sales volumes too have declined by 47% on a QoQ comparison.
  • Troubles at RIL Gas fields help the Petronet. It plans major purchases on spot basis due to lack of supply domestically. It now has tie up with Qatar, Australia and now Spain. The stock may be bought on trading basis for the time being

Enter & Exit points

Silver: Be a seller between 68,000, 72,000, 75,000, 78500 and 81,000. Do not buy back for the time being. Be a buyer between Rs 58000 to 61000 (or when the Silver is at $44.35 or below)

Gold : Be a buyer even now upto $1535. It will sail past $1685 in 2 months.

Palladium: It is still a buy

Kalidas One Liner

  • Petrol prices will be raised by Rs 3 per litre. ET reports. So inflation higher and rates.
  • Sugar prices may rise smartly in coming two months. Currently at $23.35, may rise to over $ 29.85 to $31. China is turning in as big buyer due to shortages there.
  • Focus on on some media stocks. Deccan Herald of Bangalore look attractive. Mark for buy
  • Everready Industries is on our watch list. Looks bargains to us, but investigating.

Kalidas Chopai

PEP = Preferred Entry Point

Stock Deccan Chronicle Holding CMP Rs 85.85 PEP 81 or CMP
The promoters raised their stake to 73% from 63%. The stock is reasonably cheap. With India getting more attention in media, in a coupleof years, the media magnets from UK , US and Australia may get attracted to this quality daily newspaper. It is not trading buy though. Place it on your watch list.
Ref. No. 11/KC/08 Date: 2011.04.19 Target (6M) Rs. 102 SENSEX at 19,545

Stock Swap:

None at the moment.

What is Buffet lunch and dinner? (in Kalidas language)

When I was young, a bhikharan (beggar woman) will arrive at morning with her little children and start yelling “ Ben (Sister), je kain hoi, te aalo nein (whatever suplus food you have, please give me, we are hungry)” We had 36 apartments, so some of them where her voice reached, will send her some Roti, rice, daal, curry, vegetables etc. She will collect all in one plate and eat. Almost all food get assimilated or mixed up with each other so one can not distinuish what is the taste of each item.

There were no buffet lunch and dinner at that time. Today, it has become a fashion at the restaurants and 5 star hotels and also in wedding where totally incompatible food such as Western, Chinese, Punjabi, Gujarati and South Indian  is served on 3 or 4 long tables for the guest to pick them up. There is no more sit-down lunch or dinner. Even after paying hefty amount. Self Service they call it after paying Rs 500 to Rs 1000 in large eatery places or in wedding where each plate is charged to the host @ Rs 500 per person.

And, all guests add one by one item in Single plate mixing up over 20 or items in same fashion. When so many items mix together, one does not know how Chana masaala taste or dhokla or paneer mutter or bhendi (okra) or gulaab jamun or shrikhand or kadhi or daal.

I always used to attend wedding during my younger days and asked my family to go there for sit down lunch with over 8 vaati (small bowls) where each item will be separated from each other. I used to know, and inform my family, how the food was.

With so much progress, the buffet dinner or lunch has degenerated to the food of a bhikharan collected from various peoples. Same plate, same items, same mixing, with the only difference is one is a poor bhikaran in rags and another in updated safari suits or a lady in Rs 20,000 sarees, eating in same manner.

Oh India. I do not want this kind of progress!

OVER

 


Stock Observatory India

Ref: ISO/11/13 of 2011-04-26 (India Time 10:00 am)

Yesterday’s Events and Effects

SILVER:

  1. After reaching $49.82, there was massive short selling, ostensibly at the instance of US government (Fed and Treasury) to buy the dollar index and selling short of gold and silver. Who the hell is going to buy US$ otherwise except US government. Only they have deep pockets (they have to just print money) and give it to JP Morgan to short it. The Silver prices came down in massive selling at bid prices – that is over 10000 contracts (50 million ounces or US$ 2.5 billion) were sold off at bid prices so that the bids collapsed. Only the government can do that.
  2. This will not succeed. However, there will be more selling to test the level of $44.35 and then 42.85 or $43. The silver consolidated for long around $43 level so it will be the strongest level to enter.
  3. Many readers were just asking question what is my new target to which I had categorically informed that I am more of a seller than buyer and that one should go on selling from 68,000 onwards. If they do not get higher prices, they should simply throw away the silver at bid prices. However, the readers are so greedy and rely on useless report from Zero Hedge. Where was Zero Hedge when the silver was trading at $5.20 when Kalidas boght most of his silver?
  4. The silver may start rising again from April 29 again. It may correct or so because the main silver contract is expiring in May, not in April. In April, only Gold contract is expiring, so Gold has better chance to run than Silver.
  5. The entire selling action was undertaken at behest of Fed whose chief Bernanke is about to have open house meeting. He wanted to show in the meeting that the commodity prices are coming down, so the inflation risk is less. Once his meeting is over, he would let the market determine the prices. He can not intervene all the time.
  6. Those who are debating single digit gold/silver ratio, are living in dreamcastle. The writer presumes that there will not be any seller and that even Government will not interfere. Silver has the largest holding in India, and that is where Warren Buffet failed to anticipate. He is too American to know Indian farmers. Blue suits and torn dhotis are different investment practices. The farmers do not know what is technical support or resistance or Head and Shoulder chart or Gold to silver ratio (which is just an ordinary arithmetic exercise). What Warran Buffet knows, the Indian farmers do not want to know, and what Indian Farmers know the Buffet never wanted to know, and this is why he missed the golden opportunity. He sold over 13o million of silver at little over $7, that is, he entered at right time and got out at wrong time costing his shareholders 130M x $40 (price difference) = US$ 5.2 Billion or Rs 23000 crores.
  7. When it is time to sell, and the readers are already informed well in advance, it will be reader’s folly to wait for the question to be answered by Kalidas in extremely fast market. It should be a strong lesson for the readers to learn

Gold: Fell to $1497. May fall to $ 1485 but no further in all probability. Just buy it. We are still a buyer upto $ 1535 level and become trading seller only around $1685 in less than 2 months.

 

Oil prices and Middle East situation: Explosive with terrific protest and massacre in Syria. Allied forces also attacked Gadaffi’s residence but he was a mouse, ran away quickly. There will be another spike in Oil prices which will increase inflation in India. Next two months should see Indian inflation rising to double digit, may be upto 11%. All government statements are “confidence booster” and away from stark reality.

HSBC may report bad numbers Britain’s and Hong kong ‘s largest bank might report very bad numbers judging by its pre-result annoucements such as it wanted to sell off the Credit card operations in USA (why, if US economy is recovering? It means that US economy is worsening) and it means that it needs money. For what? to meet the losses on Silver where it reportedly has large short position after JP Morgan? HSBC result should be a shocker.

 

HSBC is also a major clearing bank in USA where almost all clearing banks are kept on “negative watch” by S&P. Reason? We do not know. As rule, Clearing bank acts as Agent in 99% cases. Its negative result means that the Agent is facing lot of defaults from its principals. In short, the HSBC is at receiving end.

 

Many years ago, when HSBC bought Household Finance Corporation for US$ 10 Billion or so, we mentioned that HSBC will lose lot of money in USA. We have always mentioned that if you really want to lose money surely and squarely, you buy assets in China and USA. These two countries are never good for direct investment. Their culture and practices are totally different than rest of the world. There are many crooks and criminals in United States. Even Madoff took US$ 1 billion from HSBC for management and he had never done a single trade on the exchange although he was managing almost $ 45 billion. Can you imagine a broker doing no trade for 3 to 5 years (means he is writing only book entry in his books, no real trade). HSBC may have to provide loss of $ 1 billion or at least $750 million to Madoff. If HSBC reports bad numbers, it wil cause steep losses in Hang Seng Index.

 

Japan: Japan nuclear crisis is to watch. The plant is in most dangerous condition. If something happens there, some massive explosion or otherwise, expect violent reaction on equity market world wide.

 

Asian Markets today

NIKKEI: Lost 0.98% due to stronger yen. This is off repeated explanation and I am tired and sick of it.

HANG SENG INDEX, Hong Kong: It also dropped 0.8% to less than 24000. It appears to me that best days of Hang Seng are over. Come the elephant HSBC that will cripple Hang Seng.

SENSEX: may follow Asia and the banking stocks may rebound on the back of upgrading of SBI. The RBI move was aimed at helping out SBI which means that SBI has lost lot of money in bond market and also in financing property, power and infrastructure. Instead of following big brokers, I would dump SBI shares. there is something wrong in that bank.

 

Our Observations and Comments

  • UCO bank reported rosy picture however. It looks like that the Chairman wants to paint good picture of UCO bank to help it come out with successful IPO. In any case, its business strategy is good. We would be a buyer if it falls to 103.50 or below with best level at 92. Even at today’s prices, it is not that expensive, but we have a fear that its exposure to builders and developers is much higher where it will lose lot of money.
  • We therefore prefer only DCB, IFCI, IDBI Bank (slightly expensive to enter), Yes Bank and Indusind Bank (which is expensive at the moment – buy on 15% correction in stock price)
  • Sterlite group is rising. Position yourself in Sterlite Industries. It is still a preferred buy
  • Hindustan Copper is still on our buying list. Sterlite Industries will finally bid this company give or take 12 months. Let CAIRN episode is over.
  • Textile stocks are doing well but we are not favoring them at the moment because of fear of Rupee appreciation.

· Dollar index was pushed up ahead of Open House meeting by Bernanke. It has regained 74 level like rebels gaining ground in Libya. All eyes are fixed on Bernanke’s open house meeting. He does not have as much influence as Greenspan used to have. If he maintains the low interest picture, all metals, precious metals will rise.

Enter & Exit points

Silver: Be a seller between 68,000, 72,000, 75,000, 78500 and 81,000. Do not buy back for the time being. Be a buyer between Rs 58000 to 61000

Gold : Be a buyer even now upto $1535. It will sail past $1800 in 3 months. In India our upward target for Gold is Rs 41,000 in less than 2 years. We have to re-evaluate the target every 3 months due to volatile monetary markets.

Palladium: Opportunity to swap from Silver is gone. so use your own savings to buy this metal. Do not ask me the availability of Palladium in India because I do not know. One can buy from Kitco, Goldline, Monex and APMEX in USA. It is still our strong buy.

Kalidas One Liner

  • Petrol prices will be raised by Rs 3 per litre. ET reports. So inflation higher and rates.
  • TCS, WIPRO, HCL vie for higher US business. They will fail. No money in USA
  • Trade debtors of software companies may go up and also the losses.
  • Sathya Sai Baba died leaving Rs 40,000 crores in limbo. Where is Sai Baba in Forbe’s list?
  • Worried about RIL margin? Not to worry, He wants to finish off sibling Anil Ambani!
  • Time to devote some money to Media stocks. Watch this space tomorrow.
  • Sell SBI in rally and swap to UCO Bank/DCB/Yes Bank

Kalidas Chopai

PEP = Preferred Entry Point

Stock CMP Rs PEP CMP
None today
Ref. No. 11/KC/00 Date: 2011.04.19 Target (3M) Rs. SENSEX at 19,269

Stock Swaps

1. Short Platinum Buy long Gold

2. Swap SBI to Yes Bank, Uco Bank, DCB and IFCI

 

Merger, Acquisition and Spin off Explained (in Kalidas language)

Merger: When father and Son reunited in bad days, it is called merger. The father tells his son, look let us not have two kitchen, two chefs, two nokranis or two car drivers. We can reduce expenses by 50% that is fire 4 employees. This is what we hear when the mergers take place, and what they call “rationalization or overlapping of resources”

Acquisition: When a perons marries, he acquired the bride. It is called “acquisition”. This benefits the family. Same way, a company when acqauires a company less than its size, it is called good acquisition. However, when the company buys another company 5 times its size, like Ratan Tata did for TISCO while buying Corus, such acquisition does not work. In Hindi it means that “Aukad kya hai tumaari ke tum apne baap or baap ke baap ko kharido?”

Spin off: When the daughter married off, it is called “spin off” because a member is reduced from the family.

Similarly, when a Son becomes a prosperous, and his wife becomes monopolistic and does not like parents of her husbands, the Son begins to leave joint family and decide to have separate life – he can afford because his income remain same and expenses of his parents are reduced.

Parents in Old Age: of late, it has become a fashion of the children to consign the parents to old age home. The parent wonders – I never sent same children to “Orphanage” when they were young, and we were giving them all and starving ourselves at night. That is called “ Age of Independence”

OVER


Stock Observatory India

Ref: ISO/11/12 of 2011-04-25 (India Time 06:30 am)

Yesterday’s Events and Effects

SILVER:

  1. Gold to Silver ratio has come down to 31.61 within inches of our set target about 6 months ago. The momentum is so strong that there has to be some really serious news at COMEX – a potential default in delivery. Silver reached 47.80 today in Asia.
  2. Silver is on run, still not tired. But this is the time to get higher. Our target is reached and breached. Go on selling with every rise of Rs 3000. Leave only 10% or max 15% behind which will be your floating profits. Use the proceeds to buy some shares of IOC and put it away. It could give you 500% to 700% return from current level whereas Silver can not go Rs 350,000 to Rs 500,000 at any time.
  3. India is the biggest holder of silver this time. The local holders might start selling physical silver, esepecially if other assets like Property turn cheaper. Till then they may hold it.
  4. Gold: Rising to $1513 today in Asia. This week should see a level of $1535
  5. Hindusan Zinc reported super result. It will be a stock to watch.
  6. Inflation in India is higher at 8.9%. higher than expected. With May, the hottest month of the year approaching, the vegetable, pulses, edible oils, Ghees and Milk prices will rise much faster than before. However rates rise is having no effect on inflation or the market. With no let up in inflation, the rates may rise again for at least two times after which much depends on monsoon and international market.
  7. Go on opening Recurring Deposit account in the name of your children for 7,9,12 years. Count the period as 21 Minus Current Age of your child as desired maturity period of RD. That is,if your son is 5 years old, the RD may be opened for 16 years. If highest permissible period is say, 12 Years (varies from bank to bank) open 3 RD in all, one for 12 Years, another 10 years, and last 8 years. No need to open all RD at same time. If you open one now, open another after 3 months and another after another 3 months.
  8. Indian Rupee will begin to firm very soon and remain on uptick for a long time. Current level of 44.17 is still good to buy Rupee as higher interest rates of 10% fairly compensates the holder for any downside risk.
  9. Oil prices may remain higher due to escalation of violence in Syria. No flare up is expected
  10. Japan nuclear crisis is to watch. The plant is in most dangerous condition. If something happens there, some massive explosion or otherwise, expect violent reaction on equity market world wide.
  11. Power stocks in India in doldrum due to lack of coal, oil and gas supply as feed stock.
  12. We do not have specific recom today as we did not have time to research. May be tomorrow.
  13.  

Asian Markets today

Not open at the time of writing this report except Australia

Our Observations and Comments

· Start selling Silver at 68,000, 71,000, 75,000 and 81,000 (retain only balance 10% as token) Switch to Gold if you can. Palladium will be another star performer. When the Silver money is released, it will enter Palladium as it is trading at 50% of gold price.

· Gold is still a buy upto $1535 and in India upto 23,000 level per 10 grams. In Rupee terms Gold is set to go to Rs 41,000 in less than 2 years. Stay with the gold if you are worried about other opportunities.

· Dollar index is not abe to hold at 74 – it again dropped to 73.97. All eyes are fixed on Bernanke’s open house meeting. He does not have as much influence as Greenspan used to have. If he maintains the low interest picture, all metals, precious metals will rise.

Enter & Exit points

 

Silver: Be a seller between 68,000, 72,000, 75,000, 78500 and 81,000. Do not buy back for the time being.

Gold : Be a buyer even now upto $1535. It will sail past $1800 in 3 months. In India our upward target for Gold is Rs 41,000 in less than 2 years. We have to re-evaluate the target every 3 months due to volatile monetary markets.

Palladium: Use Silver money for buying Palladium. Use Platinum money (by selling Platinum) to buy Gold

 

Kalidas One Liner

  • None today

 

Kalidas Chopai

PEP = Preferred Entry Point

Stock CMP Rs PEP CMP
None today
Ref. No. 11/KC/00 Date: 2011.04.19 Target (3M) Rs. SENSEX at 19,269

Stock Swaps

1. Short Platinum Buy long Gold
2. Swap partially from Silver into Palladium

 

OVER


Stock Observatory India

Ref: ISO/11/11 of 2011-04-23 (India Time 04:45 am)

MARKETS CLOSED Friday to Monday (3 days – 22 Apr to 24 Apr, 2011)

Yesterday’s Events and Effects

SILVER:

  1. Gold to Silver ratio has come down to 31.59 within inches of our set target about 6 months ago. The momentum is so strong that there has to be some really serious news at COMEX – a potential default in delivery. Silver reached 47.75 today before correcting sharply to 46.65
  2. The delivery report of April 22, 2011 disclosed that a company called “Triland USA” was named as one of the party for 17 contracts for delivery. Whether it for issuing delivery or receiving delivery is not known. Triland was fined over $700,000 last year for violating CFTC regulations. Triland USA is a subsidiary of Japanese trading giant Mitubishi Corp. Is there problem with the Japanese trading giants? we do not know.
  3. In all probability, the Silver may be breaching the all time high of $50.35 by next week end (29/4). The upward momentum is extremely strong.
  4. Gold: Steady and consistent. Next week should see more action on upside.
  5. Inflation in India is higher at 8.9%. higher than expected. With May, the hottest month of the year approaching, the vegetable, pulses, edible oils, Ghees and Milk prices will rise much faster than before. However rates rise is having no effect on inflation or the market.
  6. Obama wants to launch investigations into oil price manipulations in United States. While you are thinking only now, Mr. Obama, Kalidas thought about that in 2008-09 and wrote a whole chapter on them in his precious book “Sub Prime Resolved”. At least read them now. My chapter on oil price manipulation in that book contains full modus operandi.
  7. Power projects are in doldrum with no feed supply such as Coal or Oil. The lenders are back tracking, and there is a possibility of default by a few borrowers. Lower realization and higher cost have made power projects unviable. This is what we have been saying all along not to invest in power utilties. It is price controlled and most interfered sector. There will be adverse effect on “Infrastructure and power stocks” on downside. If lenders are backing away, Anil Ambani will be in serious trouble. His gas based power plants will have hard time as his brother’s RIL is shy in increasing gas production. Looks like the war between the brothers is not over. If power projects slow down, it will have cascading effect on heavy engineering suppliers. The infrastruture projects will be markedly slow down. We will have downward draft for their stocks.
  8. Indian Rupee will begin to firm very soon and remain on uptick for a long time. As NRI, do not wait for long, Start sending $ to India for conversion to Rupee. We expect rate to go 43.50 soon and then to 39, a strong resistance factor. Refining stocks will outperform the producers. OMC, MRPL, Essar Oil, Shiv Vani, RIL will benefit. Higher Rupee will also be dampner to gold and silver prices which will not move up as much as overseas. It is possible that pace of rise in rupee will be higher than precious metal prices which may enter the period of consolidation if debt limit is approved. We are therefor seller of gold and silver more in India than overseas.
  9. Petronet and GAIL will also benefit. Due to shortage of coal supply, the demand for gas will rise, and with RIL showing curtailed supply of gas, the prices will rise. Higher rupee will benefit Petronet. We prefer GSPL to petronet but both are good buys.
  10. Indiabull Securities surprised everyone with much higher profits, turnover and revenue.
  11. Axis Bank, HDFC Bank and ICICI Bank have surprised me but it looks like they are benefitted more by stock related financing, more IPO and higher stock trading income.
  12.  

Asian Markets today

ALL CLOSED TODAY. India is also closed.

 

Our Observations and Comments

· Major markets such as USA, Australia, Britain, Hong Kong, India, Singapore and Japan will be closed on Friday (Good Friday) to Sunday (3 days). Gold and Silver physical are open.

· Start selling Silver at 68,000, 71,000, 75,000 and 81,000 (retain only balance 10% as token) Switch to Gold if you can. Palladium will be another star performer. When the Silver money is released, it will enter Palladium as it is trading at 50% of gold price. Gold is still a buy upto $1535 and in India upto 23,000 level per 10 grams.

Enter & Exit points

Silver: Be a seller between 68,000, 72,000, 75,000, 78500 and 81,000. Do not buy back. If you want retain some(10%) which will be your floating profit.

Gold : Be a buyer even now upto $1535. It will sail past $1800 in 3 months.

Palladium: Use Silver money for buying Palladium. Use Platinum money (by selling Platinum) to buy Gold

 

Kalidas One Liner

  • None today

 

Kalidas Chopai

PEP = Preferred Entry Point

Stock CMP Rs PEP CMP
None today
Ref. No. 11/KC/00 Date: 2011.04.19 Target (3M) Rs. SENSEX at 19,269

Stock Swaps

1. Short Platinum Buy long Gold

2. Swap partially from Silver into Palladium

 

There will be no edition on 24/4 as most markets will be closed.

OVER

 


Stock Observatory India

Ref: ISO/11/10 of 2011-04-22 (India Time-AM) –

MARKETS CLOSED Friday to Monday (3 days – 22 Apr to 24 Apr, 2011)

Yesterday’s Events and Effects

  1. Lot of importance is given in Wall Street Journal on Chinese Yuan’s increasing trading globally and China’s Prime Minister Mr. Wen Bao’s tacit admission that China would let Yuan appreciate to contain the inflation. In short, Britain, Australia and now China have finally decided to let their currency appreciate. India, with micky mouse Subba Rao in command center of RBI, will soon have to toe the line of major BRIC countries, Australia and Britain.
  2. China want to give greater rôle to Yuan in international market. Lot of debates have started in Wall Street Journal that China is trying to make its currency as “currency of trade” internationally, or in short make it as alternate Reserve currency.
  3. PIMCO, world’s largest Bond Fund, is making waves. People speculate where they will place their funds. It will be more active Bond fund than ever before due to higher volatility in emerging markets.
  4. Gold to Silver ratio has come down to 32.29 which becomes medium stage of selling silver. It is fast approaching our desired sell level ratio of 31 which we professed when the ratio was over 60. We mentioned at that time to sell when the AU/AG ratio (Au is chemical symbol for Gold and Ag is for silver) reaches 40 and then in extreme cases 31. We have gone ahead by 90% in our journey. If Gold advances to $1520, and AU/AG ratio reaches 31, then the Silver prices in $ terms will be $49.02.
  5. In all probability, the Silver may be breaching the all time high of $50.35. Silver is our Sehvag and Gold our Tendulkar. Both are “Not Out” at the moment with Tendulkar playing supporting rôle (gold moving slowly) and Sehvag (Silver) hitting bounderies all around. He will be soon out and Tendulkar will take over.
  6. Inflation in India is higher. They call it “Food Inflation” which is at 8.9%. higher than expected. With May, the hottest month of the year approaching, the vegetable, pulses, edible oils, Ghees and Milk prices will rise much faster than before. It is seasonal of course but for the stock market the number counts.
  7. Often people and analysts compare inflation of emerging market with United States but they forget that the components are entirely different. In USA, they deliberately show the inflation in two parts, Core Inflation (without food and energy prices) and Non Core inflation. In most other countries, they use only one figure such as CPI or Consumer Price Index. I am in USA and see the inflation almost on par with the countries like India. Indian market despite higher US market may head lower after higher opening due to prospects of higher interest rates in coming two months of RBI.

Asian Markets today

ALL CLOSED TODAY. India is also closed.

Our Observations and Comments

  • Major markets such as USA, Australia, Britain, Hong Kong, India, Singapore and Japan will be closed on Friday (Good Friday) to Sunday (3 days).
  • Debt hangover still remain. USD Index lowered below 75 and last traded at 74.42, nearly 12 months low. We are just about to witness solid upheaval in currency market.
  • Gold traded last at 1505 higher in Asian trading. Silver also traded high at 46.57 (+3.2%). The Silver after reaching 46.70 suddenly came down by 1.5% to 46.07 in a flash but after a while it rosé again, suggesting that it was a game plan of major bull players to accumulate more silver by causing it fall steeply. It has become fashion and almost a routine to reflect the lower settlement price of silver on previous day when the Asian trading starts.
  • Start selling Silver at 68,000, 71,000, 75,000 and 81,000 (retain only balance 10% as token) Switch to Gold if you can. Palladium will be another star performer. When the Silver money is released, it will enter Palladium as it is trading at 50% of gold price. Gold is still a buy upto $1535 and in India upto 23,000 level per 10 grams.
  • Reliance has confirmed our original assessment as a Buy. It does not produce as much gas as it was projected, due to perhaps one reason – one to hurt his brother Anil Ambani (Mukesh wants to finish him off). I do not accept that the lower gas production was due to some technical reasons or lack of potential, otherwise BP would not have committed over $9 billions
  • TCS reported very good numbers. It is still a strong buy. Swap from LT, Bajaj Auto and other high priced stocks like ICICI
  • US market shot up due to they say recovering economy with higher profits by Apple, IBM, Intel. However, Google and Yahoo were down, and almost all financials who have been reporting profits DO NOT PAY taxes. GE and Bank of America did not pay taxes. Goldman has lot golden touch (their all insiders in White House have gone, so proprietary income is less). In other words, the higher profits at banks is due to Bogus Profit numbers. Since they do not have to pay the taxes, they can afford to show higher book profits which can be set off against past losses. When the good days really come, they will file revise return reversing the gains so that real profits get charged off to real losses. This is why Kalidas never considers the profit numbers in isolation. Who pays taxes if they made money is more important to Kalidas than anything else.

Enter & Exit points

Silver: Be a seller between 68,000, 72,000, 75,000, 78500 and 81,000. Do not buy back

Gold : Be a buyer even now upto $1535. It will sail past $1800 in 3 months.

Palladium: Use Silver money for buying Palladium. Use Platinum money (by selling Platinum) to buy Gold

Kalidas One Liner

  • Nothing today

Reply to Queez – How many traffic policement are there in Mumbai?

Our answer is 1 Million (or 10,00,000 or 10 lakhs)

DO NOT BELIEVE IT? I will explain

Walk on any road in Mumbai. Almost 40% adults are “Jay walkers”. They never use pedestrian crossing or zebra crossings. 40% adults also include this Kalidas. While crossing the road, they simply wave off the palm and cross over. Almost everyone does that on every road, including freeways.

The above question was asked by my elder brother while I was in Mumbai and he gave me the same answer as above with same explanation.

Kalidas Chopai

PEP = Preferred Entry Point

Stock CMP Rs PEP CMP
None today
Ref. No. 11/KC/00 Date: 2011.04.19 Target (3M) Rs. SENSEX at 19,269

Stock Swaps

None today since the markets are closed. Give me a rest.

There will be no edition on 23/4 and 24/4.

OVER


WARNING!

Dollar index has just fallen below 74 to 73.84 which spells troubles. It may fall off sharply if it does not rebound comfortably over 74 level. Reduce the exposure by 30% at least if not more. Global stocks may be in deep trouble if dollar weakness assumes new intensity on the downside. Gold and Silver may jump suddenly if support does not come in for USD Index. This pair of metal might make sharp gain, anywhere from 3% to 7% for Gold and 12% for Silver. In that case, Silver may suddenly sail past all time high of $50.35 within next two days, if the dollar index does not retrace its plunge. There is no possibility that the support might come in.

Kalidas, 21/4/2011 US time at 00:52 AM

Stock Observatory India

Ref: ISO/11/09 of 2011-04-21 (India Time-AM)

Yesterday’s Events and Effects

  1. China want to give greater rôle to Yuan in international market. After permitting trading in Hong Kong, China is trying to create secondary market outside China in respect of Yuan denominated debt and equity. Are they going to make it “convertible currency”. We do not think so. However, it does serve as warning that prime days of dollars are over.
  2. War is still going on in Libya which keeps the oil prices high. War in Libya and War in the Capitol Hill over the debt extension keep the dollar lower and lower everyday. Boeing planes are going to become cheaper by over 10% as the dollar finally decide to plunge. Good news for Indian Airliners.
  3. Australia won’t “manipulate” its currency, which yesterday reached a record, and countries that do will “pay a price,” Foreign Minister Kevin Rudd said. (When will India understand?)
  4. Euro shot up to 1.45 along with 3% rise in crude oil prices. This clearly correlate Kalidas theory that oil prices are increasingly quoted in Euro, which forces oil buyers to buy euro first and then pay the Arabs in euro instead of dollar or sterling pound.
  5. Intel reported solid numbers with growth in revenue and also in profits. Stock up 6%. It is time to position one in Intel which has consolidated long enough around 18
  6. IBM reported solid revenue and profit. Its strategy to get out of hardware business and getting into software over last 7 years has finally paid off. This is why IBM is still the best company of America.
  7. Looks like Apple is having bad days in Japan. It should have set up alternate production site in Germany, Switzerland and Italy where the quality can be maintained at high level. It is a overpriced stock with Google.
  8. PIMCO, world’s largest Bond Fund has decided to raise more money. Looks like it wants to enter emerging markets having high interest rates such as Indonesia, India, South Africa, Brazil after shutting down on US treasury bonds.
  9. Gold to Silver ratio has come down to 33.5 which becomes starting point of selling silver. It is fast approaching our desired sell level of 31 which we professed when the ratio was over 60. We mentioned at that time to sell when the AU/AG ratio (Au is chemical symbol for Gold and Ag is for silver) reaches 40 and then in extreme cases 31. We have gone ahead by 90% in our journey.

Asian Markets today

This will be updated when the market starts trading. We are posting this earlier.

NIKKEI: () ; Hang Seng: ( pts); China: () (Shanghai/Shenzen)

India: expected to go lower in profit taking as the day goes on. In spite of good numbers by HCL, the software stocks might be soft due to higher Rupee.

Our Observations and Comments

· Major markets such as USA will be closed on Friday (Good Friday), Hong Kong, Nikkei will also be closed. Since they are 15 hours ahead of USA, the longer weekend begins early.

· Debt hangover still remain. USD Index lowered below 75 and last traded at 74.42, nearly 12 months low. We are just about to witness solid upheaval in currency market.

· Gold traded last at 1505 higher in Asian trading. Silver also traded high at 45.40. The Silver after reaching 45.40 suddenly came down by 2.5% to 44.29 in a flash but after a while it rosé again, suggesting that it was a game plan of major bull players to accumulate more silver by causing it fall steeply.

· While Gold may be held a bit longer, it is time to reduce position somewhat in Silver. In India, Silver may be sold probably next week after holidays. It is time to sell Silver slowly and progressively with every rise of 2%. Gold is still a buy upto $1535 and in India upto 23,000 level per 10 grams.

· Sesa Goa bought another 10% of Cairn Energy at about Rs 331. There is definitely some game plan for growth we are not aware of. Cairn is attractive to accumulate, so also Sesa Goa on any weakness.

  • It was announced that India will have normal monsoon this year. The monsoon starts in second week of June whereas we are in middle of April. India’s Weather Observatory knows better than Indra, the God of Rain. Such faltu and misleading news were released to help government to lessen the impact of food inflation. It also propped up the SENSEX by 345 points yesterday. Well done, Pranab Mukherji, you know that Indians are fools, so nothing wrong to fool them)
  • State Bank of India withdrew its teaser rate scheme which was really helping to curb long term interest rates. The villain was RBI who want to kill the housing market by constantly interfering in the normal self balancing interest rate mechanism. SBI has large share of low interest paying deposits such as Current and Savings due to large scale municipal and corporate accounts. So its interest cost is cheaper than others. So what is wrong if they decide to pass on the cost savings? But Nahin, nahin kabhi nahin. We have RBI.
  • After writing above para in the morning, we came across the following headline in “economic times” reading…SBI bows to RBI pressure, scraps teaser home loans. Read this report and see how RBI destroys the middle class and national economy. Rarely Kalidas goes wrong. When we opine, we define and refine.

Enter & Exit points

(This feature is on Trial basis)

Silver: Be a seller between 68,000 to 73,000 (trading sell)

Gold : Be a buyer even now upto $1535. It will sail past $1800 in 3 months.

Kalidas One Liner

  • YES Bank scintilated with excellent result, yet the analysts were bemused. Silly they are.
  • Indusind also came out with brilliant result, but the stock is overpriced.
  • MRPL may report better numbers due to higher refining margin of $7.5. BUY more
  • OMC lose over Rs 2 Lakh crores due to subsidy, says Minister. Abe Gadhe, do something
  • When some one will invent nuclear car so that it will be lighter, cleaner and cheaper?
  • Why not someone using rocket fuel in cars which is cheaper, non nuclear and cleaner?
  • Sugar after correction has started moving. Sugar stocks and contracts may make money
  • Interest rates may go higher by at least 0.5% in next two months.
  • Intel double digit growth means more computers and therefore more software exports
  • Aussie dollar at 1.071 and still its Minister says it won’t intervene. He has good DNA
  • Who buys US stocks when no one buys US dollar?
  • If India wants cleaner environments, it should build more urinals, and cleaner too.
  • Why RBI or MOF do not make markets in gold when India is world’s largest market?
  • How many Traffic Policemen operate in Mumbai? 1000, 10,000, 100,000 or 1 Million?
  • God is better investor than Buffet. Most hindu temples built on gold which is $1500/Oz.
  • Given a chance, Goldman Sachs and JP Morgan will issue derivatives on temple gold.

 

Watch for Reply tomorrow for query on traffic policemen! Rate your intelligence then.

Kalidas Chopai

PEP = Preferred Entry Point

Stock CMP Rs PEP CMP
None today
Ref. No. 11/KC/00 Date: 2011.04.19 Target (3M) Rs. SENSEX at 19,269

Stock Swaps

None today.

OVER


Stock Observatory India

Ref: ISO/11/08 of 2011-04-20 (India Time –

Yesterday’s Events and Effects

  • · US closed marginally higher due to higher start in the housing start.
  • · Still, lot of talks centre round debt extension limits which is due for voting in Mid May
  • · Gold closed at 1495 at lifetime settlement high. Silver also trades at 44.22 – still going strong.
  • · Not much of political or economic news.
  • · SENSEX and NIFT may see higher levels on Thursday as the markets world over are closed for long weekend due to Good Friday followed by Saturday and Sunday.

 

Asian Markets today

NIKKEI: 9575 (-134 pts or 1.32%)

Hang Seng: 23759 (+238 pts) – May go higher as day goes on

China: () (Shanghai/Shenzen)

India: expected to go higher. Rupee is strong at 44.17 (stronger by 0.75%). It may cause some losses to export oriented sectors such as Software, Textiles, Apparels, and benefit the oil refiners. They can now cover $ cheaper.

 

Our Observations and Comments

  • Major markets such as USA will be closed on Friday (Good Friday), Hong Kong, Nikkei will also be closed. Since they are 15 hours ahead of USA, the longer weekend begins early.
  • Debt hangover still remain. USD Index lowered below 75 and last traded at 74.87, causing rise in rupee as well.
  • Gold traded last at 1497 higher in Asian trading. Silver also traded high at 44.22. The gold prices are slated to hit $1535 and Silver over $45. Any price between $44 and 45.50 will really be a very good sell. Gold is now much favored by Institutions and Silver by High New Worth and retails investors. While Gold may be held a bit longer, it is time to reduce position somewhat in Silver. In India, Silver may be sold probably next week after holidays. Gold is still a buy
  • IDBI is trying to list its subsidiary CARE in which it holds 26% stake. This confirms our earlier assessment while recommending IDBI Bank that it has lot of hidden value. Since such listing may take time, one need not buy the stock now. Its result is also out, so no new developments are

 

Enter & Exit points

(This feature is on Trial basis)

Development Credit Bank: Going up after our recom. Still good to buy at Rs 61 or about.

Spicejet: Add more position slowly. It is inching up. Current price of 46.50 is still good.

Kalidas One Liner

None today

Kalidas Chopai

PEP = Preferred Entry Point

Stock CMP Rs PEP CMP
None today
Ref. No. 11/KC/00 Date: 2011.04.19 Target (3M) Rs. SENSEX at 19,269

Stock Swaps

None today.

 

OVER


Stock Observatory India

Ref: ISO/11/07 of 2011-04-19

Yesterday’s Events and Effects

  • The big news is that S&P placed the credit rating of United States on “negative watch” for the first time in recent memory. The Dow dropped about 250 points twice during the day before recovering to close 144 pts down to 12,201 – a psychological support level.
  • USD Index improved for a while obviously in false trading. Initially, almost all metals including Gold and Silver dropped, but excepting precious metals, all other metals traded lower.
  • There is physical buying of gold going on. University of Texas Investment Management Company , second largest University fund after Harvard, voted to receive physical delivery of 6643 Gold Bars at the instance of his Investment Manager Mr. Bass. This is the first time such large scale delivery has been insisted on. Read the link thoroughly and note particularly the following:

Contracts Exceed Supply

“Open interest in gold futures and options traded on the Comex typically exceeds supplies held in its warehouses. If the holders of just 5 percent of those contracts opted to take delivery of the metal, there wouldn’t be enough to cover the demand, Bass said.”

  • It means that the Investors no longer trust the paper contracts. They are afraid that there might be default on the contracts, so better trust the physical holding” This confirms Kalidas view reiterated over last 18 months that “Go Physical” and do not rely too much on paper contracts”
  • There was huge increase in Open Interest on Gold. The total OI position is 538,276 contracts (each contract = 100 Oz) or about Tons of Gold which is equal to 53,827,600 or say 54 Million ounces of gold or about 1700 tons of gold. At current price, it works out to $81 billion of gold at current price of $1500/oz.
  • If Kalidas book “Sub Prime Resolved” assessment that United States has lost almost all of its Gold in shorting operation (total loss of 6300 tons of gold as per chapter on gold “Where is Mckenna’s Gold”, then there will be wild fire in the gold market.
  • It will be Gold that will rise faster than Silver , which has been outperforming,in future.
  • There is every possibility that some of the largest Mutual Funds, Hedge Funds, ETF who appear to have physical gold to support their paper units may not have physical inventory or they may face default from the suppliers or storage owners or warehouses. Even COMEX delivery is in serious danger of falling apart in physical delivery. If one of such events do happen, the high profile and high stake game will start.
  • It would be better to rely on physical gold than paper gold from now on. Watch your portfolio of Gold ETF closely and study the delivery related news rather closely. At the moment there is nothing wrong in holding ETF, but the situation on gold may suddenly worsen internationally. If gold goes too high, many states in United States will ask FED to sell the national gold and finance the budget deficits of the states. However, FED knows that most of the gold is already gone without the knowledge of American people.

 

Asian Markets today

NIKKEI: 9430 (-126 pts or 1.32%)
Hang Seng
: (-256 pts) – May go lower as day goes on
China
: () (Shanghai/Shenzen)
India
: expected to go lower to start with but may respond to USD Index later. Rupee is weaker when the whole world goes higher, thanks to stupid Subba Rao of RBI and Pranab Mukherji of India.

Our Observations and Comments

  • We doubt Bernanke will cool off in buying back $600 billion bonds that program ends in June. Many think that Bernanke may not start QE3 but the fact of the matter is from where would they fund the unemployment allowance of $50 to $60 billions per month or US$ 600 billions per year. The people will fume if they do not see UE check (Unemployment Allowance check.
  • The market risk has increased of late. Start reducing exposure to activity earlier than planned.
  • We prefer Gold more at the moment due to US possible downgrade. We know that S&P will ultimately reverse its decision and remove US from negative watch when the gold prices could fall.
    • To me it looks like that S&P has been indirectly asked by the authorities to give threats of possible credit downgrades, so that the Republicans are forced to agree the $14.3 trillion debt extension limit. Once the debt limit is extended, S&P will remove United States from negative watch. This is politics of convenience.
  • We have to see how Moody’s Rating services and Fitch Rating Agency react to S&P actions. The bond market will be in much trouble and market interest rates will go suddenly higher causing heavy equity losses.

 

Enter & Exit points

(This feature is on Trial basis)
Silver: Enter 1 $40.35; Enter 2 $ 39.35 Enter 3 : 38.10 (Best entry) Buy some even now.
Silver: Exit 1 $ 44.35; Exit 2 $48.30 Exit 3 $ 53.35 (Best Exit point) – Sell on stage 2 & 3
Gold : Enter Now; (Best Entry point) – Still a Buy
Gold : Exit 1 – $1585; Exit 2 $ 1685 and then Enjoy the wild ride. No target for obvious reasons. It may suddenly jump by $100 to $250 if the crisis worsens due to credit related problems. I am sure that there will be extension of debt limit which will contain the damage. The situation is simply too volatile to predict.

Kalidas One Liner

  • Forget stocks. Start reducing exposure to overall 25% (only in high quality stocks)
  • Gold may shine better than Silver from now on as originally said by us a few days ago. However, Silver will have sympathetic rise. Be a seller at Rs 68,000 or more.
  • In <3 months, Gold prices will overtake Platinum, to restore the historical imbalance.
  • Platinum is no longer a major force. Silver, gold, palladium and platinum will be the order
  • Palladium is a better buy from cost point of view. Buy between $685 and $735
  • Yen, NZ$, AU$ and Euro too will rise faster than before at least for next 3 days.
  • Rupee is considered by us as “World’s Best Alternative Reserve Currency” , higher than even Yuan and well ahead of Aussie dollar. While Euro will be preferred in short period, there is nothing better than 3R – Rupee, Ruble and Rand (South African Rand). The best is of course “Indian Rupee” . As soon as Rupee is made fully convertible, the exchange rates may go lower than 26 level or even below Rs 21. There is still time, lot of time to happen, so watch it closely. We are writing a major article on Rupee as Reserve currency.

Kalidas Chopai

None today

Swaps

REDUCE overall equity position. We are sensing mini financial tsunami soon. Do not be under panic but pay more attention to current affairs and do not buy anything (except Puts or market puts). If nothing happens in next 3 weeks, you may re-enter the market. Until such time look at your gold and silver – they will make your life better

OVER


Stock Observatory India

Ref: ISO/11/06 of 2011-04-18

Yesterday’s Events and Effects

  • USD Index slightly up (>75) on Geithner’s remarks to the press that GOP (Republicans) have privagtely agreed to vote for $14.3 trillion debt limit. Republicans have flatly denied it
  • Rumors take shape that Bernanke will end $600 billions bond buy back program that ends in June.
  • Silver whizzed past $43.22 in Asian trading. Gold stable at $1486
  • China was seen tightening crdit by opening another front (apart from rate rise) by raising cash reserve ratio of the banks. Effective rates will rise cooling China’s growth and real estate sector.
  • Unemployment rate has fallen to 8.8. Wow, economy is improving!
  • Nothing much over the week end. Read our comments on 16/4.

 

Asian Markets today

NIKKEI: 9590 (+30 pts)

Hang Seng: (+73) – May go higher if USD continues to stenghthen for a day.

China: () (Shanghai/Shenzen)

India: expected steady to higher. It may go higher if USD index goes higher. Indian market is right in predicting the US market moves at night. In anticipation of US higher opening, Indian markets may gain. HDFC Bank result may boost some sentiments towards banking.

Our Observations and Comments

  • We dount Bernanke will cool off in buying back $600 billion bonds that program ends in June. Many think that Bernanke may not start QE3 but the fact of the matter is from where would they fund the unemployment allowance of $50 to $60 billions per month or US$ 600 billions per year. The people will fume if they do not see UE check (Unemployment Allowance check.
  • There may be momentary pause in Gold and Silver prices although both have opened higher. If USD Index gains by 1% (100 basis point), there may be sharp pull back in gold price but not much in silver prices where the buyers abound
  • Silver open interest dropped by 10000 contracts previous day. Strong short covering operation in swing actions. There may be 2 or 3 days of price rise to give about 10% up movement in prices.

 

Enter & Exit points (This feature is on Trial basis)

Silver: Enter 1 $41.85; Enter 2 $ 40.85 Enter 3 : 38.75 (Best entry) – Buy on stage 2

Silver: Exit 1 $ 43.50; Exit 2 $45.50 Exit 3 $ 47.85 (Best Exit point) – Sell on stage 2

Gold : Enter 1 $1465; Enter 2 $14.45 ; Enter 3 $1430 (Best Entry point) – Still a Buy

Gold : Exit 1 $1535; Exit 2 $15.65; Exit 3 $1585 (Moderate exit) – Trading sell in rally

Kalidas One Liner

  • Silver may rise suddenly. Be a seller at Rs 68,000 or more and do not buy back soon
  • In <4 months, Gold prices will overtake Platinum, to restore the historical imbalance.
  • Platinum is no longer major force. Silver, gold, palladium and platinum will be the order
  • New Zeland dollar is still moving up. Buy it in correction but below 0.80 (it is at 0.7995)
  • Banks are losing a lot in Microfinance after real estate. ICICI Bank is major loser. BEWARE

 

Kalidas Chopai

PEP = Preferred Entry Point

Stock Shree Ashtavinayak CMP Rs. 6.90 PEP CMP
It has turned a speculative buy today. Other day, the volume was huge on uptick, so today, uptics will be more after initial sell off . Afternoon should see more positive actions. Speculative buy good for traders. The stock may soon enter upper circuit limits for 2 or 3 days in a row. Not for faint hearted
Ref. No. 11/KC/005 Date: 2011.04.18 Target (3M) Rs.11.85 SENSEX at 19,269

Stock Swaps

  • SELL L&T, SBI, nd Infosys and swap into TCS or RIL
  • SELL Some bank stocks like UCO, IDBI and swap into Spicejet

OVER


Stock Observatory India

Ref: ISO/11/06 of 2011-04-16

Yesterday’s Events and Effects

  • Supreme Court asked Satyam Computers to furnish bank guarantee of Rs 617 crores to IT Department, in spite of knowing that Satyam was victim of fraudulent accounting and investigations have revealed the bogus profits which were non existent and not taxable. The stock may not be affected much but the cloud will overhang for a while.
  • USD continues to be weak with lot of “pillow fighting” taking place between Democrats (Obama) and GOP (Republicans) over debt extension limit and taxes on rich. The sentiments are really bad. Lower dollar promotes higher commodity prices.
  • Euro continues to march up or remain strong in spite of higher oil prices. That is, both Oil prices and Euro going higher at same time, confirming our earelier assessment that it is due to Middle East selling their oil against Euro and not against dollar because of frequent “economic sanction” game and “freezing of forex reserve” by United States. US is simply stupid that it can not see such naked truth and uses the binoculars.
  • Dow Jones was up marginally by 56 points despite all neative news
  • There were reports that “China cut its holdings by $600 million to $1.15 trillion, the Treasury Department reported Friday. Japan, the second-largest foreign holder, boosted its holdings by $4.4 billion to $890.3 billion. “ In other words, Japan continues to be “chamcha” of United States in spite of massive earthquakes that shook entire Japan but the Bank of Japan is unmoved. They are resolute and will learn the lesson hard way.
  • Gold and Silver continues to shine with risk of inflation catching up with everyone, with China raising interest rates again to curb the inflation. Even Bank of England says that the only way to control the inflation is to allow GBP to rise. When stupid RBI will understand?

Asian Markets today

NIKKEI: 9556 (-65) I never understand Japan – they are “programmable robots”, not humans. Almost all Japanese corporate executive learn basic Japanese art – they bow publicly and apologise – and no one ask them why the hell you made such silly mistakes or frauds.

Hang Seng: (-5) may soften due to soft Chinese stocks, especially banking.

China: (+8) (Shanghai/Shenzen) react to interest rate rise later.

India: Inflation figures higher than expected. RBI dilemma is better explained famour quwalli “Main ither jaoon yaa udher jaoon” (Should I go here (raise interest rate and hurting growth) or should I go there (prefer growth, hell with the inflation, let us not raise interest rates)

Our Observations and Comments

  • Massive short covering is finally going on in Silver for May. The Open Interest came down from 67000 contracts to 57000 contracts, that is, by 10,000 contracts were bought back equivalent to 50 Million ounces of silver (= US$ 2 billions) However, the short position increased in July, that is, the position were rolled over. When the Open Interest comes down to <30,000 for May 2011, it will be time to sell the Silver immediately within not more than 3 days.
  • By that time, the silver prices would have risen to >$50, breaking the jinx of $50 top set 31 years ago. That is, Silver will trade at all time high by end of April. GET OUT of silver as trading sell by the end of Silver. In India, the prices may rise anywhere between Rs 68,000 to Rs 75,000 but just sell whatever price you get. Silver has moved exactly same way, day by day, target by target, as predicted by Kalidas almost a month ago.

 

About Rupee, its weakness and Exchange Rate policy:

Bank of England came out with affirmative statement on the rôle of firm currency to tame inflation only yesterday which should be eye opener to RBI (who will never listen to Kalidas). In spite of GBP having risen from low of 1.48 to 1.64 now, BOE says as under:

BoE’s Sentance Sees UK Inflation Exceeding 5%: (2011.04.15 – UK time)

Inflation in the U.K may exceed 5 percent during this summer on weak pound, Bank of England policymaker Andrew Sentance said in an interview with Bloomberg on Friday. He noted that the U.K. is seeing “more imported inflation than we would have if the pound was a bit stronger and therefore that’s reinforcing the squeeze on consumer spending.”

Kalidas One Liner

  • Silver may rise suddenly. Be a seller at Rs 68,000 or more and do not buy back soon
  • Gold may rise by $60 to $100 in single day if USD index breaches 74 level.
  • In <4 months, Gold prices will overtake Platinum, to restore the historical imbalance.
  • Platinum is no longer major force. Silver, gold, palladium and platinum will be the order
  • New Zeland dollar is still moving up. Buy it in correction but below 0.80 (it is at 0.7995)
  • Watch JM Financial. It is on my buy list in correction.
  • We are reinstating Essar Oil Ltd. Future performance will be good.
  • Watch Ruchi Soya (at about 105) – We foresee soyaben shortage in the world.
  • Banks are losing a lot in Microfinance after real estate. ICICI Bank is major loser. BEWARE

 

Kalidas Chopai

PEP = Preferred Entry Point

Stock Spicejet CMP Rs. 44.35 PEP 41.35
The stock has consolidated long enough around 40s, with earnings strong, and political news on back burner, it is time to accumulate the stocks in 3 stages – to buy more in any negative political news (not stock specific economic or financial news). Our original assessment almost two years ago is bearing the result. The stock has 12 months upside of over Rs 120. Sell some bank stocks and swap to Spicejet.
Ref. No. 11/KC/004 Date: 2011.04.16 Target (3M) Rs.71 SENSEX at 19,386

Stock Swaps

  • SELL L&T, SBI (at 2803) , and Infosys (2988) and swap into TCS (1190) or RIL (at 1018)
  • SELL Some bank stocks like UCO (at 120) , IDBI (147) and swap into Spicejet (44.35)

OVER


Stock Observatory India

Ref: ISO/11/05 of 2011-04-15

Yesterday’s Events and Effects

All of sudden, Indian Rupee flared up from 44.67/70 to 44.3/32. There were rumors that in BRIC meetings, the 5 countries were trying to conduct the trade in their own currencies in place of declining dollar. Rupee generally firms up – 2 days before SENSEX rise – because the FII need to buy Rupee before they buy the stocks. So whether the sudden spurt rupee is due to BRIC rumors or strong FII inflow, we do not know.

Dow was again up marginally. There is lot of hangover of Debt extension talks and Republican’s opposition to higher taxes on the rich as proposed by Obama. It hurts dollar. USD index is again lower at 74.72 with other currencies like Euro and Yen moving up due to oil purchase settlement in Euro rather than dollar. Most EU stocks were down over 0.6 to 1%

Asian Markets today

Japan was marginally lower, may not dictate trend at other places. There is demand for the Prime Minister’s resignation for mishandling crisis. Hang Sang (or dollar block stocks) is up.

Our Observations and Comments

Indian market will have upward bias due to firmer rupee which shows FII inflow. The talks that Goldman Sachs has applied for banking license in India and expects this financial year shows the importance given by leading brokers to India.

Silver skyrocketed to $42.27 – over 3% – in single day. It touched over Rs 63,500 on MCX when Rupee was trading at 44.67/70 but dropped marginally by Rs 500 after rupee firmed up to 44.27/30 or by 1%. Rupee again weakened to 44.55. Gold also rosé to 1478, near all time high. These two metals show that the inflation is perking up everywhere and growth expectations are subdued. Be a seller of Silver >68,500 and do not buy back soon.

Kalidas One Liner

  • Silver may rise suddenly. Be a seller at Rs 68,000 and do not buy back soon
  • Gold may rise by $60 to $100 in single day if USD index breaches 74 level.
  • ITC shows huge volume indicating large institutional interest. Good investment buy
  • New Zeland dollar is still moving up. Buy it in correction but below 0.80 and hold
  • Softsware stocks like Infosys, TCS and WIPRO may dictate higher trend in the sector
  • Watch JM Financial. They are getting good deals from large companies.
  • We are reinstating Essar Oil Ltd. on buy list.
  • Watch Ruchi Soya (at about 105) – We foresee soyaben shortage in the world.

 

Kalidas Chopai

PEP = Preferred Entry Point

Stock Ashok Leyland CMP Rs. 55.25 PEP 49.50
The C ompany is getting into bigger ticket items where it may attain leadership due to early entry. Its venture with Nissan and recently with Deere of USA may get its innovative medium to heavy veicles which are need of the day. The stock has been consolidating in Mid 50s for a long time. Current prices also attractive to enter.
Ref. No. 11/KC/003 Date: 2011.04.15 Target (3M) Rs. 71 SENSEX at 19,696

Stock Swaps

SELL L&T and swap into TCS or RIL.

OVER


Stock Observatory India

Ref: ISO/11/04 of 2011-04-14

Yesterday’s Events and Effects

Dow was marginally up due to lot of uncertainties relating to Debt Limit extension and Treasury Auction. PIMCO has sold out all tresury portfolio, so who will replace them as buyer in forthcoming auction remain to be seen. PIMCO is the world’s largest bond fund managers and a unit of Allianze, the insurer from Germany. If the bids do not come in well, the yield (interest rates) may rise which may spook the market. Obama talks in the air that he would reduce the budget deficit by $4 trillions in 12 years when his term ends only in two years. “Thokam thok” is what we call in Gujarati. Reminds me of Shammi Kapoor’s movie Bluff Master which found imitator in the white house.

Asian Markets today

Nothing special. All attention on G20 and G7. In fact, G20 is now more important than G7 who are all almost bankrupt nations. China and India are demanding control of World Bank and IMF from western governments. There is distinct polarizations between BRIC countries and Western powers. We may see some direction after G20 meeting.

Our Observations and Comments

Yesterday’s massive rise really surprised me. There was nothing to warrant such hefty rise. That is what we call “market beast”. Our comments as of yesterday stand good today for software stocks. While other metals stocks are down, Silver is again up strongly. It simply draws in buyers in hordes. It is 40.73 – up $0.47 or 1.2% today. Gold is modest.

We suggest everyone to remain more on sale side. Buy only at your desired price, no more. Reduce holding by end April and remain long on Gold and Silver.

Yen is moving higher and may stop near 81 level. The USD index is still not gaining, which is strong indicator of weak bond markets. Goldman Sachs is also coming under strong pressure from US senates who are insisting on pressing charges through SEC and under Civil law. It centers round all CDO (which ICICI specialized and sold to many corporate customers in India)

Kalidas One Liner

  • Pay attention to Sugar stocks. Sugar corected over 3% yesterday in future market. It is in final stage of correction. Summer months are usually good for Sugar in Asia.
  • Pay attention to DCB or Development Credit Bank, which has returned to profit on two consecutive quarters. Buy some in correction since it has already advanced sharply. With only 20 crores shares outstanding, its share performance will outshine other financials. While we are still negatie on financials and banks, some banks may be exceptions like Yes Bank, DCB, UCO, Bank of Baroda and Punjab and Sindh Bank.
  • Avoid taking new position for a day or two. There are only sell opportunities.

Kalidas Chopai

PEP = Preferred Entry Point

Stock Development Credit Bank CMP Rs. 57.00 PEP 53.50
The bank has reported second consecutive rise in profits which signifies the upward trend. The stock may look expensive on historical EPS, the future EPS appear to be on rise. There is overall increase in the business which is a very good sign. This will be a growth stock of the future. Pick up some even at Rs 55.
Ref. No. 11/KC/003 Date: 2011.04.14 Target (3M) Rs. 78 SENSEX at 19,696

Stock Swaps

Swap some Banks stocks between Rs 60 to Rs 140 into DCB and keep this bank in focus.

OVER


Stock Observatory India

Ref: ISO/11/03 of 2011-04-13

Yesterday’s Events and Effects

Dow Jones was weaker losing over 117 points due to budget woes. It may affect the sentiments in Asia. Dollar still weak, Yen strong, Oil slightly weaker but Brent is firming up. Most worrisome is the USD Index which is not able to hold above 75.

Asian Markets today

Japan was marginally lower, may not dictate trend at other places. Nuclear concern remain but from the announcements, the accident may not happen. It is just radiation level high due to release of contaminated water into the sea. Hang Seng down over 120 points with sentiments weak. We can not expect much improvement as the day progresses.

Our Observations and Comments

Indian market will have bearish sentiments to prevail with some software stocks like TCS, Infosys and Wipro stable to gainers. Weaker rupee helps. Gold still weak but Silver surprisingly strong with buyers moving in after it slid to 39.70 – still selling pressure remain somewhat.

I think that most of the correction in Silver is over, though Gold may still remain subdued for a day or two. Gold should move from Monday, 18 April, 2011 and remain in upward trend. Be a buyer of gold at about $1435 level. We prefer Silver however. Our target is Rs 72,000 by June end, which may be achieved even earlier (April end or first week of May)

Kalidas One Liner

  • TVS Motor is getting attractive. If weak market pushes it down to <55, just buy it.
  • Satyam is in strong shape. Most selling is done. Go for it. Industry trend in your favor
  • Ruchi Infra is in firm trend. If volume goes above 150,000 shr on uptick, just buy it.
  • Strong demand for most pharma stocks. Looks like sector is on preferred buy list for FII
  • Sugar stocks may become good buy again. Sugar may move higher soon.

Kalidas Chopai

PEP = Preferred Entry Point

Stock Mahindra Satyam (Symbol) CMP Rs. 78.60 PEP CMP
Almost all negatives of Satyam are out of way. Rupee weak, software majors like TCS, Infosys and Wipro expected to report higher sales and profits, Satyam is well poised for higher growth. Start taking position in this counter where downside is less (4%) and upside is more (30%).
Ref. No. 11/KC/002 Date: 2011.04.13 Target (1M) Rs. 103.50 SENSEX at 19,262

Stock Swaps

Think of swapping some Auto stocks into TVS Motors and Ashok Leyland.

OVER

____________________________________________________________________

Stock Observatory – India

Ref: ISO:11:012 of Monday, April 12, 2011 (India Time)

Events and Comments:

  1. The dollar relatively stabilized which had immediate effect on commodities and some currencies. Gold dropped to $1462 and Silver to $40.32, both have to go down first to $1435 and $39.75 level before resuming upward climb. Silver nearly touched $42 (at $41.97). Dollar is still not out of wood. Expect USD Index to rise to 76.25 (now at 75.07) which may engineer some corrections in almost all currencies and commodities.
  2. Alcoa Aluminum reported higher earnings that may help Aluminum stocks in India. However, the rally may prove short lived.
  3. No other price sensitive news of real significance.
  4. Japan increased the nuclear warning to the highest level comparable to Cherbonyl disaster in Russia. It caused slump in Nikkei 225 index 190 points (-2%) and Hang Seng Index followed suit with a fall of362 points (-1.5%).

Currencies:

Yen is firmer. May go higher. Aussie dollar slightly weak. New Zealand dollar shows lot of strength, it may be better choice. Earlier, the difference between Aussie Dollar and Kiwi dollar used to be 10 points, now at 25 points. Kiwi has more to gain relatively. Rupee is 44.37, nearly 1% weaker than two days ago, which may force state refiners to cover dollar to pay for imports. At about Rs 44.75, better be a buyer of  Rupee. USD will continue to be weaker despite reactionary strength now. Treasury Auction next week may not be good.

Commodities:

Gold to correct to $1430/1435 in two days, Silver may correct to $39.50 (strong entry point) to $39.75 – curently 40.27. Be a buyer at those level. Gold will move to higher range from 15 Apr onwards. There are number of buyers for silver at the moment in spite of selling on paper (shorting). It is all set to have very fast rise to over $46 as originally predicted. In India, the Silver may rise to Rs 71,000 to Rs 72,000 soon, before this month end.

Expectations of SENSEX/NIFTY: Markets closed on 12/4/2011 due to Ram  Navmi

Lower Asian indices due to nuclear issue in Japan may cause loss everywhere. India is saved due to holiday of Ram Navmi. May be the commodity portal MCX may be working. Silver has fallen to 39.88 at the moment, and may slide more by $0.50 to 39.50 or about. The market may lose more tomorrow if the Japan nuclear issue continues to boil.

Buy in the  afternoon (13/4) tomorrow, after about 1:30 PM, to seek loThe index may also lose due to Lower due to slower growth in  Industrial production (3.6% against 5.1 expected). Hopes for higher GDP will be affected. We are therefore stock specific.

  1. Arvind Mills is showing strength. May rise due to weaker rupee. Sell in the strength.
  2. Ruchi Infra (Rs 26) is showing more strength. It went up yesterday in down market. It is time to buy more. Its parents have bought lot of shares in the past around Rs 40 level. See BSE/NSE notices. Higher Soybean prices internationally will benefit its parents with more cash that can be used to buy this stock at cheaper prices.
  3. Satyam is still on our favored list. Accumulate upto Rs 84 and then wait. Target 120 minimum by May end. Buy in weakness.
  4. Due to higher refining margin reported by Essar Oil, it looks like OMC, ONGC, RIL, Shiv Vani and MRPL may report better than expected earnings in spite of subsidy problem. RIL too may be attractive to buy at this stage.
  5. Due to quick resolution of Cairns take over, we prefer Sterlite Industries as preferred buy. Higher copper and Aluminum prices booster. The stock is in consolidation stage for far too long waiting to go higher.It is likely that it will bid for Hindustan Copper after Cairn affairs sorted out fully.
  6. Watch Coal India, It may correct with correction in oil prices which will give opportunity to accumulate.

Over

_______________________________________________________________________________

Stock Observatory – India Update Ref: ISO: 11:001 of 11 April, 2011 (India Time)

Notable Events or News

  1. The budget deal was finally struck. This may lend support to US stocks on opening. USD Index may gain today which may cause correction in commodity markets. Although gold and silver are higher in the morning, it is possible that the gain might wash out before London opens, and especially US opening.
  2. However, except for some knee jerk reaction to political news in Washington, the upward climb of Gold and Silver is intact. Silver might gain over 15% in less than 4 days, before weak close on Friday.
  3. SENSEX (India) which is drifting lower this morning, may gain as the day progresses, and it will gain smartly after 1:00 PM. It will rise in anticipation of rise in Dow Jones.
  4. Strength in dollar or weakness in rupee will bring the buyers back to software stocks. Mahindra Satyam will gain smartly and it is time to position one self in this stock. Most of the negatives are over. ADR will outperform domestic stock in future, because ADR will gain premium. The silver prices in India will more or less remain same today due to fall in silver prices in dollar terms will synchoronise with the weakness in rupee which pushes the rupee prices higher. It will be tug of war. Any weakness in silver prices will be a buy opportunity because in the international markets, the buyers are very strong.

Qualified Remarks:

Nothing at the moment

INDIAN MARKET TODAY

opened lower but will gain over 200 points as the day progresses. It should gain after 1:00 PM India Time

ACTIONS

BUY Satyam Computer and buy it until Rs 88. It is going well above Rs 120 very soon. SWAP from Infosys, Wipro and other software stocks except TCS which should not be sold for the time being.
BUY Sterlite upto Rs 179 (Target >230) and Hindustan Copper (Accumulate and do not be in hurry to sell.
Coal India is on my buy list. Start buying from now.

CHOPAI

not today, Watch it tomorrow

ONE LINER

None today
Kalidas, 11 April, 2011 (Morning)
 Posted by at 12:46 pm

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