Profitwala

PFC Capital

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HandPhone 98209 26692

Weekly Newsletter.

Week : July 14- 18.

Nifty Index 

Resistance 

Support  

Monday morning we may see a gap down opening due to 1) Sell of in US and Europe markets  2) Crude at 147. In spite of this negative cues we still advice to buy into quality scrip's at the lower levels. We are in the middle of  a upward rally .Corrections as seen on Friday  are only to shake off the weaker hands.

Strategies for the investors should be buy into quality scripts. Investors can identify the companies who have paid higher advance tax  ,start accumulating in comfortable lots at lower levels and you will definitely find buyers ( FIIs Included)  around the result dates. Investors should hold on to their earlier investments until the end of the result season (in short this is not the time to sell). Traders can trade with a long bias (with Stop losses) . 

Keeping Shorts open in result season is dangerous, incase of any unexpected positive performance or bonuses / dividends / buy backs the stock can rally up to its previous highs, In case of poor performance, since most of the stocks are already beaten down the the downside will be too little.  

Dow and Nasdaq is in the oversold zone, so both of them is waiting for a trigger to start its next up move.

Many of the business channel gives  wide importance to FII cash figures. The fact of the matter is by just seeing a sell XXXX figure on FII cash one cannot exactly conclude FII has sold Stocks worth XXXX amount. Since one has to take  Index futures, Stock futures, Index options and Stock options in account.  Now one cannot get any details on index options or stock options as it can be both put and call options( It could also be a part of strangle strategy) . These days since many of the stock futures are trading at a discount to the cash rates many FIIs will find it prudent to sell in the cash market at the higher rate and buy the future which is trading at a lower rate. Some sense can be made out from the FII cash, FII Index futures, FII Stock Futures all taken into account  Lets take the FII figures from July 1st onwards 

The above table suggests a net investment of Rs 553 Crores by DIIS and  a net Investment Exposure of Rs 8971 Crores By FIIs ( -496.5 + 2677 + 6790) in between July 1-8. (Please note we have not taken index options and stock options into account as the data available includes both call and put options).

A long term investor ( Not a trader ) has taken a position in HDFC bank in the cash market by buying 100 shares at Rs 1500. He has a target of Rs 2000 (1 Year View )In mind and he has plans to hold on since he believes in the HDFC Bank story. Now in the panic which was created in the last week of June ,HDFC bank has come down to 945 Cash 930 Futures. The investor finds great value at 930 but he does not have further capital to bring in, One strategy open for him  is he can buy a HDFC Bank Futures contract (200 Shares) at say Rs 930 and sell his 100 HDFC Bank shares in the cash market. Now since he has sold of his cash market holdings he gets 94500 towards the sale of his cash market sales. A part of the Rs 94500 goes in as a margin for the future contract and he has freed up  about Rs 50,000 in his trading account. Now as far as his HDFC Bank Position is  concerned his price of acquisition has come down to 1225 and the number of shares has gone up to 200. He can  keep rolling the contract till his target of Rs 2000 . As and when the target is achieved his profit margin also increases substantially. Now a ill informed TV presenter will say the long term investor has sold of his cash holdings but the truth is he has increased the exposure on the same stock by twice the quantity. He has also freed up some capital .He has also  taken the advantage of the price arbitration ( price difference in  lower futures rate then the cash market rate) .

As for the Indian political scene with the Congress getting support of Samajwadi party, Congress will use the opportunity to go ahead with all the economic reforms which were stalled by the left. Privatization of the public sector, FDI proposals  will get a major boost, it may so happen Congress government may move at a very fast pace with economic reforms in the next 6 months . Stock markets generally bottoms out 6 months before the Economy does.    

The rally seen after the Left pull out was great. The trust vote results will be a major trigger which will take the Nifty into a new trading zone.  

All the calls mentioned above have Exact Entry Points, Targets and Stop Loss Rates. Non Subscribers Should take the advice of their Personal Investment Advisor before entering into any of the above mentioned trades.

Suggestions or Feedback   Please do email us at : info@pfccapital.com

Short calls On certain Scrips or the Index does not any way indicate the fundamentals of the Scrip or the Index. Short calls are based on the Chart Formations and Weakness Displayed on Proprietary Technical Indicators Developed by PFC Capital IT.