THIRSTY THURSDAY

Factors that influence share prices in the stock market

After a phenomenal 2007 during which new highs were tested on a regular basis, the current year has brought the Indian Stock Market crashing down to earth. Jittery investors have had one worry or another to make them exit the stock market in droves this year. The new year started with heightened worries over the credit crunch in the US and Europe. Foreign Institutional Investors (FII’s) started selling and exiting in droves after record inflows in the previous year. The effect has been to bring the Sensex down from the 21,000 to 15,189 as of the 13th Friday 2008 (the Nifty is now at 4,500 down from 6,350). The Rupee after strengthening strongly in 2007 has weakened in 2008 - due to the FII’s exiting Indian Markets and rocketing oil prices which has led to the USD being heavily bought.
So where to from here? My personal feeling is that there is not much good news which will help the markets in the near term. If anything there is more probability that there will be more bad news emanating as the credit crunch refuses to go away and there is little doubt any big news on this front will be felt all the way in India. So overall I think there does remain some probability that we will see the markets even lower by the end of August. I would not be entirely surprised to see the Sensex at between 12K and 13K and the Nifty at around 4K. However this all in the balance of probabilities.
The reasons for my bearishness are as follows:
1). Inflation - There seems to be a real problem with inflation rising globally and more so in emerging markets like India. As the prices of everything from Oil to food continues to hit new records there will clearly be a negative impact on RPI figures. Consumption is bound to drop off as people tighten their belts and the growth story starts to look not as rosy as it did in 2007. There seems to be very little room to use monetary policy to boost consumer confidence as well. The property sector is already starting to feel the pain and I see the large property companies getting hammered every day in the stock market. The question now is how long before this translates onto the real economy and house prices start falling? Consequently this also makes mortgage banks like HDFC probably less attractive at the moment.
2). Oil at $200 - well there has been a lot of talk about this and judging by the last couple of weeks this could be a real possibility towards the end of the current year. My own feeling still is that this will start to tail off by the end of the summer and we will see Oil nearer the $100 level. My feeling is that there will a lot of pressure on OPEC to increase production and there is also considrable amount of inventory lying around in tankers as refineries are cutting back on buying at the moment. Of course any unanticipated supply shocks owing to political events or natural disasters in the Oil producing areas of the world will send prices skyrocketing.
3).Weak Government - The BJP victory in Karnataka was clearly far more sweeping than anyone had expected or predicted. The current government faces a national election at the latest by May 2009 and as such is not likely to make any bold moves to tackle inflation with the BJP breathing down its neck nationally. I think we will see more inaction and prevarication as witnessed over the oil price rise. The markets will not like this sort of uncertainty and to be honest the economy will not benefit from this sort of weak leadership. Chidambaram clearly has a tough few months ahead of him and I think his credibility and credentials will be severely tested.
So overall there are a lot of factors which would clearly indicate than any investors should proceed with caution. Things will be clearer by the end of the summer I feel and there will be some great bargains to be had once the dust settles and the lie of the land is clearer. I will be doing a seperate post on my picks in the Indian stock market and my reasons for it in the near future.

Factors That Affect The Stock Market: The Only 2 Things That Drive The Markets

There’s such a glut of information these days: monthly investment magazines covering the markets daily investment newspapers doing the same and minute-by-minute coverage on CNBC. They’re all trying to tell you what’s driving the stock market, and they all love to tell you where the market is going to go. And much of the time, they’re wrong! It’s enough to drive you crazy!
I’m going to make your life a lot easier. Of all the factors that affect the stock market, only two things drive the markets. And you don’t need to check in on CNBC, newspapers or magazines to follow them. Just two things drive the markets; I call them The Two “E’s.”

The Two E’s… And How They Affect The Stock Market
The first “E” you can probably guess. The second “E” you probably wouldn’t guess right away, but it’s equally important and it’s much less talked about. Since that’s the case, we’ll spend a little more time on the second “E” today
The first “E” is earnings. Everyone talks about this “E,” and it is extremely important. The big question here is: What is the stock price in relation to the company’s earnings? That tells you, in general, whether a stock is cheap or expensive. This is what we need to know and the information is easy to find.




The Second Factor that Drives the Markets Is EMOTIONS
Emotions are a huge part of investing. Do you think it was earnings that drove the Nasdaq from 1,500 to 5,000, and then back to 1,500, all in four years time? Did earnings get 200%+ better? And then 70% worse? No. Was the Crash of ’29, where stocks ultimately fell by 89%, due to earnings? No. Emotions played a big part in both of those examples.



The 10 Stages Of The Stock Market
Human beings, with both rational and emotional urges, are the market players. And the thing is, those emotional urges can (and do) often overtake the rational side.
Instead of explaining this at great length, it’s better if you just read my “10 Stages Of The Stock Market” below and figure out where we are right now. This “10 Stages” model is a tool for measuring the “emotional state” of the market today.
What are your friends and neighbors saying about the stock market? Ask them. Then figure out which quote below best sums up all their emotions. By doing this, you’ll know exactly where we are in the stock market. Of course, you’ll want to be a buyer somewhere around the end of the bear market and the beginning of the bull market.
Please read these “10 Stages,” and think about where you think we are now. When you do this, you’ll know where we are in this market.

• BULL MARKET, LATE STAGE: “Darn it, other people not as smart as me are getting rich, and I’m just sitting here. I’ve got to get in on that!” (Late 1990s?)


• BULL MARKET, PEAK: “Man, I am SMART. I’ve made a ton of money in stocks. And it couldn’t have been any easier. Practically everything I buy goes up!” (Early 2000?)


• BEAR MARKET, BEGINNINGS: “It’s just a correction. Buying the dips has worked like a charm in the past, and it’ll work again!” (Late 2000?)


• BEAR MARKET, EARLY STAGE: “They say to buy and hold, so that’s what I’ll do, just keep on holding it’ll come back!” (2001?)


• BEAR MARKET, MIDDLE STAGE: “The correction HAS to be almost over by now. I’d sure hate to sell out right at the bottom, only to have the market roar back.” (Early 2002?)


• BEAR MARKET, LATE STAGE: “Well, it’s too late to sell now. So I’ll just keep holding. Boy, I used to open my portfolio statement the second it came in the mail just to see my net worth going up, up, up! Now I dread opening my mailbox.” (Late 2002?)


• BEAR MARKET, PEAK: “Okay, I give up. It’s time to start cleaning house and sell these stocks. Boy I really shouldn’t have put so much money into these things.” (Early 2003?)


• BULL MARKET, BEGINNINGS: Nobody EVER makes money investing. I’ll never put any money in the stock market ever again. (When???)


• BULL MARKET, EARLY STAGE: “Wow, prices have been going up lately. I hadn’t even noticed – I’d given up. Those foolish buyers, they’ll sure get what’s coming to them! I’m going to get out now, while things are up!” (When ???)


• BULL MARKET, MIDDLE STAGE: “Hey, things are looking up. Maybe there is something going on here Nah, once burned, twice shy! I’m skeptical – I’ll keep watching this sucker’s rally!” (When???)
  
  

NOW TODAY's

DAY TRADING STRATEGY

OF NIFTY FUTURES – AUG 19

If cuts and trades below 5483 for 15 minutes expect an intraday slide upto 5455-5445-25

Strong Support @ 5422

Be cautious in higher levels..

Exact levels for our subscribers only.

Use the levels for your trading, but do not trade blindly..

ALL THE BEST

BANK NIFTY

Good support @ 10759

Buy btwn 10932-48

T1- 10975-88

T2- 11001-18

Sell btwn 10878-61

T1- 10834-821

T2- 10808-797-60

SHARE TIPS TODAY (AUG 19)

INTRADAY

SELL DPSCLTD @ 1295

T1 – 1275

T2 – 1255

(Please refer to ‘OUR POLICIES’ before you leave the site)

For further details,

Contact Admin (Editor) @

(0)9788563656

&

(04142)236656

-Mahindeesh (a) Sathish

Cuddalore-2

Tamil Nadu

India

TODAY’S QUOTE

To be conscious of happiness is to hear Nemesis rapping at the portals.
-PHILIP MOELLER, The Roadhouse in Arden

RELAX CORNER

JUST SMS TO YOUR PAL

*A Sardar saw a Beautiful Girl,he Went and Kissed her.
Girl: “STUPID what r u doing?”
Sardar: B.Com final year”
*Breaking News
ATM @ Gulshan-e-Iqbal Is Jammed &
Not In Working Condition
.
.
.
Because
.
.
.
Sardar’s Wife Put Hair pin In Machine
When It Said”, Enter Ur PIN”

DISCLAIMER
THE RECOMMENDATIONS MADE HERE DO NOT CONSTITUTE AND OFFER TO SELL OF A SOLICITATION TO BUY ANY OF THE SECURITIES/COMMODITIES OF ANY OTHER INSTRUMENTS WHATSOEVER MENTIONED. NO REPRESENTATIONS CAN BE MADE THAT THE RECOMMENDATIONS CONTAINED WILL BE PROFITABLE OF THAT THEY WILL NOT RESULT IN LOSSES. READERS USING THE INFORMATION CONTAINED HEREIN ARE SOLELY RESPONSIBLE FOR THEIR ACTIONS. SURFING OR USING ‘tradersharmony.blogspot.com' DEEMS THAT THE SURFER ACCEPTS AND ACKNOWLEDGES THE DISCLAIMERS AND DISCLOSURES.THE INFORMATION PUBLISHED ARE FOR EDUCATIONAL AND INFORMATIVE PURPOSE ONLY AND THE USER/READERS SHOULD TAKE ADVICE OF HIS/HER ADVISOR BEFORE TAKING ANY DECISION FOR BUYING, SELLING OR OTHERWISE DEALING WITH SECURITIES/COMMODITIES OR ANY OTHER INSTRUMENT WHATSOEVER.