HBJ Capital Says, "Expect a stable to positive session on Friday".

Indian Markets behaved on the same way as we have predicted yesterday, all the SHORT/PUT holders must have enjoyed profit. Happy trading.

The seventh-day losing streak continued on Dalal Street. The markets started gap down, and then spent the entire session in negative territory as dismal global cues wreaked havoc. A sharp slump in the US as well as in Asian and European markets, due to cut in US economic growth forecast of 2008-2010 by Fed and weak housing data, has weighed on our markets.

Equities were witnessing selling pressure as sentiments turned bearish after fall in US and Asian markets. All the sectoral indices were in the red with realty, banks and oil & gas worst hit. The global onslaught of bears doesn’t seem to end anytime soon and markets have breached crucial support levels.

We will eventually head towards October lows, 7700 and 2250. Dow and Nikkei both indices are trading below 8000 levels. Long term strong supports for these markets come in at around 8 per cent lower from the current levels. When markets head towards those levels, we are likely to see policy action from the regulators.

In India, bond markets traders bought bonds yesterday, concluding interest rate cuts will come in by the weekend. Hopes of policy actions can trigger buying at the lower levels in our markets also, but wait for concrete signals

HBJ Capital’s View for Friday:-

• Traders are pinning hopes on some further rate cuts by the Reserve Bank of Indian which they expect might happen anytime soon as inflation has come down to single digit. Inflation for the week ended November 8 stood at 8.9 per cent against 8.98 per cent previous week. But it did little to change sentiments on Thursday.
• Players are also expecting a financial stimulus by the government to keep the economy moving. According to reports, bailout package for Indian industry hit by global slowdown is likely to be finalized by the high-level committee of secretaries by the week-end.
• The prime minister’s apex panel on economic crisis is expected to meet next week to approve the package aimed at stimulating economy and improving credit flow to industry. Measures could include increased spending on infrastructure, special credit window for select sectors and enhanced credit period and insurance cover for exporters. This is likely arrest the current fall in the Indian markets.

Indian stock markets are expected to break the last seven days losing streak on Friday, One can see flat opening but later during the day short covering is expected which will take Nifty up by 2-3% or more. Short covering can be due to three reasons 1st positive global clue, 2nd Over the weekend no trader will be willing to carry their winning SHORT positions and 3rd because during the weekend & next week govt is going to decide on some bailout packages etc along with RBI rate cut.

1. Traders holding SHORT/PUT should exit on Friday if market opens flat. In case if market falls below Nifty 2% down then stay with SHORT and cover up during mid-day.
2. Traders with high risk appetite can take small LONG/CALL position in Nifty betting on govt package & RBI rate cut over the weekend.
3. Pls do not take fresh SHORT/PUT on Nifty on Friday. We will be seeing Oct low but for a day or two there will be pullback rally too due to short covering.

Global Update:-

• Jobless claims jump unexpectedly to 16-year high as labor market weakens rapidly. The government said new applications for jobless benefits rose to a seasonally adjusted 542,000 from a downwardly revised figure of 515,000 in the previous week. That's much higher than Wall Street economists' expectations of 505,000.
• Aides to a bipartisan group of auto-state senators say they have reached a compromise to speed emergency loans to Detroit's Big Three car makers.

- Sandeep Jain, Associate, HBJ Capital.