Stock Watch-Reliance Capital

Reliance Capital is looking extremely strong in this falling market. This might be a good short term bet on the long side. Watch out.

Stock Watch-Bharti,Indiabulls Financial

Bharti cracked big time today and is now clearing turning bearish. Infact, in the morning as soon as I issued a short sell on Bharti at around 885 levels one of my clients immediately came up with a buy recommendation on the stock on TV !As expected the stock cracked and is now looking to test 800 levels. RCOM though not that bearish is also not looking very bullish in the short term. I plan to initiate some countertrend trades around 690 levels on the stock

Indiabulls is one stock which is showing great strength and touching new lifetime highs. We have been accumulating the stock ever since Religare IPO went through. Indiabulls still remains the best brokerage play-much better than the Religares of the world!

But the short term is certainly not up, so its a good time to wind up the short term longs and may be play for some downside.

Is US heading for a recession?

Sometimes when start talking about certain things, they start to happen. If you remember, just two days back one of the readers had pointed out to the strong GDP numbers in the US and I was expressing my concern about the subprime issues in the US and a possible recession. All of us were speculating as to when will the bubble burst and it looks the event is nearer to us than we thought!

US banks might have to write off as large as $100 billion before this year itself! Now this is a serious figure. The Fed shall cut interest rates further but I am not sure if it will save US. The dollar is going to take some more whack in the coming days. With commodity prices rising, there is a bigger risk of inflation in the US . So things are not looking very pretty in the US. Both bad news might follow on the US front. If you are a US investor, you should just pack your bags and move your dollar assets to commodities or stronger currencies.

Now what impact can it have on India and Indian markets? This is a billion dollar question! Of course IT sector shall take a big hit . Those who say that this might result in bigger outsourcing might be correct but those orders shall not flow in immediately. When your core business gets hit, you don’t think of your IT systems and processes which are tools to increase productivity!Check out the latest CISCO warning which sells telcom gear to enterprises.

The impact on the rest of the economy remains to be seen. I feel real estate is another sector which can be hit because of slowdown in demand. Another thing to watch shall be the “hefty valuations” that India currently enjoys. Will it stay that way?

Technically I am not getting very pretty signals. Had this momentum continued this could have easily taken us past 6000+ levels. Now the downwards momentum can take us to 5450 and 5000 levels once 5700 gets broken on the downside.

So prepare yourself for some rough days ahead!