Enough opportunity left to buy quality stocks:Anil Manghnani

Excerpts from an interview:

Q: We have come back to almost 5100, what does it look like, 4900-5000 will be tested or are we going to bounce back or are we going to test higher levels or even lower levels?

A: The pattern is playing out to the tea. We talked about a couple of days back that one down leg is still left to retest the bottom and this retesting doesnt have to be all the way down at last couple of Tuesdays back at 4,400 or 15,000 it can be a little higher.

My guess is if the pattern plays out normally it goes and tests the 200 day simple moving average which is somewhere between 5,000 and 4,900 on the Nifty. So those levels anywhere between 5,000- 4,860 and 17,100 to 16,700 on the Sensex, I think those levels will be tested.

I dont see it running away as such, there will be enough of opportunities in the period of a week when that testing takes place for you to buy stocks and typically what happens when the market does a 60% retesting, you would be surprised to see how many stocks come back to the lows to the last couple of Tuesdays even though at that point the index was much lower. But that is typical of what a retesting does, so you will get enough opportunities to buy.

The fear this time as compared to the previous occasions, in the previously the fall has been in some sort of a ladder where it keeps on going up and coming down but the trend is a little down and then you get the final pain. This time the pain was in seven days, stocks have fallen 65% to 70%, which has completely wiped out two aspects of the market, the trader side and the retail interest side. Plus you have the FIIs selling on a continuous basis, so three parts out of the four if you leave out the domestic mutual funds that are trying to nibble every day.

So there are three aspects of the market missing out on the buy side which is why the pain is a little more this time and even if we get to those levels, we may not see the sharp bounces that we are used to but we may see more of a consolidation and a base building and then a steady move up.

Q: Can you open up a trade at 5,100 or not quite?

A: I would wait, I am very clear this time the fall was so sharp and it has taken out three aspects from the market already. So any bounce or trade is so low on volume that the moves are going to be a little volatile. The market needs to settle at some point and one is probably better off trading on the up tick a little higher than trying to trade volatility and I dont think it makes sense to trade volatility because the volumes are too thin and movements will be very sharp.

I think one needs to wait for things to settle down. We maybe decoupled in the sense of the economy, but in terms of like everyday you hear different FIIs selling out, they have to off set some of the sub prime losses by selling across Asia and thats still happening, so wait for that to settle down. The way they are selling, they are in no hurry to come back and buy, so the market is going to spend some time at the lower level and consolidate. Its not going to hit some point and run away. You will have enough opportunities, so just wait for it to settle down.

Even if you had some trading sessions where nothing happened, a 50 point band on the Nifty or a 100 -150 point band on the Sensex that might be good for base building. I dont think anybody is interested in seeing 500 points up and another 500 points down.

Don't listen to him ! He won't take any responsibility if you take a loss, he will just put his hands up, if u don't believe after taking a loss try to hold him accountable for his predictions and see what happens.

Why don't you read Sain't thread "Teach a man to fish" or watch Dave's trading videos iwhich I posted in the beginners section instead of listening to all these self proclaimed analysts.

Stocks will rally by 3-4% tomorrow a pre budget rally, so make happy.
Start selling monday onwards, and get rid of any holdings, the markets look like a death trap to me

old article but must read....

Watching out for disclaimers that are not in the open
07 Feb, 2006


Investing is simple, but not easy, said the legendary investment guru Warren Buffett. Unfortunately, a large army of retail investors dont listen to sound advice from real gurus with an impeccable track record. Instead, they follow the wisdom quoted on a bullish website that says, Dont confuse brains with a bull market.


There is nothing new in this attitude; human nature has remained the same for centuries. Jesse Livermore, a legendary speculator (who correctly predicted the crash of 1929 that led to the Great Depression) had said: The average man doesnt wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesnt even wish to have to think.


This quote has held true in every major bull market around the world, whether it is in stocks or commodities. New generations of investors come into the market believing that the shortest route to riches is instant trading tips. It is happening again as the Sensex soars past 9700 and towards the 10000 mark.


Discerning investors have often noticed how even so-called experts voice confident opinions that are proved disastrously wrong within a day. To their credit, many of them readily admit their misjudgement; but to them it is usually means a sheepish smile, a shrug and a new prediction for the next day. Investors who may have acted on the advice could easily have lost their shirt.


The danger of relying on such tips was established by the Securities and Exchange Board of India (SEBI) when it issued cease and desist orders against Mathew Easow, a popular analyst and advisor on www.moneycontrol.com and top television channel.


Easow doled out instant advice to investors who called in with specific queries almost on a daily basis. Should I buy a certain stock, hold it or sell? Easow had an answer to every question.


Technically, SEBI regulations require all analysts who comment and a stock or offer advice to declare their own trading positions at the end of the show. This is to give investors a sense of whether or not the expert has a vested interest in a particular recommendation. However, television anchors are usually very breezy about ensuring proper disclosures. I have often seen analysts say I hold positions in some of the stocks discussed in the programme, without specifying what they are. This clearly violates the spirit of SEBIs disclosure rules, but it was always assumed that the regulator wasnt watching closely and nobody would bother to analyse every recommendation against the real trading position of the analyst.


SEBI did just that and unearthed the problem. It passed an order under the Prohibition of Fraudulent and Unfair Trade Practices regulations, based on the analysis of three specific stocks where Easows trading position was the opposite of his recommendation. He was actually selling stocks which he had advised investors to buy or vice versa.


Most stock brokers will tell you that this practice is as old as the hills. Broker reactions on hearing the order are revealing. They point out that brokerage firms send their analysts to television studios in order to build a profile for the firm and a market following. But why would anyone who is an expert spend a part of his/her working day dishing out free advice to anonymous investors as if they are on a mission to enrich strangers? One successful broker says: if I have a hot tip, will I be stupid enough to go and reveal it on national television? The only time I will talk about a hot stock is when I have bought enough of shares myself and am looking to sell and book profits.


This is exactly what SEBI seems to have found in the Easow case. Interestingly, Easows website has a fairly iron-clad disclaimer which says, Mathew Easow Research Securities Limited, Mathew Easow and their relations, business associates and clients have a vested interest in the above mentioned share and will benefit if the prices move up or down. Mathew Easow and matheweasow.com gives an unbiased and competent picture of trading opportunities and it does that to the best of its abilities. However, prices can move up as well as down due to number of factors, all of which are impossible for anyone to foresee. THEREFORE, MATHEW EASOW RESEARCH SECURITIES LIMITED and matheweasow.com and Mathew Easow cannot accept any responsibility for any investment decision or trading decision taken by readers and clients on the basis of information contained herein. Sometimes Mathew Easow Research Securities Ltd, Mathew Easow and their clients, relations, Business Associates etc. may hold contrary positions to the above recommendations.


The information, opinions estimates and forecasts contained here have been obtained from, or are based upon, sources we believe to be reliable, but no representation of warranty, express or implied, is made by us to their accuracy or completeness. Opinions expressed are our current opinions as of the date appearing of this material only and are subject to change without notice.


Clearly, anyone who acts on Easows recommendations (on the website) does so at his/her own risk. Unfortunately, the disclaimer was not available to the average investor who checked out his tips on the moneycontrol.com website or heard him on television.

I learn that SEBI is investigating three more cases of analysts giving tips that are contrary to their trading position. The regulator has also warned the media to ensure that it is not misused by analysts for personal gains and exercise due care and diligence by calling persons with proven credentials to offer advice. Since so many media companies are listed on the stock exchanges and directly under SEBI supervision, they will have to take this warning seriously. This is good news for investors because it even protects those who are foolish enough to act on instant tips, without doing their own research.


(This column first appeared in the Hindustan a leading Hindi language newspaper)