"Bear romance is over: But be cautious of TV Analysts"

~~G. S. Roongta

Last week, this column exposed the games that technical analyst play while making their calls about CNX Nifty heading Southwards to hit 4200 or BSE Sensex might break 14K. We have been repeatedly writing against such analyses over the last 3-4 weeks and finally their forecasts have proved completely wrong and misleading only to expose them as having some vested interest or being hand-in-glove with the bear lobby.
Having appeared on several business channels and their reviews/forecasts featured in the pink business dailies has rendered millions of viewers and readers who acted on their advice to suffer huge losses.
In the last issue of Money Times, our column headlined ‘Games analysts play’ has sparked great interest as we discussed in detail how such analysts use TV channels and the print media for their selfish motives and are in league with the interested lobbies, which is nothing short of a crime as they misguide millions of innocent investors who follow their advice.
It is indeed a great irony that some of these analysts having proved utterly wrong are still found boasting about their calls on the TV channels even today instead of admitting the error in their forecasts.
However, with the 1000-point rise on the Nifty and 3000-point rise on the Sensex from the levels of their baseless forecasts, has put an end to the gameplan of such analysts. When there is no timeframe given for such calls, let us frankly accept that it has no meaning and followers of such analysts must blame their blind faith in them for suffering huge losses. Even if by chance these calls materialize after a long gap, it makes little or no sense according to me.
The Sensex, which closed at 16739 for the week ended Friday, 20 January 2012, advanced further each trading day of the week under review albeit slowly starting with a mere rise of 12.72 points on Monday, 23 January 2012 to close at 16751.73.
In our last column, we had hinted that even if the CRR/interest rate is cut, the benchmarks might make a quantum jump and I am happy that our expectation was fulfilled when the RBI Governor announced the Monetary Policy on Tuesday, 24 January 2012, including a 50 basis point (bps) cut in CRR. This led the market to shoot up amid all worries by nearly 300 points to touch an intra-day high at Sensex 17050 while closing at 16995.77 with a gain of 244 points. Correspondingly, the Nifty advanced by 81 points crossing the 5100 mark to touch a high of 5141.05 and closed at 5127.
With no change in the bear speculation and the market handing over the reins to the bulls at the fag end of the month also proved to be a nightmare with the expiry of the F&O contracts of January 2012, which closed a day earlier on Wednesday, 25 January 2012 on account of the Republic Day holiday on Thursday, 26 January 2012. Thus the game played by the bears so far came to an end with the market sentiments flaring up on account of the 50bps cut in CRR, which was beyond market expectations and led the speculators to rush to cover up the balance of their oversold positions thus paying for their wrongdoings for the December 2011 expiry and creating the scare about the market heading further south!
As expected, the market gained on Wednesday, 25 January 2012 – the day of the January 2012 F&O expiry. The Sensex gained 81.41 points at 17077.18 while the Nifty was up by 31 points at 5158 crossing some of the resistance levels of Nifty 5050 and 5100 and Sensex 17K.
The market maintained its upward trend when it reopened on Friday, 27 January 2012 and closed the day with a gain of 156.80 points at Sensex 17233.98 and a gain of 46.40 points on the Nifty at 5204.70. In fact, the market has risen sharply and unexpectedly from its 20 December 2011 low of 15135 and Nifty 4531. This gain of 2000 points on the Sensex and nearly 700 points on the Nifty in just a month amid fears of a further decline as created by technical analysts is indeed a great achievement. Several stocks that were beaten down like L&T, Maruti, Tata Steel, Tata Motors and majority banking stocks like Axis Bank, ICICI Bank, SBI have gained absolute grounds, which is a good indication of the market sentiments reviving.
Whether, the level is now sustainable or not depends on how the government policy announcements till the Union Budget is announced. If they are positive and announce economic reforms and inflation remains under control between 7-8%, I feel there will be no risk in the market and investors who had fled earlier may return. But we have yet to be very careful of the beaten bearish analysts who crowd the TV channels as they might start giving wrong signals again about the Nifty heading towards 5600-5800 or falling back to 4200 or Sensex 14K.
As warned earlier, the readers of this column should not pay any heed to such calls and those who will buy beaten down good stocks in any panic conditions are bound to reap a good harvest as has been possible in the past few weeks.
L&T, which was beaten by the bear lobby to as low as Rs.985, has shot up to a high of Rs.1388 gaining over 400 points.
Tata Steel that had fallen to Rs.320 has risen by over 140 points to Rs.462 within 2-3 weeks. So my earnest request to my readers is that they should always remain cautious of such mischievous and misguided calls designed to create fears.