Nifty : Ready for Orgasm - 7200 by June 2014

Can it be true?

Guess ejaculation is round the corner. And

Nifty is all set to feel the Orgasm - crossing 7000 by June 2014...may be the time atmosphere is full with hopes, happiness, life and romance when the skies open the doors and soil tastes the first drop of the rain water!!!

Yes...Nifty is changing the tracks and first junction will be at 6640. Market may consolidate here in a tight range of 6350-6650 just before it takes off!!

Nahhh.....that's insane!!! Can't be...who will lead us there?

Hellooo...were your sleeping today in the markets??? Of course!!! Its going to be financials. But its going to be party for all - the Stars, the Duds, the Laggards, the Heros.

TCS and ONGC of the world be back to help you climb the mountain and so shall be ITC and Sun.

So if you are in the camp that Modi rally is already priced in and we wont move higher post elections...please write 6600 calls and best of luck. Promise we will not betray and leave you but sure be present for the burial.

Its a time for changing the tracks. Its not a bus...its a train. If you gonna miss its, it gonna be real hard to catch it...so just seat tight and allow yourself a chance to experience an Orgasm of Life.
  

Changing the Tracks - S&P 500: Set for 1920!!! Top or New Bull Market to commence post 2000

Borrowing from the locomotives changing the tracks are crucial points and called junctions. 

Secular US bull market train derailed early 2008 itself and after free fall till March 2009 the train is heading back now to regain the lost course. 

It has already jumped the first junction successfully crossing over at all time highs in April 2013.

But the train is now headed for first major stop/station as I may call at 1920.

However it seems all set to get back on the 2000-2008 track if it can successfully pass by junction at 2000.

Thats a major hurdle ahead for the market. 

If it does and by end 2014 itself then...boy o boy...fasten your belt....hold tight...we are set for stupendous Ride !!!

Ranbaxy - Too Fast Too Furious - Sell Rs.500 plus CALLS and BUY Rs.410 PUTS

Ranbaxy has seen an extraordinary rise from a low of Rs.250 in early August to Rs.460 as of yesterday...The stock appears to be in an exceptionally strong uptrend and the rise is mostly supported by uncertainty/non-clarity around the expected turnaround benefits if the rumors of it being cleared by FDA came true. 

But we believe even if those rumors be true for the time being it seems to more than price the immediate benefits of the same and there is no error of execution built in it. We expect the same to be priced in as risk-reward appear to be fair hereon.Why? 

Check the chart below which shows that EV/EBIDTA is now back to average of the last 5 years. So valuations are no more distressed or cheap.

Even on P/FCF basis the valuations are back to averages. 

However, given the strength of the stock we do recognize that the stock could further surge from here. But its more likely that it could take a breather before surging ahead and given the sharp rise that could be a big swing downwards.

So how to play the stock then?

We advise to SELL CALL OPTIONS at strike price of Rs.500 and above.
Use that money to BUY PUT OPTIONS at strike price of Rs.410

STOP LOSS at cash price of Rs.480...the immediate resistance and next resistance at 510 will be hard to breach

Expect put prices to more than double in the current series...fund the same selling call options...returns will be very high.

Good Luck !!!

Long CIPLA

Long Cipla @ 435 (positional trade call for September series)...

Target - 485....Stop Loss - 428

Cipla has broken out of a long consolidation and we expect the stock to be on a secular uptrend hereon...The company has a new CEO and aggressive growth plans in place. The rupee depreciation is a bonus cherry on the cake. In fact, we expect the stock to double from these levels over the next 3 years. Strong conviction BUY!!

Click on the chart for better view.