The Great PSU share sale.

As per TV coverage, NTPC and SAIL share sale is likely to exceed Rs 30,000 crores this year. That is about US $6.5 billion. This is a lot of liquidity moving out from the market into the hands of the Govt.

Less money could mean higher interest rates, which could mean lower share prices. It is possible that India may see (a) Decent GDP growth at 6%+ (b) Growth in corporate earnings, and, (c) A trading range for stocks. China has gone through this process a few years ago when the Chinese market was falling while the economy was booming.

Indian markets, as we are reminded, are – fairly valued. As per the NSE web site, the PE ratio on Nov 16, 2009 was 22.48. This is not low.

While the markets can do anything, it is possible that Indian stocks may go through a period of relative underperformance as compared to world markets.

CeTA – Certified Technical Analyst

This certification offered by The Association of Technical Analysts, India should be essential qualification for every aspiring analyst. If you are an exisitng professional then the certification will provide an added assurance that you know the subject. If you are aspiring to become a Technician then the certification is essential to your prospects.

Please visit www.taindia.org for more details. The Exam for Level – 1 will be held in the last week of December 2009.

Bollinger Bands

The traditional approach to Bands on prices is to identify the bands as support and resistance lines. Traders will often use the lower line as support and upper line as resistance. But, system testing suggests that the opposite is superior in terms of profitability. When prices break the resistance line, they signify strength, thus giving a buy signal. When prices break the support line, they signify weakness, thus giving a sell signal. The bands then become a trend indicator. Like all trend following mechanisms, this approach will lose money when markets go sideways.