TIME UP FOR THE AMERICANS........

Anyone aware of the US Government's real financial situation knows that time is running out. The Government has $15.5 trillion in admitted debts but those debts, when calculated under Generally Accepted Accounting Principles (GAAP), or 'honest accounting', is over $70 trillion. $70 trillion divided by 300 million+ Americans works out to $233,000 per person in US Federal Government debt and obligations. Or nearly $1 million per family of four.

That does not included personal debt, state debt or municipal debt.

This debt plus an economy that has been completely hollowed out by the Federal Reserve system ensures that there is no way the US Government can ever pay off this debt. And, everyone knows it.

The indications that the US Government is moving very quickly to enact any legal measure or fine against Americans and to make it nearly impossible for any American to escape payment to pay for their sins are everywhere.

We recently commented on how It Is now Easier to Enter the US Than It Is To Leave. Customs agents and cash sniffing dogs stand on guard at most international US airports checking to make sure no one has more than $10,000 in cash without declaring it. The standard response to this is: "They are only making it difficult for criminals to move about and to transfer money".

Well, the problem is, the US Government is moving very quickly to make it so almost everyone is seen as a criminal in the eyes of the US legal system.

Now We Are All Criminals

It is already said that there are so many laws, rules and regulations in the US that each person in the US breaks at least one law per day, if not much more - without even knowing it. But the US Government is becoming more obvious in how it will go about making everyone a criminal and fining them ridiculous amounts of money in doing so.

This week, an American family who said they were just trying to teach their son about responsibility and entrepreneurship was fined $90,000 by the USDA because the teenager sold $4,600 worth of bunnies in one calendar year without a license. Not only were they demanded to pay $90,000, but if they did not pay within a short period of time the fine could increase to as high as $4 million.

This one case only goes to show how easy it is, within the system, to take any small transgression and to blackmail someone for, for all intents and purposes, every penny they have - or more.

Students to be Forced into the Military to Repay Debts

We also recently commented on how the US college system draws people into large debts (Debtucation) and how student debt is now larger than credit card debt in the US. It is the US Government itself that has made college education so expensive by offering student loans to anyone who can fog a mirror but again they have shown their intentions by making student loan debt the only debt which can not be forgiven. A 2005 decree from the Bush Administration stated that student loan debt could not be dissolved through bankruptcy proceedings. The only other scenario where this "no-escape" clause exists is debt from criminal acts and debt from fraud. In other words, student loan debt is seen, by the US Government, as being similar to proceeds from crime!

What will this mean with more young Americans in student loan debt than any other time? It's anyones guess but it would not be out of the realm of possibility to force students who can not pay off their debt into the military to repay their debt.

And with the US military with 800 military bases worldwide with US military personnel in 156 countries and US Military bases in 63 countries and currently occupying or attacking Iraq, Afghanistan, Libya and with other drone operations in places like Yemen and Pakistan, the US is all but ensuring that it is screwing around in enough places to eventually draw in one of the big boys. Russia, China or Iran.

And, hey, we Gotta Support the Troops, right?

US Government Eyeing Pensions and Retirement Funds

On the other end of the spectrum, seniors and those in retirement, the US Government recently made it very obvious that funds held in retirement accounts are going to be the first to be taken when times get tough.

In the recent scuffle over raising the debt ceiling, the US Government was short of some funds after reaching the United States' $14.3 trillion debt ceiling last Monday. Where was the very first place the US Government went to find new sources of funds? Last week they dipped into state pension funds in order to make payments.

It is no great leap to think that as things worsen in the US Government's financial situation, which is all but guaranteed, that the first thing that will be nationalized will be all tax sheltered retirement accounts. After all, we all have to do our part to pay for the debts of the Government, right?

Anyone living off of US pensions should be very worried. And anyone with significant funds in retirement accounts should be running, not walking, to get any funds they can outside of the direct control of the US Government. We recommend looking at "Unleash Your IRA", a great program for diversifying your IRA internationally.

Get a 2nd Passport

There are two ways to look at the upcoming battle between the US Government and US citizens. You can stay and fight or you can run and hide.

If you plan to stay and fight we wish you good luck and will try to support your efforts in any way we can.

If you would rather run and hide then one of the first things you should be looking to do at this time is to at least get a second passport. This is still legal for Americans and there are many options. We discuss many of them, regularly in our newsletter.

As well, if you have the financial capability, we highly recommend buying some foreign real estate - preferably somewhere you like to live. Our favorite place, at the moment, is La Estancia de Cafayate in Argentina (email them for more information at tdv@lec.com.ar).

2011 Last Year to Get Out

Most things are still legal in the US. It is still legal to have foreign bank accounts - although you are required by law to report them to the Government. It is still legal to get a second passport. It is still legal to move assets in your IRA outside of the country. It is still legal to move money outside of the country and buy foreign real estate.

The window of opportunity is closing. If you live in the US and still have all your assets inside of the US, you likely have months, not years, to internationally diversify your assets and to get your affairs in order. Anything much after 2011 is taking a big risk of losing it all.

The Government Can

After all, we, as individuals have to live within our means and it is considered a crime if we forcibly take money from others to pay for our debts. The Government, on the other hand? The Government Can.

INDIA'S Kondratieff Winter confirmed............. IT'S OFFICIAL......

The break of 5348 confirms that the post March rally was a bear rally and that is the most important piece of evidence for this. As the Market kept doint its own thing thanks to RBIs muted policy rate increases it took time to take a call on the possibility of a Kf cycle extention. Just because the US managed to extend its Kf Autumn for 16 more years than analysts on the subject expected niether kills the theory nor justifies why everyone else should be able to repeate the same wonder. Unless you own the reserve currency of the world are the biggest consumer of the world and have accessto markets for low cost production, that feat can only be done by a world power at the height of its reign.
UK did so in its time with colonisation and the US did with Globalisation. What I am referring to is the key ingredient that postpones the onset of a deflationary winter with deleveraging and recession as key components. In other words keep the Kf Autumn,which is marked by speculation in an envirionment of growth amidst historically low interest rates, continue longer than its usual average of 8 years. An economic autumn occurs because before it inflation appears to have come under control and rates were lowered to very low levels. Typically in 8 years these low rates allow debt to balloon to unsustainable levels.

An Autumn extention therefore needs keeping rates low without kicking in inflation. Colonisation and Globalisation allowed moving manufaturing to cheaper destinations or to buy inputs cheaper, thus inflation was controlled for longer than would have been normally and the cycle went on. But nothing goes on forever.
The Kf winter always follows once the Arbitrage is over, and the sister countries also pile up enough debts or a worsening social mood that makes them financially unviable. The Kondratieff cycle[Kf] was not a time cycle but a flow of events in a pattern over time.The question for the last 6 months was whether India could repeat those wonders. Despite the double digit inflation in CPI and Food RBIs slow policy action allowing for growth made you believe that the Government and society was working towards an alternate outcome but the recent aggressive stance and policy freeze continues as an issue. In the meantime the stock market action and its wave structure confirms the bearish outcome. So irrespetive of what it may look like in terms of a short term bounce the eventual result of the market should be more significant downside.For indians recession and deflatoin are words unheard of and most disputed as even a remote possibility. Yes the triggers for 8% GDP growth exist but with India's total debt [public+private]at 150% of GDP its only possible if both inflation and

interest rates stay low. A potentially rare possibility unless we can start outsourcing to someone else.

Refer : PDF attached.

C'MMON ITS BETTER LATE THAN NEVER TO REACH ONES GOALS ........NIFTY .......................

Orbit Corp: Where's The Execution?

Orbit’s FY11 revenue was disappointing due to construction being below guidance and delay in approvals in the past few months. Even with lower sales (given sluggish market conditions), Orbit has sold 79% of its launched projects, from which it has receivables of Rs12bn as of Mar ’11.

n Results review. Orbit’s FY11 revenue belied our expectations, given removal of a project (Villa Orb annex) from revenue recognition, as the threshold was not achieved. This indicates below guidance construction, although it does not impact cash flows. Adjusting for this, FY11 revenue and PAT were in line with our estimates, at ~Rs4bn and ~Rs0.8bn respectively.

n Operations. Sales slowed in 4Q, but Orbit closed FY11 with Rs5.3bn sales and Rs3.4bn cash collected. Although Mandhwa project is not in line with guidance (unlikely in FY12 too), Napean Sea Road remains Orbit’s forte, with ~50% sales contribution. Orbit’s projects saw 30% price appreciation in FY11.

n Focus on execution. Sales receivables stood at a healthy Rs12bn as of Mar ’11. Admitting slower execution in FY11, though citing approval delays, management has guided for 30% rise in the FY12 construction budget to ~Rs1.7bn and collections of ~Rs8bn.

Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

India Heading For Sub 7% GDP Growth in FY12; Crude To Average $130/BBL in FY12 and $140/BBL in 2013..........

Goldman Sachs

India Research

It is a GS contention that FY12 earnings for Sensex companies have been over-estimated by as much as 22 per cent by consensus street analysts. If FY12 Sensex earnings come a cropper at just about Rs 1050-1100 then a very shaky base case for the Sensex would be 15000-16000.

Construction, Real Estate, Infrastructure and Cement will be the biggest sufferers in a stagflation scenario. Top sells will include SBI, BOI and ACC.

Scenario to 7.5% and 6.9% GDP growth

We have run two scenarios for our coverage in India. The first assumes a further 75bps hike to rates, oil prices of $115/bbl and GDP growth of 7.5% in FY2012. The second, more aggressive scenario, assumes a further 150bps hike to rates, oil prices of $130/bbl and GDP growth of 6.9% in FY2012. Under the first scenario, we conclude that our average earnings would be cut by 6.4% (taking them 16% below current consensus) and under the second scenario, our earnings would be cut by 12.4% (going to 22% below consensus).

GS forecasting 7.5% inflation in FY 2012

Our ECS team has increased their forecast for inflation from 6.7% to 7.5% for FY12. In this note, we explore how inflation has impacted corporate profitability and valuations in previous cycles and seek to identify companies that could be shielded in a difficult macro environment.

High inflation a harbinger of lower growth, lower margins and compressed multiples

Previous periods of high inflation in India have led to a 200bps compression in EBIT margins, 250-300bps compression in net margins and a 15% contraction to earnings multiples. Against this backdrop, we note that consensus is forecasting a 70bps improvement to EBIT margins and a 30bps improvement to net margins in CY2011E. Our earnings forecasts for our coverage group are 10% below consensus in FY 2012.

We expect consensus earnings to decline in the months ahead. In this note we seek to identify companies that are relatively insulated from a dynamic of decelerating growth, as well as those particularly exposed to the same.

Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

Soft Commodities To Shoot Up As The Biggest Drought Of 50 Years Hits China.........

The impact of China's worst drought in a half-century is deepening, as the parched weather that has left millions without enough drinking water is pushing inflation higher and adding to widespread power shortages.

Reports said Thursday that the power company in Shanghai, the country's commercial center, says some stores and factories may have to close in the hottest days of summer to cope with power shortages. The city is also scrambling to protect its drinking water from being overly tainted by salinity due to higher tides as the flow of the Yangtze River weakens.

Upstream, farmers are watching crops wither and struggling to save their livestock, while inland shipping has been obstructed by low water levels.

Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

Intraday update>>>>>>

INTRADAY LONG NIFTY FUT ABOVE 5370 AND DOUBLE THE QTY ABOVE 5395 NOW TRADING @ 5405 - REVISE THE SL TO 5390 AND HOLD FOR TGT'S 5420 / 5445 / 5475

NOW IF BREAK 5370 ON NIFTY FUTURE GO SHORT BELOW 5370 AND DOUBLE THE QTY BELOW 5335 KEEP SL @ 5395 FOR TGT 5310 / 5285 / 5260

INtraday Trading Lvls. For NIfty>>>>>>>

Long Nifty Future above 5370 double the qty above 5395 with sl 5335 for target 5420 / 5445 / 5475

Exit if break 5395 and does not sustain above the same

Short Nifty Future below 5335 double the qty below 5310 with stop loss 5370 for target 5285 / 5260 / 5230

Exit if break 5310 and does not sustain below the same

Nifty From now onwards ...... The Journey to the Bottoms of the markets....

TODAY NIFTY SPOT [ 5348] GAVE A CLOSE ABOVE 5339 .

NOW ON ANY UPMOVE TOWARDS 5499- 5537 OR IN RARE CASE 5598 SPOT MARK-- ENTER NIFTY SHORTS FOR THE TARGETS BELOW 5280-- 5100 -- 4950/4933-- 4884 [ ALL SPOT LEVLS. MENTIONED]

WILL UPDATE MORE LATER.

Intraday update>>>>>>>>

BROKEN MONTHLY SUPPORT LEVEL OF 5339 SPOT . NW CLOSE BELOW 5339 .HEEEEEEEEEEEELL BREAK LOOSE . WAIT N WATCH . IN CASE ANY RALLY HAPPENS TO BE THERE IN A DAY OR 2 . THEN SHORT VIGOROUSLY . . GATES WILL OPEN FOR LOWER TARGETS TO BE ACHIEVED.

IN CASE TODAY NIFTY SPOT CLOSES BELOW 5339 -- THEN BY 31ST MAY --- THERE
LARGE POSSIBILITY OF TOUCHING 5100 -5097 SPOT MARK ON THE CHARTS.

STAY ALERT . STAY AWAY FORM THE MARKETS. TILL MONTH END .

Niall Ferguson's Complete And Definitive Guide To The Sovereign Debt Crisis Read more: http://www.businessinsider.com/niall-ferguson-sovereign-debt-2

The European sovereign debt crisis is well and truly back and on the minds of investors attempting to asses whether or not it will expand beyond Portugal's borders.

Harvard and Oxford historian Niall Ferguson released a presentation last year on how such crises develop, and it's vital reading for anyone trying to understand the times we live in.

This isn't just about the "PIIGS" states, it is about the United States and United Kingdom, and their very real crisis in public finances. It is about what these states are going to have to sacrifice to maintain stability, in both a fiscal and political sense.

The speech, made at the Peterson Institute for International Economics, can be watched at their site, but we have the amazingly powerful presentation here.

Read more: http://www.businessinsider.com/niall-ferguson-sovereign-debt-2011-3#ixzz1NLJigatm

UPDATE>>>>>

TRAILING STOP LOSS FOR NIFTY SHORTS NOW IS 5365 SPOT MARK

MY SIMPLE FUNDA :

INVEST IN GOLD N TRADE IN SILVER .
SIMILARLY INVEST IN STOCKS N TRADE IN NIFTY.

NF Intraday Trding Lvls.>>>>>>>>>

LONG NF ABV 5405 SL5386 TRGTS. >> 5427/5455/5480
SHORT NF BLW 5385 SL5395 TRGTS.>> 5367/5331/5302
THIS IS FOR INTRADAY

FOR POSITIONAL -- SHORT NEAR 5455-5480 WITH STRICT SL 5505

CHARTS>>>>.

BE READY FOR A DOWN MOVE IN NIFTY NOW . AS EXPECTED. LETS SEE WHETHER IT HAPPENS OR NOT.

Nifty update>>>>>>

Todays daily chart attached sports an ending triangle pattern with its e leg potentially at yesterdays lows, so as long as 5373 does not break it could cause short covering to 5475 or 5570.

If yesterdays low of 5373 breaks trend down resumes .If 5348 breaks hell breaks loose .

Louis Navellier: Sell Construction, Real Estate & Banks.....

If you have any money in construction, real estate and PSU banks, get out now! These stocks will be fatal to your portfolio when the next round of economic reports comes out next week.

Here’s why:

1. Many are not only losing customers and market share but also are facing permanent decline as the economy tightens and they fall further behind their competition as next week’s economic reports will clearly show.
   
   
2. Their profit progress to date is simply unsustainable because most of their 2010 and first quarter 2011 profits came from downsizing and not revenue growth, which is about to hit a brick wall and send a shockwave throughout Wall Street.
   
   
3. Those with bloated valuations and who are up to their eyeballs in debt will fall the furthest the fastest as soaring energy prices and rising inflation and rising interest rates crush earnings—that describes our 32 stocks to sell below to a “T.”
   
   
4. Our research shows the biggest collapse will come in the next 24 to 48 hours, as our sell-side report goes viral—before next week’s reports reveal the truth—and the public along with pension funds follow our lead in mass and abandon ship.
   

Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

Nifty Future Lvls.for Trading>>>>>>

Long Nifty Future above 5400 with stop loss 5393for target 5425 / 5468 / 5500

Short Nifty Future below 5375 with stop loss 5399 for target 5355/ 5324 / 5280

Asian markets slide following signs European debt crisis is getting worse, US economy slowing ...........

Pamela Sampson, AP Business Writer, On Monday May 23, 2011, 1:29 am EDT

BANGKOK (AP) -- Asian markets were sharply lower Monday amid signs of U.S. economic sluggishness and escalating worries about Europe's debt crisis after Italy and Greece were slapped with credit downgrades.

Oil prices fell below $99 a barrel as a stronger U.S. dollar made commodities more expensive for investors with other currencies.Signs of a worldwide slowdown in economic growth, manifested in slumping markets and rising inflation rates, are also cooling investor sentiment, according to Linus Yip, a strategist at First Shanghai Securities in Hong Kong.Markets are going through "a global correction" because of slowing growth in China, the contraction of Japan's economy and Europe's debt problems.

"Money is just not willing to go into the market," Yip said. "Investors are expecting the market to go lower."

Japan's Nikkei 225 slid 1.6 percent to 9,456.29 and South Korea's Kospi tumbled 2.3 percent to 2,062.77. Hong Kong's Hang Seng shed 1.7 percent to 22,798.28.

Shares of Japanese auto maker Honda Motor Corp. were down 1.6 percent as the company announced its workers would take 14 days off this summer because of production interruptions caused by parts shortages. The work days will be made up later in the year.

Operations at Honda, like scores of other Japanese manufactures, have been severely hindered after an earthquake and tsunami on March 11 struck Japan's industrial northeast. The region, largely wiped out, was home to hundreds of companies that manufacture parts for the country's powerhouse manufacturing industry.

A weakening yen didn't help Japan's export sector much. Canon Ltd. lost 1.6 percent, Panasonic was down 0.9 percent, and Hitachi Ltd. lost 2.2 percent.

Virtually no sector nor any country escaped punishment. Chinese blue chip property developer China Resources Land Ltd., listed in Hong Kong, dropped 3.1 percent. Heavy equipment makers tumbled, including Japan's Komatsu Ltd., down 6.8 percent, and Korea's Hyundai Heavy Industries Co. Ltd., slid 6.7 percent. China Garments Co. Ltd. was down 5.6 percent.

Shares of most major airlines also weakened. Korean Air Lines Co. Ltd. lost 3.7 percent while Hong Kong's Cathay Pacific Airways Ltd. dropped 2.2 percent.

In Europe, Standard & Poors cut its ratings outlook for Italy's debt from stable to negative Saturday, citing the country's poor growth prospects and concerns about the government's ability to reduce public borrowing. But with its rating still A+, Italy remains in far better shape than Greece.

Credit ratings agency Fitch cut Greece's long-term credit rating further into junk status on Friday, saying the indebted country faces challenges changing its economy to reduce debt. Investors remain concerned that Greece will have to stretch out its debt repayments or pay creditors less than what they're owed. Europe's banks, especially those in Greece, hold lots of Greek bonds, and a restructuring could hurt them.

In New York on Friday, stocks closed broadly lower for a third straight week on signs that U.S. consumer demand may be weakening.

Retailers Gap Inc. and Aeropostale Inc. each lost more than 14 percent Friday after cutting their profit forecasts for the year, in part because of higher costs for raw materials and sluggish sales. That was a worrying sign for investors who had counted shoppers to lead a recovery in spending.

The Dow Jones industrial average fell 0.7 percent to 12,512.04. The Standard & Poor's 500 index lost 0.8 percent to 1,333.27. The Nasdaq composite dropped 0.7 percent to 2,803.32.

Benchmark crude for June delivery was down $1.14 to $98.96 a barrel in electronic trading on the New York Mercantile Exchange.

The euro dropped against the greenback to $1.4073 from $1.4201 in late trading in New York on Friday. The dollar strengthened to 81.90 yen from 81.57 yen.

Italy, Spain, Portugal, Greece and Ireland Are likely to Default on Debt Payment-Negative For Global Banks.............

Asian markets were sharply lower Monday amid signs of U.S. economic sluggishness and escalating worries about Europe's debt crisis after Italy and Greece were slapped with credit downgrades. Oil prices fell to near $99 a barrel Monday in Asia as a stronger U.S. dollar made commodities more expensive for investors with other currencies. Japan's Nikkei 225 slid 1.4 percent to 9,474.83; South Korea's Kospi tumbled 1.8 percent to 2,073.01 and Hong Kong's Hang Seng index slumped 1.6 percent to 22,817.95.

Shares of Japanese auto maker Honda Motor Corp. were down 1.6 percent as the company announced its workers would take 14 days off this summer because of production interruptions caused shortages of parts. The work days will be made up for those days later in the year.

Operations at Honda, like scores of other manufactures, were severely hindered following a devastating earthquake and tsunami on March 22 struck Japan's industrial northeast. The region, largely wiped out, was home to hundreds of companies that manufacture parts for the country's powerhouse manufacturing industry.

In Europe, meanwhile, Standard & Poors cut its ratings outlook for Italy's debt from stable to negative Saturday, citing the country's poor growth prospects and concerns about the government's ability to reduce public borrowing.But with a ratings outlook still at A+/negative, Italy remains in far better shape than Greece.

Credit ratings agency Fitch cut Greece's long-term credit rating further into junk status on Friday, saying the indebted country faces challenges changing its economy and government to reduce debt.

Investors remain concerned that Greece will have to stretch out its debt repayments or pay creditors less than what they're owed. Europe's banks, especially those in Greece, hold lots of Greek bonds, and a restructuring could hurt them.

Also in Europe, Spain is holding regional elections this weekend, leading to speculation that new politicians might say the country is even more deeply in debt than the current government had forecast.

That raises the possibility that Spain would need to seek a bailout, following the path of Greece, Ireland and Portugal. In New York on Friday, stocks closed broadly lower for a third straight week on signs that U.S. consumer demand may be weakening.

Retailers Gap Inc. and Aeropostale Inc. each lost more than 14 percent Friday after cutting their profit forecasts for the year, in part because of higher costs for raw materials and sluggish sales. That was a worrying sign for investors who had counted shoppers to lead a recovery in spending.

The Dow Jones industrial average fell 0.7 percent to 12,512.04. The Standard & Poor's 500 index lost 0.8 percent to 1,333.27. The Nasdaq composite dropped 0.7 percent to 2,803.32.

May is traditionally a weak month for the stock market. Traders have little to base buying and selling decisions on with corporate earnings season officially over and economic news scarce.

Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

India's Good Times Are Over. Sensex May Not Return More Than 8 per cent per annum over 2011-2014......

Over the next three years, Sensex returns could disappoint, with a compound annual outcome of 8.3%. This is where the model has the best predictive power and essentially the message is that, for medium term investors, equity valuations are middling at the current level of short rates.

Key Debate: What does the combination of high short rates and middling equity valuations suggest about future market returns?

A modified earnings yield gap approach

We have modified the traditional earnings yield gap model, using short instead of long rates. The resulting earnings yield gap appears to have strong predictive power on medium-term (three-year forward) market returns. The R-squared of the relationship is 70%, implying that more than two-thirds of the three-year compounded annual return of the market is explained by this single variable.

What does this model say about the market?

We use this relationship to model the Sensex path over the coming three years. It suggests there is downside to the Sensex in the next three months (but has low accuracy for short term forecasts) but that, over the next 18 months, the market is heading for a substantially higher level, with the Sensex potentially breaking 30,000.

Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

NIFTY WEEKLY TREND ANALYSIS...........

ON WEEKLY CHART'S NIFTY SPOT GIVEN TWO WEEKS CLOSE BELOW
THE SUPPORT TREND LINE SINCE 2ND WEEK OF FEB 2011
NOW THIS IS A CONFIRMATION THAT IN COMMING WEEKS
NIFTY WILL TEST / TRY TO COME NEAR SUPPORT ZONE TREND LINE -2 @ 5210
BE CAUTIOUS : LOOK LIKE MANY BAD NEWS ON CARDS TO COME

JUST USE PULL BACKS TO SHORT AND SQUARE-OFF THE LONGS POSITIONS

MOSTLY ALL THE INDICATORS ARE ON SELL AND -VE DIV

WEEKLY TREND LINE -2 @ 5210
LAMAX REKHA & LAST HOPE FOR NIFTY
IF CLOSE BELOW HISTORY WILL BE REPEATED

TWO WEEKLY CLOSE BELOW 5210
WILL TGT 1 - 4880 / 4760 & TGT 2 - 3400 / 3500
WITH SUPPORT IN BTW AROUND 4400-4500
STOPLOSS WILL UPDATE LATER

Nifty Future May>>>>>>

BUY ABV. 5431 SL 5424 TRGTS.>5447>>5472>>>5494
SELL BLW 5417 SL 5430 TRGTS.>5405>>5382>>>5358

Nifty May Future Lvls..

BUY ABV. 5432 SL 5426 TRGTS.>5456>>5492>>>5522
SELL BLW 5416SL 5431TRGTS.>5396>>5365>>>5330

TODAY THERE ARE CHANCES OF CONSOLIDATION BUT CAN SELL ON EVERY RISE NEAR 5449 5472 SPOT MARK. STRICT SL 5515 SPOT ON CLOSING

FII Derivatives Statitcs...........

FII DERIVATIVES STATISTICS FOR 18-May-2011
	BUY		SELL		OPEN INTEREST AT THE END OF THE DAY
	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores
INDEX FUTURES	58642	1590.24	54523	1478.75	767982	20788.34	111.49
INDEX OPTIONS	223849	6082.90	211907	5809.32	1796349	48683.90	273.58
STOCK FUTURES	91306	2398.02	90720	2353.07	1264699	30352.99	44.95
STOCK OPTIONS	13171	339.26	11782	303.44	24122	600.72	35.82
						Total	465.83

Geithner: GOP will bear responsibility for default...........

NEW YORK (AP) -- Treasury Secretary Timothy Geithner said Tuesday that if Republicans insist on passage of their budget plan as a condition for approving an increase in the nation's borrowing limit, they will be responsible for the consequences.

Speaking to a New York audience, Geithner said that Republicans would bear responsibility for the first debt default in the nation's history if they insist they will not vote for an increase in the $14.3 billion borrowing limit unless they win approval of a House Republican budget plan.

"If Republicans try to impose that plan on this country as a condition for raising the debt limit, then they will own the responsibility for the first default in our history, with devastating consequences," Geithner said in a speech to the Harvard Club of New York.

Geithner noted that the country reached the current borrowing limit of $14.29 trillion on Monday. He said he has begun deploying a series of bookkeeping maneuvers to avoid a debt default but that he will run out of maneuvering room around Aug. 2.

"As I have said before, Congress must meet its responsibility to protect the nation's full faith and credit by increasing the debt limit," Geithner said.

He said while the borrowing costs on the national debt have remained low, that could change quickly if financial markets begin to doubt America's ability to deal with its financial difficulties.

He said the cost of debt default, something that has never occurred in the country's history, would be as devastating as the financial crisis that hit in 2008.

"As we saw in the fall of 2008, when confidence turns, it can turn with brutal force and with a momentum that is very difficult and costly to arrest," Geithner said. "That is a threat we should pre-empt."

Geithner called on lawmakers to work on a credible deficit-cutting plan that could be accepted by both Republicans and Democrats.

House Speaker John Boehner said again on Monday that Republicans will not support an increase in the debt limit "without serious budget reforms and significant spending cuts."

Republicans have ruled out any tax increases, including any plans to end tax cuts for high earners enacted in 2001 and 2003.

The Treasury Department confirmed that the debt ceiling was reached on Monday with the debt now totaling $14.293 trillion, $25 million under the current ceiling of $14.294 trillion.

Treasury will maintain that level over the next 11 weeks through a series of maneuvers that began Monday when Geithner informed Congress he had halted investments in two pension plans for federal employees.

Treasury will begin reducing the debt holdings in those accounts over the next few weeks to make room for its regular auctions of debt.

AP Economics Writer Martin Crutsinger in Washington contributed to this story.

http://finance.yahoo.com/news/Geithner-GOP-will-bear-apf-2013587381.html?x=0&sec=topStories&pos=1&asset=&ccode=

Nifty Future Positional Shorts>>>>>>>

FLAG PATTERN FORMATION ON CHART WHERE THE HEIGHT IS OF 162 POINTS
BREAKOUT ON DOWNSIDE HAPPEN BELOW 5480

THOSE TAKEN SHORT BELOW 5480 CAN HOLD FOR TGT 5330-5310 WITH SL ON CLOSING 5515

UPDATE:-

POSITIONAL SHORT TAKEN @ 5800 AND DOUBLE BELOW 5680
WE BOOKED 50% OF SHORT @ TGT 2 - 5480 AND BELOW
NOW FOR REMAINING SHORT REVISE STOPLOSS TO 5515 ON CLOSING BASIS
BOOK REMAINING 30% @ TGT 3 - 5370 AND REMAINING 20% @ TGT 4 - 5245

AFTER MAKING 4 ATTEMPS NIFTY SPOT TODAY FINALLY CLOSED BELOW LAST SUPPORT TRENDLINE AS SHOWN IN CHART

ON WEEKLY CHART NIFTY SPOT TODAY HIT THE SAR LEVEL AND SAR TURNED TO SELL

AND AS POSTED ON SUNDAY THAT ON NIFTY SPOT WEEKLY CHART CLOSED BELOW THE SUPPORT TREND LINE - 1

SO NOW IN COMMING DAYS WILL MAKE AN ATTEMP TO HIT LEVELS NEAR SUPPORT TREND LINE - 2 @ 5210

Trading Lvls. for nifty future>>>>>

Long Nifty Future above 5480 with stop loss 5450 for target 5510 / 5540 / 5570

Short Nifty Future below 5425 with stop loss 5460 for target 5380 / 5355 / 5325

Positional Short Hold.....status updates........

FLAG PATTERN FORMATION ON CHART WHERE THE HEIGHT IS OF 162 POINTS
BREAKOUT ON DOWNSIDE HAPPEN BELOW 5480

THOSE TAKEN SHORT BELOW 5480 CAN HOLD FOR TGT 5330-5310 WITH SL ON CLOSING 5515

UPDATE:-

POSITIONAL SHORT TAKEN @ 5800 AND DOUBLE BELOW 5680
WE BOOKED 50% OF SHORT @ TGT 2 - 5480 AND BELOW
NOW FOR REMAINING SHORT REVISE STOPLOSS TO 5515 ON CLOSING BASIS
BOOK REMAINING 30% @ TGT 3 - 5370 AND REMAINING 20% @ TGT 4 - 5245

AFTER MAKING 4 ATTEMPS NIFTY SPOT TODAY FINALLY CLOSED BELOW LAST SUPPORT TRENDLINE AS SHOWN IN CHART

ON WEEKLY CHART NIFTY SPOT TODAY HIT THE SAR LEVEL AND SAR TURNED TO SELL

AND AS POSTED ON SUNDAY THAT ON NIFTY SPOT WEEKLY CHART CLOSED BELOW THE SUPPORT TREND LINE - 1

SO NOW IN COMMING DAYS WILL MAKE AN ATTEMP TO HIT LEVELS NEAR SUPPORT TREND LINE - 2 @ 5210

MORE CAN READ ON BELOW POST POSTED

NOTE : AS PER ASTRO ANY RISE ON MONDAY OR TUESDAY SHOULD BE USED FOR SELLING
ON WENESDAY & THURSDAY MARKET WILL REMAIN UNDER SELLING PRESSURE

AND ON FRIDAY WILL ATTRACT BIG SELL-OFF.

POSTING INTRADAY NIFTY FUT LONG / SHORT LEVELS IN NEXT FEW MINS

FII DERIVATIVES STATISTICS FOR 16-May-2011..........

FII DERIVATIVES STATISTICS FOR 16-May-2011
	BUY		SELL		OPEN INTEREST AT THE END OF THE DAY
	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores
INDEX FUTURES	62441	1717.92	63802	1755.78	760889	20865.40	-37.85
INDEX OPTIONS	202340	5585.36	180825	4981.89	1775575	48818.59	603.48
STOCK FUTURES	54168	1415.46	66681	1745.55	1248713	30389.76	-330.09
STOCK OPTIONS	8180	223.11	7944	216.81	21796	552.01	6.30
						Total	241.83

Trading Lvls.>>>

Note / Alert :- Reliance close below 930for2 days bloodbath start.

LT is weak below 1550 and trading below the lower trend line since 6-7 days
Close below 1500 heading for 1420-1380 / 1325 / 1240-1250 sl 1580 closing

Inspirational>>>>>

Birth was not my CHOICE, Death will not be my CHOICE EITHER,
The way I lead my life is ABSOLUTELY my CHOICE .

Friendship is certainly the finest balm for the pangs of disappointed
love. (Jane Austen)

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Nifty Flag Pattern formation.........

THERE IS FLAG PATTERN FORMATION ON CHART
THE HEIGHT IS OF 162 POINTS

BREAKOUT LEVELS
ON DOWNSIDE 5480 - TGT 5330-5310
ON UPSIDE 5615 - TGT 5765-5785

NEED TO CLOSE BELOW OR ABOVE
AND SUSTAIN THE LEVEL NEXT DAY FOR CONFIRMATION

AS PER ASTRO ANY RISE ON MONDAY OR TUESDAY SHOULD BE USED FOR SELLING
ON WENESDAY & THURSDAY MARKET WILL REMAIN UNDER SELLING PRESSURE

AND ON FRIDAY WILL ATTRACT BIG SELL-OFF.

NOTE :- OUR VIEWS REMAIN THE SAME TILL NIFTY SPOT REMAINS BELOW 5570 ON CLOSING BASIS

THE TREND IS BEARISH AND WE KEEP OUR TGT 3 & 4 INTACT I.E. 5370 & 5245

ONLY ON CLOSE ABOVE 5570 TREND WILL BECOME BULLISH

AND FOR BOOSTING UP NIFTY SPOT NEED BREAK AND CLOSE ABOVE 5640

India: Realistically FY12 GDP Growth May Not Exceed 6.9 per cent (GS)..........

High double digit lending rates, high single digit inflation, high crude and a non-existent pass through mechanism for Diesel, Kerosene and LPG price, excessive pressure on Wage Inflation and the factual reality that most of India is living beyond it's means lends us to believe GDP growth for FY12 may realistically be sub-7 per cent. The big sufferers will be Real Estate, Construction, Infrastructure and Power Gen names. Worse comes to worse even demand for Automobiles of all dimensions and consumer durables too should fall sizeably.

Interest rate rises: autos, cement and steel worst hit

We expect interest rates to rise a further 75-100 bps after the steep rise they have already seen raising fears of a slow-down in the economy. We tried to look at the past impact of a rising interest rate on the economy and the markets. Unfortunately, the history is limited with only one meaningful rising rate environment from Nov-2004. We saw a meaningful slow-down in sales of autos, cement and sales but overall IIP did not slow much. While global liquidity continued to drive markets, we did see a correction after the 4

th hike.

Impact on economy – auto, steel and cement hit

Since we had only one steep rising interest rate cycle that coincided with a global world flush with liquidity, these conclusions may not be represented of what happens in future cycles. Indeed, we feel that the impact of rising interest rates will be more pronounced this time as economic environment both globally and in India is not as robust. Some observations from the last interest rate hikes:

1. There was minimal impact on the IIP which did not fall materially.

2. Non-agriculture credit growth slowed after the 3

rd hike but not very significantly.

3. Autos slowed after the first hike but started surprisingly CVs and passenger vehicles recovered post the 3rd hike while 2-wheelers continued to lag.

4. Cement and steel had a pronounced slow-down (steel slowed with a lag) suggesting that construction activity did slow.

Impact on markets – may not be benchmark

We feel that the global liquidity scenario was different in this period and hence may not be representative of markets this time.

1. Markets continued their rally though we did see a 30% correction in markets post the 4

th hike.

2. Autos under-performed only after the 3rd hike (which means after a lag from the sales slow-down). CV stocks (Tata Motors, Leyland) however started correcting after earlier in the rate increase cycle.

3. Banks stocks actually outperformed till the 3rd hike. Post that at some point NPL worries started to drag stock performance.

4. Capital goods continued to outperform – we think this cycle will be different.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

NIfty Trading Lvls.for this WEEK>>>>>>>

For IntraDay . the lvls. for tradng r-----

Long Nifty Future above 5585 with stop loss 5550 for target 5615 / 5635 / 5665

Short Nifty Future below 5535 with stop loss 5570 for target 5495 / 5465 / 5440

Trade Only If The Level Crossover Above or Below With-In The First Hour of Trading Session


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NIFTY SPOT WEEKLY CHART

PREV WEEK FAILED TO CLOSE BELOW BUT THIS WEEK BROKEN TREND LINE -1 @ 5550

AND CLOSED BELOW THE SAME AS SHOWN IN CHART
NOW IF NEXT WEEK FAILS TO HOLD LEVEL 5570 THEN IT WILL BE CONFIRMATION

THAT IN COMMING WEEKS MARKET WILL TEST / TRY TO COME NEAR SUPPORT ZONE TREND LINE -2 @ 5210

BE CAUTIOUS

ONE CAN ACCUMULATE LONGS NEAR 5300 +/- LEVELS

WITH STOP LOSS 5210 ON WEEKLY CLOSING

WEEKLY TREND LINE - 2 @ 5210

LAMAX REKHA & LAST HOPE FOR NIFTY
IF CLOSE BELOW HISTORY WILL BE REPEAT

TWO WEEKLY CLOSE BELOW 5210
WILL TGT 1 - 4880 / 4760 & TGT 2 - 3400 / 3500
WITH SUPPORT IN BTW AROUND 4400-4500
STOPLOSS WILL UPDATE LATER