R Power

Hi Friends,

The previous week saw the major Indices plummeting close to 4%.This movement was totally against our expectations.The coming week looks far better technically.We have seen good amount of shorts being created in markets at the levels of 5110-5185.Smart money is not having any view on the market and is awaiting the technical breakout of nifty from this range.I believe that Bulls reside above 200 dma and bears below 200 dma.We are currently poised above 200 dma and this is the only reason why i am not that bearish on medium term basis.All said and done 200 dma is just 70 points away for nifty.I believe that in terms of fibonacci retracements we are currently poised at 50% of the up move from 4800 to 5368 levels.If we manage to pull back(which i expect we will )we will see a decent rally in Nifty with short covering leading the fray.With an important event coming up on Friday i believe that smart money might not choose to remain short on our markets before the budget as everyone will favor going ahead into the budget with light positions.We have seen a good amount of shorts in the system so now we might see some short covering.Going ahead one factor to watch out for will be the stability of the rally as it will provide the inference to our view of nifty.Reliance power bonus announcements is poised to bring in good cheer to the stock.We believe that the investors will try and book profits using every opportunity in the stock but compensation to Ipo investors truly sets a new standard in the Indian Ipo scenario.Frankly there is so much hue and cry over the R power Ipo.I have a different take on it.I met some of my HNI clients in a recent meeting.They were really happy with R power.People can only talk about notional profits but they can never speak about the losses they actually have suffered or there notional losses.Imagine a non leveraged Hni client who at any time invests around 80% of his cash in markets.If he had applied on a R power Ipo on a notional application of 1 crore.

APPLICATION AMOUNT: 1 CRORE

NO OF TIMES SUBSCRIBED IN HNI CATEGORY 200

ISSUE PRICE 450 Amount alloted 60000-68000( since many hnis withdrew there application) LOWEST TRADED PRICE 333

ACTUAL LOSS IN INVESTMENT max 18000-20000In % age terms 0.018-0.02%

If any investor remembers markets are down nearly 20% from those levels.A fall of 0.02% to a hni client is nothing.

All said and done i am in no way related with ADAG ad have no positions in any of reliance group stocks.Our clients might have some positions in these stocks.Also do remember that the present BONUS announcement is a preferential bonus issue given by the promoters from his own stake to the Investors of the IPO.price wont fall in the ratio of 3:5 post ipo as its is a preferential Bonus ratio.Its a new concept which Sebi should make mandatory to all those companies whose shares are traded below there issue price after there IPO.