The Paris based Organisation of Industralised nations raises its forecasts for global growth to 4.6% in 2010 and 4.5% in 2011 from 3.4% & 3.7% after a contraction of 0.9% in 2009. Unemployment in 31 members countries may have peaked at around 8.5%. The OECD also said that interest rates should start rising by the end of the year in the US, the UK and Canada, as the global economic recovery continues.

The OECD raised its forecast for US economic growth in 2010 and 2011 to 3.2% each, from 2.5% and 2.8% in its forecasts of last November. Japan's growth will be 3% in 2010 and 2% in 2011, up from 1.8% and 2% previously. The euro-zone will lag with growth of 1.2% and 1.8% this year and next, still marginally more than forecasts of 0.9% and 1.7% announced in November 2009.

US bank exposure to the European Union as a whole was $1.5tn, but still the US guys are giving surety that the banks would not end up having trouble. Marketsmen are predicting a double digit in US.

Germany proposed naked short selling ban to include all German-listed stocks. Italy has also joined Europe’s austerity club with deep spending cuts.

We cannot rule out that we will not see another blood bath in the world markets. It may happen as Euro countries are facing a major financial crisis and the Euro is under pressure. Other key economies like China, Japan, the UK and the US also have their own set of issues to overcome.

Nifty for the week made a low of 4786. On Tuesday Nifty closed below the trendline but closed above the 4800 mark. As mentioned in my last article that the Nifty if closes below the 4800 levels may take it to the next level of 4600. But the markets bounced back sharply. World markets too gave good support. Europe markets and the US markets bounced back sharply. Indian markets to closed higher. Nifty for the week closed higher at 5066 after making a low of 4786. Sensex closed at 16863 and the low was 15960.

Nifty for the week closed above its 200DMA, but faced resistance at the 20DMA. Nifty may face resistance at the trendline (as marked in the chart). Chart suggests that as per the wave theory, Nifty is in its 5^th wave. It was also mentioned that the RSI was near the over bought sold which bounced back sharply. MACD is also trying to be positive.

At the close of the Friday trading session, Dow futures were trading in the positive zone. Personally do not feel like the markets will still be so comfortable trading in the coming week. Markets have bounced back sharply in the last week. Nifty bounced back 250 points in the last 3 days and Sensex nearly 900 points. Nifty will face resistance at the trendline. We might see some more correction.

Last weeks article title was “ Is this the end of correction” and the markets bounced back from the low of 4786 as mentioned. It won’t be so easy for the investors to search for the diamond at the decent buy price. Investors are still advised to wait till some more time.

FII’s continued to dump their stocks in the Indian markets. They sold almost $1bn worth of stocks since last thursday. DII’s remained net buyers to the tune of $500mn.

Last weeks call..
Short TCS below 710 made a low of 691.

Short DLF below 260 made a low of 254.

==>> Its all over for the Bulls....

It's been a long wait for the Bears to get the control of the markets. Since the start of the week, Sensex lost almost 750 points from the yesterdays high. Nifty made a low of 4786 and closed marginally above the 4800 mark. Nifty closed down 2.78% or 137 points at 4806. Sensex sinked more than 500 points but recovered marginally in the end. Since the close below the 200DMA, Nifty seems to have a very bad time. Nifty faced resistance at 4950 levels, crossover of the level triggered heavy selling in the markets. With the expiry date nearing the volatility in the markets was at top. Yesterday Sensex fell from the high of almost 300 points slipped down 700 points till today. FII's remained net seller. The selling continued since the start of the month. FII have sold almost Rs.10K Cr of stocks till date. DII's on the other hand has been net buyers, but the question is "TILL WHEN they could buy". Are our Domestic funds sitiing on cash, that could be pumped in the markets during the FII sell off. Its not only the Indian markets who are feeling the heat. Its a Global Sell off. European markets were down more then 3%. Dow futures were down 150 points post lunch session. As mentioned in my earlier articles also, the Euro problems wont be solved out with few bn dollars. They need really BIG money for the bailout. Investors are adviced to wait for the markets to settle. Nifty close below the 4800 levels might see some the level of 4780- 4692.

On back of positive close in the US markets, our markets today opened pretty well, but in the end markets tanked to trade in the negative zone. Sensex which was trading more then 300 points post lunch session slipped down nearly -25 points.

==>> Is this the end of the correction???

Is the Indian markets bottomed out???? This is the question in everyone’s mind. But this may not be correct….

This is just a technical bounce back from the 4850 levels. Below 4980 levels Nifty finds support at 4850 levels and that was mentioned in my last article. Recovery in the European markets and US futures triggered the pull back in the Indian markets.

In the last week it was mentioned in my article that the Nifty has closed below its 100 DMA. And now, the Nifty is below its 200DMA also. For the first time since April 2009 Nifty closed below the 200DMA on Wednesday.

Euro problems are not seems to be fading out so easily. Some even bets that the problem will not be solved even with the $1tn bailout. On Thursday evening US markets fell sharply on back week data for the first time since the start of the new financial year, which created doubt about the sustainability of its recovery in the second half of this year. Thursday on growing fears the euro zone's efforts to tackle its sovereign debt crisis will fall short, jeopardizing the global economic recovery. The number of US workers filing new applications for unemployment benefits unexpectedly rose last week for the first time since early April. The index of leading economic indicators slipped last month for the first time since March 2009, while factory activity in the US mid-Atlantic region accelerated less than expected in May.

Four Years of delay in the auction of 3G mobile spectrum had bought unexpected revenues to the Government. Govt managed to garner nearly $15bn (68k Cr). The country’s top two mobile firms—Bharti Airtel and Reliance Communications (RCOM)—each won 13 of the 22 telecom zones on offer while other major operators Vodafone Essar, Idea Cellular and Tata won a total of 9, 11 and 9 circles, respectively. Bharti, RCOM and Vodafone won the coveted 20-year licences for Delhi and Mumbai, which account for a lion’s share of the country’s customers and revenues and attracted top bids of Rs 3,317 crore and Rs 3,247 crore, respectively—effectively Rs 166 crore and Rs 162 crore per year of the licence period. The auctions were for a maximum of three operator slots in all but one circle. Staterun BSNL and MTNL will be the fourth operator of 3G services.

Not only the Equity, even the commodities and the currency felt the heat. Gold fell down to $1181. Rupee tumbled to its 27 week low. Rupee closed down at 46.96.

FII’s for the week remained net sellers to the tune of Rs.3700 Cr while DII’s were Rs.1500Cr.

According to the Indian Meteorological Department there will be good Monsoon season. Good Rains would raise farm output, boost rural incomes and lower flood inflation. But at noticed in the past also our Met Dept’s prediction have never been right. So all I could say is “May God Bless Us”. Still if the rains are not good, then will surely see another fall in the Indian markets.

The latest data showed the food price inflation picked up for the second consecutive week in early May 2010. The food price index rose 16.49% in the year to 8 May 2010, a tad higher than the prior week's annual reading of 16.44% as fruit and vegetables prices climbed on the back of a heat wave. The fuel price index was steady at 12.33%, while the primary articles index was up 16.19% versus 16.76%

India's exports rose an annual 36% to $16.9 billion in April 2010 as demand picked up for gems and textiles while imports rose an annual 43% to $27.3 billion buoyed by industrial recovery, stronger domestic growth and rising oil prices

UPA govt has successfully completed its 365 days as the ruling party. This year has been very good for the UPA govt. Government raise money via selling stakes in the govt owned companies. 3G mobile Spectrum sale helped govt garner nearly Rs.68kCr. But the question which rose in my mind is, “Is the govt doing anything for the raise in the corruption levels, raise in the food prices….”

We might see some bounce back as the Nifty is very close to its support level of 4850, but I do not think that it is still the right time to buy in the markets. Indian markets and the Global markets are still in the correction mode. Euro problems are still far from getting solved. Euro countries will still require more such kind of bailout.

But the markets might see some bounce back, as seen in the chart attached together.. A similar of a Hammer like patter was seen. From there the markets had bounced back. Nifty is almost at the same levels with almost the similar type of the candle stick pattern. RSI is closing near the oversold zone. Nifty is closes below the 4800 levels then we could see 4600 levels in Nifty.

Last weeks call..

Short SBI with SL of 2242. Low was 2141 after that Sl triggered

Short Rel capital with SL of 684. Low was 611.

Short Tata Steel below 542. Low 487.

Current Weeks call…

Short TCS below 710

Short DLF below 260

Its been a very volatile session for the Indian markets. Bse Sensex plunging down to sub zero levels from the high of 200 points and again back to northward direction to close up nearly 110 points. But Rupee could not stand this effect. Rupee continued to meltdown. It slide nearly 47 for June expirty contract and current month was down to 46.80 levels.

In the Intraday trade nifty made a low and high of 4924 & 4980. As mentioned that the Nifty will face stiff resistance at the 4980 levels. Nifty closed at 4954 and Sensex closed at 16520 levels. Markets will continue to slide. Nifty once again closed down the 200DMA.

Euro problems have really take the rest of the world for granted. As mentioned in my last update Nifty had closed below the 100DMA last friday. Today nifty broke its support level of 4980 and closed at 4919.65 down by 146 points. Nifty dropped and closed below its 200 DMA. Since May 2009 Nifty never closed below the 200DMA. For the 1st time it closed below its 200DMA.
For immediate support will be seen at 4890 levels, but the movement may lead to break the same and Nifty could fall down to its next support levels of 4850 levels. In the past also we have seen that 4850 seems to be a very good support level.

RIL close below 990 tgt 960

Euro Debt have taken toll on the World

It’s been long time I had written any article in this news letter. Nothing major had happened for quite a sometime. It’s been same old things of the countries facing bankruptcy. After Spain and Greece it was Portugal to go for austerity measures. Euro debt by some of the European countries gets some more countries in the trap. Greece owes $226bn to other countries. IMF came out with a $962bn rescue package. Not only Greece, Portugal, Italy, Ireland, and Spain. Portugal owes $286bn to other countries, Ireland $867bn, Spain $1.1tn, Italy $1.4tn.

France $511bn or 20% of its GDP. It owes Germany $190bn. Spain in turn owes Germany $238bn and France $220bn. Ireland owes $184bn to Germany and $60bn to France. Portugal owes $47bn to France. And the smallest of them all, Greece owes Germany $45bn and France $75bn. The Moral of the story is, if one country fails to make the payment then the rest of the countries might also get trapped in the same bankruptcy scene.

On Monday Markets surged sharply on back of rescue package for the Euro debt ridden countries which was announced late Sunday evening. On Monday markets opened with a gap. Till mid afternoon our markets were marginally up, but the opening of the European markets our markets too saw a sharp rise. European markets were nearly 5-10% up in the opening session. Later in the evening the US markets also closed higher. But the rescue package announced does not mean that all the problems in the European countries have been wiped off.

The heat was felt till the end of the week. Markets continued to be volatile. As usual Nifty faced resistance at 5200 levels. Even after making a high above 5200 levels, Nifty could not close above the same. Nifty closed down at 5093 down by nearly 90 points on the last day of the week. Sensex too close below the psychological figure of 17000. Sensex closed down 271 at 16994 after sinking nearly 300 points. Nifty chart suggests that there is still more pain that can be felt in the coming week. Nifty is showing weakness. Nifty could come down to 4850 levels if it closes below 4980. In the chart we can clearly see that the Nifty after making 3 tops at 5200 levels in the current week corrected to make a low of 5070 and closed below the 100DMA. RSI is also showing negative trend. MACD in the past 1 month had never given any long term bullish signal. Through out the period it has been negative. There was absolutely no sign of bullish trend.

FII and DII activity also have been lackluster in the week. Inflation for the week cooled off a bit. IIP numbers announced in the week were also upto the mark.

China property bubble news is also heating up. I really do not think any problem in the Chinese markets.

Aban Offshore shares plunged nearly 17% down on back of one of its Semi –sub rigs sinked. The impact could be on some of the banks too.

Short SBI with SL of 2242.

Short Rel capital with SL of 684.

Short Tata Steel below 542.