Last time when I had written the article Nifty was trading well above the 5350 levels. In the Intaweek Nifty made a low below the 5200 levels and once again we are back to 5500 levels. Isn’t that too fast recovery, when nothing has been changed in the fundamentals of India. Its just the games which FII play. Till Wednes FII remained net seller in the Indian Equity market while DII kept on buying, since Thursday FII have changed their mood and are net Buyers and the markets have also changed its way.
It was the repeat of the usual Black Monday’s this week but the reason of something different. This time the Indian government is in talks with the Mauritius to sign the tax treaty. Fears were there that the double taxation treaty between the India and Mauritius may be renegotiated after which FIIs would need to pay capital gains tax on their equity investments in India. Approx 40% of the FII holdings in India companies, estimated at about $280bn, is believed to have been routed through Mauritius. News sparked panic selling in the Indian markets, Sensex in its intraday trading session collapsed more that 500 points but close nearly 360 points down.
Major Indices, Nifty & Sensex surged nearly 2% each. IT index jumped 2.7%, Cap Goods surged 1.5%. But Realty Sector continued its downtrend and closed down more that 4.5%. In the Frontline stocks Hero Honda gained the most 7.7%, Hdfc closed up by 4.5% on week on week basis. ACC 5%, M&M 4.2% & Bajaj Auto 3.7% Wipro 3.5%. Ril Infra lost 8%, Cairn 5.1%. DLF lost 3.4%, while Dr Reddy closed down 3.8%. Maruti is trading after making its 52 week low closed down 4.1%.
One, crude oil has gone down; two, a bailout for Greece seems to be happening, and three, there is a strong covering of short positions made when news of tax treaty with Mauritius had come. Concerns over Greece's debt crisis abated as on Thursday the International Monetary Fund and the European Union agreed to support the nation if it
implements further austerity measures such as tax hikes and spending cuts.
Rumours of the Selling of the Pledge shares continued in the market. Orchid was one of the script that has seen one of its very volatile trading week. In the Intra week trading session the script made a high and low of 265-215. Selling in Skumar, Shree Ashtvinayak, GTL infra, Havells, Alstom, Unitech continued.
This might have surely been proved to be bad for the Indian markets, But the readers of my blog and Informed investors would have definitely gained a lot. On 14th June and the last article dated 18th June 2011 in Informed Investor, technical chart of the Nifty was given with a price target ot 5177 in Nifty from the break of 5350 levels. Nifty made a low of 5196 and bounced back. But the bottom line is that the Nifty made a low of below 5200 levels. We could clearly see that the Head and Shoulder (H&S) Pattern was made in the Nifty daily chart pattern.
But the Nifty have bounce back sharply till the end of the week. Nifty made a high of-----5478 & Low of 5196 for the week. The recovery had been too fast. No boubt the H&S patter formation was complete but it did not continue. Nifty bounced back from its over sold zone. Nifty once again took good support at 5200 levels and bounced back. I am still cautious on the recovery of the market. Nifty still have a big resistance levels at 5475-5560 levels.
If we take a new retracement levels from the high of 5944 made on 06th Apr 2011 and a low of 5196 made on 20th June 2011 (Green colour). Nifty crossed it 23.60% retracement levels 5375 and closed at its 38.2% levels.
Last weeks call
Sell Acc below 959 SL 963. Made a low of 918.
Sell Andhra bank below 132.80 SL 133.80. Made a low of 127.
Buy Bharti Airtel close above 385 SL 380.Made a high of 398.
Sell Cipla below 328 SL 331. Made a low of 310.
Buy Hind Petro above 390.
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