Minning Scam, CWG, 2G etc etc….. Inflation, rising int rate, so where is the good news that the markets were surging till now. Only the FII’s inflow can change the Indian markets outlook.
Moody’s cut Greece’s rating by three notches to Ca, just one notch above default to reflect the expected loss implied by the proposed debt exchanges. It is the 2nd rating agency to warn of a default after euro zone leaders and banks agree last week that the procreate sector would shoulder part of the burden of a rescue deal that offers Greece more cash and easier loan terms to keep it afloat and avoid further contagion.
Practically blaming the government for not doing enough, the Reserve Bank of India (RBI) on Tuesday decided to go all guns blazing to subdue persistently high inflation. The Reserve Bank of India (RBI) on Tuesday increased its inflation prediction for end-March 2012 and credit growth forecast while retaining its GDP growth projection even as it stunned the markets with a 50 basis-point (bps) hike in policy rates. The central bank now sees inflation at 7% by the end of March next year as opposed to 6% earlier. The GDP growth projection stays unchanged at 8%. Repo rate under the liquidity adjustment facility (LAF) is up by 50 basis points from 7.5 per cent to 8.0 per cent with immediate effect. The Bank Rate has been retained at 6.0 per cent.
The Rupee rose to an almost three year high against the US Dollar on Wednesday, expecting a rise in fund flows due to higher interest rates compared with the US where the Fed is holding policy rates near zero. The US Dollar, the global currency for trade, hit a new low against the currencies of Australia and New Zealand and also Swiss Franc. The Canadian dollar and the Japanese yen have also been rising against the green back.
Once again the Indian Markets closed below the 5500 levels. Indices shrinked more that 2.5% in a week. Midcap Index too closed down 1.7%. Reality Index was the major looser which lost nearly 8%. Metals tanked 5% and Auto Index closed down 1.2%. There are stocks which have impacted by their Quarterly results. Bhel tanked post results by 7%. Kotak Bank closed down 9%. Rel Infra by 7%, IDFC & JP Ass by 11%. Jspl, Voltas, Glenmark Pharma & Marico all close down in the range of 5-7%. Adani was one of the major looser which lost nearly 19% after the news broke out that the Company might have been benefited by illegal mining in Karnataka. Godrej Ind lost 10%.
On the other side Maruti closed in green with gains of 4%, Axis Bank 3%, Acc & Bajaj Auto 1.5%. Hexaware closed with a gain of 8.5% and Nav Bharat 6.5%. On the Midcap side Madras Cement gained 10%, HSIL 22%, Dcm Shriram 20% and EIH Associate 18%
As mentioned in my earlier article also that the Nifty chart pattern shows some weakness and the markets above 5700 only will prove to be in a bullish zone. But the Nifty once again tanked and once again we are at 5500 levels. Nifty closed below its 50DMA. In the chart we can clearly see that the Inverted Head and Shoulder pattern was formed but it failed to close above the neckline and so it tanked. In my earlier article I had mentioned about the instability of the Indian markets, as there was no good reason or fundamental change in the Indian markets to get pulled up from 5200 to 5700 levels. That was just because of the FII flows.
In the chart we can see that the Nifty tried crossing the 38.2% retracement levels but failed to do that for a consecutive days and collapsed to take support only at its 23.6% levels. Close below the same will take the Nifty to 5300 levels.
Markets will turn bullish only when it closes above the 5800 levels. Till the time its better to be on the sideline or play with the volatility.
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