BUT THE READERS OF INFORMED INVESTOR WERE ADVICED MANY TIMES IN THE PAST..
In the last article also I had mentioned about the FII’s flow driving up the Indian markets and that was the only reason the Indian markets have been surging from the 5200 levels to 5700 odd levels. And now the FII’s flow have turned negative, Indian markets are falling like a dead pin. It was mentioned earlier also that there is no change in the FUNDAMENTALS OF INDIA, still the markets are rising. So finally there had to be some end to it.
US' Institute for Supply Management's manufacturing index tested 50.9, and UK's Market Economics/The Chartered Institute of Purchasing & Supply's index touched 49.1. HSBC manufacturing Purchasing Managers' Index for Brazil tumbled to 47.8 in July from 49.0 in June, and that for China fell to 49.3--its lowest since Mar 2009.
Weak manufacturing data from India and other major economies clearly shows that global growth is slowing down. And Reserve Bank of India's willingness to sacrifice growth to control inflation (in near term) will further weaken sentiment.
US may have managed to avid default, but the economy is moving from bad to worse despite the QE2. Markets are worried about various issues, including the weak US economy, European debt problems and the risk of increasing inflation in India. The debt battle arose when the Treasury dept said that if the govt debt ceiling of $14.29 trillion wasn’t raised by Tuesday, the US would not have enough money to pay its bills.
Gold Prices short up yet another new record high on Thursday after the European central bank President said that the bank would continue to buy bonds in response to a deepening euro zone debt crisis. Gold hit a record $1678 an also made a fresh records in Euro.
Global markets crashed on Friday, making it a once of the worst intra day correction in the recent times. Crude tanked to make its 5 month low. Indian markets too followed the same. On the start of the trading day on Friday Indices opened in red with almost 3% down.
Indian markets started the week on the negative bias. Indices corrected nearly 5% in a week. Last week Nifty had closed below its 50DMA and continued to slide down. In my last article I had mentioned about the Inverted Head and Shoulder pattern which broke and the market start its downward journey since then. On the last day of the trading session of this week markets opened in deep red. Nifty opened below 5200 levels but some how managed to close above the same.
Real Estate, banking and IT stocks fell down the most. ADAG once again closed deep in Red. Mining ban in Karnataka triggered panic selling in the Steel stocks.
I have been consistently talking about the importance of the 5200 levels. This was the 4th time the Nifty have tested the same since June 2010. This week also the Nifty tested the strength of 5200 levels but some how managed to close above the same. Also in the past I had mentioned about the Fibonacci Levels also. On Thursday Nifty closed below its 23.6 retracement levels and on Friday touched its start point also. Further downside is possible if the Nifty closes below the 5200 levels for 2 consecutive days. Sensex close below 17400 is bad for the markets.
Technically, our markets have gone very weak now. Two consecutive closes below the 5200 levels can take the Nifty to 5050-4800 levels. Nifty will face resistance at 5350-5400 levels.
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