Nifty Heading towards 4450.

The Central bank does not have enough resource to halt the depreciating Rupee. This could be a major blow to the Oil companies. Oil importers rushed to buy US dollars to keep their plants running. It is estimated that they require more than $200 million a day. The currency has now depreciated almost 17% since Jan this year and is among the worst performing currencies. On Tuesday Rupee made a low of 52.73.

There’s more pain in store for the rate cyclical, given that the interest rate cycle is not turning around anytime soon. But within the rate sensitive sectors, real estate is probably the worst hit. In the second quarter, 14 listed real estate companies posted a mere 3.1 per cent year-on-year growth in revenues but a 22.7 per cent fall in profits, says Edelweiss Financial Services. Rising input costs and interest burden are the main culprits.

Given that the chances of interest rates, margin pressures and debt levels are unlikely to abate in the second half of this year, most analysts continue to remain underweight on the sector. Only companies with strong balance sheets and exposure to high visibility rental assets are expected to do well.

The Total net Debt of atleast 11 real estate is estimated at Rs.40k Cr. FCCB issued and the pledged shares by the companies which are due in 2012 is estimated more that Rs1.1Lac Cr. Now that’s too much… Companies in power, IT, Infra and Pharma sectors have seen higher levels of pledging. More than 15 companies have pledged 90% plus of their holding. The higher the pledging the higher the risk of loosing the control on the company. More that 100 companies have pledged 50% plus of their holdings. As per the reports companies like Ganesh Benzoplast, XL Energy, Guj Pipavav, Raj Oil, Tata Coffee, Spentex Ind are some of the companies who have pledged their entire stake to raise funds. Companies like Spice Jet, GUj Nre Coke, United Spirits, Gati, Raj Oil, Birla Power Solutions, Western India Shipyard, Gati, Gayatri Projects, GTL, Koutons and Edserv are some of the companies where its promoter group has pledged 85-99% of their equity. And almost all these stocks have fallen in the range of 5-50% since the beginning of Nov. Next will be the FCCB redemption which is lined up in the coming year.

Rupee had fallen to its all time high.

Portugal’s credit rating was downgraded to junk status this week. S&P informed that Japan’s Finances are getting worse and worse every day, every second.

Technically speaking, Indian markets are in a bad shape. It is clearly seen in the chart that the Nifty had made a top at the Trendline 1 in last year Nov, then in Dec, after Mar 2011, June 2011 and the fallen apart. Till the time the above trendline is not broken, markets are not going to have any upward movement. Since last 2-3 months, I have constantly be telling about the negative sentiments in the India. FII have turned Net sellers, Banks have been downgraded, Real Estate companies are unable to push up the sales etc etc…

In my last few articles, I have continuously talking about the 4750-4800 levels and its importance and strength. But now it seems so the all I said talked was real. Now the Nifty may plunge to 4450-4400 levels. Break Below that can take the Nifty further. But as of now, we will not discuss about the same, but that does not mean the below levels will not come. Many of them did not believe about the present levels also but they have been achieved.

If we take the Fibonacci retracement levels from the high of 5743(7^th July 11) and a low of 4720(26^th Aug 11) levels. But now the close of 4710 is below 4720 levels. Nifty have taken major support at Trend line 2 also but the same have been broken this time. Now the support comes at 4500 levels. On Wednesday Nifty close below the 4720 levels but bounced back to close above the same. Fridays close is below the 4720 levels. In my last article also I had mentioned that the Nifty can break below 4800 levels and close lower.

We can see a clear breakdown in the Nifty chart. Nifty may break down till 4450 levels or even further, as the only support is now at 4450 levels.