28th Jan 2012: Growth not the Inflation, new mantra for RBI

The European Union banned imports of oil from Iran on Monday and imposed a number of other economic sanctions, joining the United States in a new round of measures aimed at deflecting Tehran’s nuclear development programme. That might hurt Greece, Italy ad other ailing economies which depend heavily on Iranian crude and as a result, won as part of the EU agreement a grace period until July 1 before the embargo takes full effect.

The RBI on Tuesday slashed the Cash Reserve Ratio (CRR), the amount of deposits banks need to park with it, by half a percentage point to 5.5%, but kept other rates unchanged. Repo Rate @ 8.50% and Reverse Repo Rate @ 7.50%.

Indian markets surged 3% this week. Nifty once again managed to close above the 5200 levels and Sensex above 17000. Midcap and Small cap closed higher 3.3%. Bankex 4.3%, Metal Index 4%, IT up 4% and Auto 4%.

There is a long list of the gainers in the week. To name few, Sail, Tata Motors, Sesa goa, Rel Infra, Maruti all gained in the range of 10-15%. Bharti Airtel, Maruti, Idfc, Lnt, Mnm, Rcom, Rpower, Ril, Hero Motocorp, Ranbaxy all gained in the range of 5-10%. In the midcap stocks Ptc Financial closed with a weekly gain of 49%, Zensar Tech 27% & Indosolar 28%. The losers in the list are Midvalley Ent 30%, Kgn Intl 23% and Neha Intl 10%.

Volumes have been good in the markets with price appreciation. Markets have been trending up since a long time. Next weeks rally have been in continuation. Nifty and Sensex closed higher by 3%. Technically speaking Nifty has bounce back from its low to close near the trendline. (See in the chart No. 1.) the trendline is made on the basis of the highs which were made since Oct 2010. Nifty have closed just below the trendline. The Redline trendline (no.2) is made joining the lows which since June 2010. Nifty have closed below this also. RSI is in the over bought zone that calls for some caution in the market. MACD is still in the positive mode, but anytime the divergence can change. Nifty if stabilizes above 5200 then we could see higher levels also. Close above 5225 may take the Nifty to 5325-5400 levels, but the same will not be so easy as the Nifty is in the overbought position, so before the next rally we might see some correction.

Rupee too was in the hands of the bulls. After the intervention by the RBI, Rupee has bounced back to 49.30 levels. Commodities like Gold and Silver have also recovered some points.

FII continued with its buying speer. And DII on the other hand continued to be buyer in the Indian equity market.

07th Jan 2012:

Euro tumbles against dollar to 16 month low and nearly 11yr low against Yen hurting Japanese export oriented stocks. Crisis in Euro spreads over smaller countries after Hungary 10 yr bond reaches 10% earlier European markets ended lower lead by Banks after investors were skeptical of Euro Italian 10 yr bond move above 7 % Banks ability to raise capital.

France sold 7.66 bln Euro worth long term debt in the markets average yield of 3.99 % reflecting concerns of France may loose triple A rating.

Asian Markets are cautious ahead of the U.S. Crucial employment report.

Back home trading volumes continue to be low despite Nifty trading above 4700 levels.

Nifty closed at 4754 and Sensex at 15868. Indian markets rallied more that 2.5%. Midcap and small Cap indices gained 2.2% & 3% respectively. Tata Motors closed higher by 14%, Ril Infra 11%, Icici Bank 10%, Lnt & Tata Steel 9%, Ranbaxy & Cairn 8%. Hero Honda lost 9%, Dlf 4%, Bajaj Auto 4.5%, Acc and Ntpc closed down by 3% & 2%.

Technically speaking Nifty have bounced back from its recent low of 4531 to make a high of 4795 in the week. If we look at the Fibonacci Theory from the high of 5399.7 to the low of 4531 levels. Nifty closed slightly above its 23.6% retracement levels. In the week Nifty made higher top and higher bottom pattern, But still the pattern is not complete. If Nifty closes above 4800 levels, then we might see higher levels till 4850-4863- 4900 levels. If the trendline is broken (Marked in Red) then we might see some higher tops.

31st Dec: India the worst

Number says everything. Indian is the worst performing index in the Asia pack. Nifty and Sensex had slipped down 25% in the year 2011. Where is Indian markets heading towards? India with all the negative news are not going to go higher. Inflation still a problem. Political issues are the main cause for the Indian downtrend. Reality was amongst the worst returning assets this year.

Over all the 2011 have really bad. Rupee slipped to its all time low. Indian Rupee has turned out to be one of the worst performers among the major currencies vs the Dollar. FII flow has dropped to its low. Even after increasing the trading time in India, volumes have not increased but infact the volumes have decreased. There is a long list of the scams that have unearthed in this year.

Indian markets collapsed nearly 25% this year, counting as the worst performing Index in whole Asia. Reality Index collapsed more the 50%,Metals 47%, Bankex 33%, IT Index 18%, Small Cap 43%, Auto 20% & Oil and Gas index closed down 30%. This year was not only bad for the Equity market but the commodities markets also made many losers. The only commodity which gained is gold which closed higher by 11%. Silver after its absurd rally corrected 10%, Copper 21%, Cotton 36%, Sugar 22%, Wheat 20%, Zinc 25%, Tin 30%

There are end numbers of companies which have lost more the 75% of their market capitalization. Stocks like Gtl, Adsl, Jai Balaji, Arss, Ksoil, Sks Micro, Lanco Infra, Triveni Eng, Spice Jet, UB Holding, Infotech lost in the range of 80-90% of the market capitalization.

Companies which lost in the range of 60-80% are ICSA, Gtl Infra, Jet, BGR Energy, Moser bear, Dishman Pharma, NCC, First source, Bajaj Hind, DB Reality, Guj Nre & Essar Oil. Ril Infra, Ril Power, Ril Com after all the bad news has fallen down 55% each.

Sail, Hindalco, Sesa Goa, Tata Steel, JP Ass, Lnt, Bhel, Idfc, Icici bank, Axis bank, United Spirit lost in the range of 40-60%.

Pnb Bank, Tata motor, Maruti, DLF, Ntpc, Jspl, Tata Power, Bpcl, Ril, Ongc Wipro, Gail, Jubilant Foodworks, Godfrey Philip, Marico & Supreme Ind sinked from the range of 20-40%.

Nifty closed down at 4624 levels which is well below the 4750 mark. In my last few articles also I had mentioned that the Indian markets are not going to rally. We may see 4400 levels also in the coming weeks as the scenario in the Indian markets are going bad to worst. In the chart we can clearly see that the Nifty made the same pattern before also and had triggered more selling in the market and fallen down till 4640 levels. Recovery is still far. We may see levels near 4000 levels also.