Euro Debt have taken toll on the World

It’s been long time I had written any article in this news letter. Nothing major had happened for quite a sometime. It’s been same old things of the countries facing bankruptcy. After Spain and Greece it was Portugal to go for austerity measures. Euro debt by some of the European countries gets some more countries in the trap. Greece owes $226bn to other countries. IMF came out with a $962bn rescue package. Not only Greece, Portugal, Italy, Ireland, and Spain. Portugal owes $286bn to other countries, Ireland $867bn, Spain $1.1tn, Italy $1.4tn.

France $511bn or 20% of its GDP. It owes Germany $190bn. Spain in turn owes Germany $238bn and France $220bn. Ireland owes $184bn to Germany and $60bn to France. Portugal owes $47bn to France. And the smallest of them all, Greece owes Germany $45bn and France $75bn. The Moral of the story is, if one country fails to make the payment then the rest of the countries might also get trapped in the same bankruptcy scene.

On Monday Markets surged sharply on back of rescue package for the Euro debt ridden countries which was announced late Sunday evening. On Monday markets opened with a gap. Till mid afternoon our markets were marginally up, but the opening of the European markets our markets too saw a sharp rise. European markets were nearly 5-10% up in the opening session. Later in the evening the US markets also closed higher. But the rescue package announced does not mean that all the problems in the European countries have been wiped off.

The heat was felt till the end of the week. Markets continued to be volatile. As usual Nifty faced resistance at 5200 levels. Even after making a high above 5200 levels, Nifty could not close above the same. Nifty closed down at 5093 down by nearly 90 points on the last day of the week. Sensex too close below the psychological figure of 17000. Sensex closed down 271 at 16994 after sinking nearly 300 points. Nifty chart suggests that there is still more pain that can be felt in the coming week. Nifty is showing weakness. Nifty could come down to 4850 levels if it closes below 4980. In the chart we can clearly see that the Nifty after making 3 tops at 5200 levels in the current week corrected to make a low of 5070 and closed below the 100DMA. RSI is also showing negative trend. MACD in the past 1 month had never given any long term bullish signal. Through out the period it has been negative. There was absolutely no sign of bullish trend.

FII and DII activity also have been lackluster in the week. Inflation for the week cooled off a bit. IIP numbers announced in the week were also upto the mark.

China property bubble news is also heating up. I really do not think any problem in the Chinese markets.

Aban Offshore shares plunged nearly 17% down on back of one of its Semi –sub rigs sinked. The impact could be on some of the banks too.

Short SBI with SL of 2242.

Short Rel capital with SL of 684.

Short Tata Steel below 542.