Oh am sorry. Osama’s dead. This was just a spelling mistake by me. But does u expect the same thing from the India media players. They actually made this do. Leading News channel actually showed this “OBAMA DEAD” instead of “OSAMA”.
So are our Indian investors. Hahaha… FII sold almost 6400 Cr of equity in the Indian markets from 25th Apr to 5th May.
As mentioned in the last article 50bps rate hike is there on the cards.
India’s economic growth could slow in the short term after the Reserve Bank of India on Tuesday raised its key policy rate by 7.25% to make money dearer and tame runway inflation. Savings bank rate up by 50bps to 4%. Repo Rate up by 50bps to 7.25%. Reverse Repo rate up by 50bps to 6.25%. Bank Rate, Cash reserve Ration were kept unchanged at 6%. Car loans and Home loans become more costly. This will sure impact the already hit Reality sector. Banking and the Reality stocks tanked immediately after the RBI surprised everyone by raising 50bps. Every one expected a 25bps increase in this policy to balance the growth and inflation. But the hike of 50bps seems to have been concentrated only in controlling the rising inflation only.
Portugal is not the third Euro zone country to do a debt rescue deal with the European Union and IMF, announcing a Euro 78bn. Bank of England (BOE) announced that it has maintained official Bank rate paid on commercial bank reserves to 0.5% despite updating its growth and inflation projections.
In the past also we have seen that the Indian markets have mostly corrected in the month of May. In 2006, 2008, 2010 and now in 2011 also. As mentioned in the earlier article also that in the Nifty chart we can see that there is a Double Top formation and the Nifty corrected from there onwards. Nifty made a recent high of 5944 and cracked since then. Nifty faced resistance at 61.80% retracement levels and continued to correct. In the last week Nifty corrected took support at its 200DMA. But even the Mother of all support i.e 200DMA could not support the market and the Nifty continued its slide. Within 2 days nifty closed below its 100DMA and 38.2% retracement levels. The break of the 38.2% levels indicated heavy selling pressure and the same continued till the time the Nifty tested its 23.6% retracement levels. (See the chart).
On Thursday, Nifty took support at its 23.6% retracement levels and bounced back sharply on the next day. Sensex jumped nearly 330 points in intraday and close higher nearly 303 points. Nifty on the last day of the trading week closed 1.68% or 91.60 points higher. The loosing 10 loosing streak was stopped on the last day of this week.
FII have been Net sellers since past two week. DII being buyers in the markets could not stop the falling markets. Commodities corrected heavily. Silver after having its dream run shrinked nearly about 55K from its high of 75K in the last week. Crude too corrected heavily on the news that after the Libya issue is solved the world will get some relief from the shortage of the fuel and the rising crude price.
Indian markets corrected almost more that 4% in just days of the start of the week but had a relief rally on the last day of the trading session. As mentioned in my earlier article also the Nifty if close below the 5700 levels will continue the slide show till 5635 levels, that’s where the 38.2% retracement level could have given support. Heavy selling by the FII’s triggered the panic button amongst many. Nifty broke the 38.2% levels, and that’s where triggered another round of selling spear. There was no support till the 23.6% retracement levels. And it did happen the same way. With absolutely less volumes markets collapsed.
Nifty is nearing its over sold zone. But there is still lot of time for fresh buys in the market. Nifty bounced back and closed at 5551 levels. Nifty will face resistance at its 38.2% retracement levels. Journey towards the top will be extremely hard. In the article dated 21st Apr, the writer had mentioned that the Nifty movement will be capped and the journey will be very hard. Nifty will continue to have support at 5450 levels. Close below the same will take the Nifty to 5200 levels with some supports at 5350-5300. Upside it will continue to face resistance at 5640-5680 levels.
Last weeks call
Sell Adani below 620 SL 624. Made a low of 600.
Sell Bharti Airtel below 377 SL 381. Made a low of 345
Sell DLF below 219 SL 222. Made a low of 214.
Sell Federal Bank below 414 SL 418. Made a low of 395.
Sell IOB below 151 SL 152.50. Made a low of 150.
Sell Jai Prakash Ass with SL of 94.50. Made a low of 82.30
Sell Lic housing below 217 SL 219.5. Made a low of 197.50
Sell SBI below 2800 SL 2809. Made a low of 2562.
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