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.
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 sinkedfrom 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.
In the past this writer has mentioned endless time that the Indian Economy is going down the drain with endless reason to justify. Political issue is the main reason. Lack of control on the Scams. Failing to get the Black Money back to country. FDI could have helped the Indian retail and the Farmers and most of all the Citizen of India by proper pricing of the food articles. Tough the real numbers of Inflation are down by the essential commodities prices is sky rocketing. IIP numbers are near their worst. Rupee is on its all time low. Interest rate is soaring high. Real estate guys are sitting on huge inventories. Etc etc. With all these negative, how can an Economy going to function properly. FII have been pulling out the money from the Indian markets as if there is no tomorrow. The only thing I can say is that the country have been downgraded by many foreign and local Research houses that leads to outflow of money from the country.
This writer had informed in the past also, that technically Markets are not going to cross recent high. That there will be too much pressure for the markets to go up and we might see markets making new low.
Last week the Government cut its growth forecast for the year to around 7.5%. But according to me even that looks difficult to achieve the same after looking at the latest IIP data released this week. IIP numbers shrank 5.1% in October, far exceeding forecasts of a 0.5-1% decline. Markets tanked nearly 2% on Monday after the release of the data. The Economic situation in India is going bad day by day.
Rupee depreciation has left scar on many companies, specially the oil importing. Rupee worlds worst currency on 5 day basis it was down by 4.5%. Finally RBI steps in to curb the falling Rupee. Rupee bounced back on Friday but the same could not impress the markets. Nifty closed at 4651 down by 95 and Sensex at 15491.
Indian Markets collapsed more than 4.5% in the week. There are huge numbers of stocks which are trading at their 52 week low. But there are some stocks which are sailing against the tide and made its all time high. Hindustan Unilever scaled to all time high in such a negative markets. Almost 190 stocks on Nse are trading at its 52 week low.
Midcap and Small cap Index fell 6% each. In the Large cap stocks Lnt, Pnb, Sail, & Sbin fell more tha 10%. In the ADAG group, Rcom, Rpower & Relinfra all close down more than 10%. Bhel, Dlf, Axis Bank, Icicbank & Tata power fell in the range of 7-10% each. Power Sector closed down 6% Auto 5%, Realty 9%, Capital Goods 10%, Metals 7% & Oil & Gas 5%. In the Midcap Sintex lost the most which closed down 33% in a single week. Areva 28%, Pantaloon 23%, UB Holding19%, Fortis 18%, Wockhardt, Fortis, Renuka Delta Corp, Suzlon, Punj llyod, Chambal, Jet Airways, United Breweries fell in the range of 15-17% each.
There was expectation in the market that the RBI could cut Rate on Friday. Which according to me was not possible as the rate hike was due to rise in inflation numbers. Now the Inflation has not come down so much that there could be rate cut. The only thing I could think was no Rate hike, but surely no Rate cuts.
Nifty made a new low of 4628 which we haven’t seen since last 2009 Nov. Nifty made its new low. Break below 4600 levels we might see some more selling till 4400 levels.
S&P’s has warned it may carry out an unprecedented mass downgrade of euro zone countries, including Germany and France, if European Union leaders fail to deliver a convincing agreement on how to solve the regions debt crisis in a summit on Friday.
After an awesome rally in the last week Indices this week corrected more than 3%. Its been a very week. Nifty and Sensex lost 3%. Midcap & Small Cap Index closed down 2.5 & 2% respectively. Realty, Metals & Capital Goods indices lost more that 5% in a single week. Oil and Gas & Power indices closed down 4%. Auto and Bankex lost 3%.
In the stocks one of the major looser was Pantloon which lost nearly 15% in a single week after the setback in FDI in retail. Shoppers stop lost 7% & JP Ass lost 15%. Renuka too lost more than 13%. Bgr Energy 12% & Koutons 11%. Jet Airways and Guj Pipavav lost 10%. Sesagoa, Bharti, Reliance Power, Sterilte Ind, Reliance, Reliance Infra, Bhel, Ranbaxy, Coal India, LT, M&M, Jubilant Foods, Shoppers Stop, delta Corp & Educomp closed down in the range 6-10%.
The major attraction is on the weekend when the EU unions will have to deliver convincing agreement on how to solve the ongoing crisis in the EU. On failure in doing that, there could be major downgrade from the rating agencies which will impact the markets more. Indian markets have also been downgraded by major broking houses. FII’s are pulling out money from the Indian markets on back of instability of government. Few weeks back I have mentioned about many reasons for which the FII’s will pull their money back. Scams played a major role in that.
Rupee closed at 52 vs $. Inflation numbers this week were down as compared to last week. But the real numbers has not come down.
Last week this writer had mentioned that the volumes are really dry in the markets and we may see markets turning lower. The last few trading sessions have been very very volatile. Traders finding it difficult to trade in gap up and gap down trading session.
The last weeks bounce back was just like a dead cat bounce back. In the chart we can see that Nifty is trending downwards and we can see Nifty making new lows in the coming week.
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, SpentexInd 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 ofnow, 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(7th July 11) and a low of 4720(26th 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.
Rupee made a new low this week against Dollar. Rupee hit a 32 month low and its almost near its all time low. RBI has indicated that it will be difficult to boost Rupee at this juncture.
Rising Fuel price have made a dent in the Airlines companies in India. Air India has been in trouble since a long time and has been surviving on the government funds. Now King Fisher Airlines have also pulled up his hands, and now seeking government intervention.
Fuel Prices have cooled off for the first time since Jan 2009 and also for the first time since the automobile fuel was decontrolled in June Last year. The price has been cut by Rs.2+.The Oil Marketing companies informed that the cut was possible only after the softening of the International crude prices.
In the last three months Indian markets lost the most over the last 7 sessions. The market sentiment also dented by the Euro zone debt crisis and its impact on the global economy and the financial system.
FII have bought equities worth about $663 million so far this year sharply below from $29Bn they invested in 2010.
Investors believe that the Indian growth will be well below the 8.5% this year.
Indian markets have fallen like a pack of cards. Nifty and Sensex lost slightly above 5% in a single week. Midcap Index lost 7% and Small Cap 9%, Reality 11%, Capital Goods 10%, Metal Index 8%, Bankex lost 5%, Oil & Gas 10%, Auto 7%, & IT 2%
There is endless number of stocks which lost more than 5%. JP Associates, Bhel, Relcap, Mnm, Sail, Rcom, Sesagoa, Siemens, Jsw Energy, Arvin, Crompton, Maruti, RPower, Relinace Infra, & Dlf lost in the range of 10-20% in a single week. Some of the midcap stocks have fallen down so much that they are now counted in the small cap. Kwality Dairy fell 49%, Suajan 36%.
Margin call pressure has really taken a toll on some of the stocks. Pipavav Doc lost 34%. The companies pledged shares amounts to 95%. There was rumours floating in the market that there were selling in the pledged shares and some naked shorts created by some brokers. Educomp lost 23%. Suzlon lost 31% and 2.5% reduction in the promoters stake, Adani Ent lost 27%. IFCI 24%, Ivrcl 21. Redemption of FCCBs of many companies are lined up in 2012. The sharp correction in the share price of the stock prices has made it hard for the companies to convert the FCCBs into shares.
Most of the frontline stocks hit their 52 week low. Stocks like Tata Steel, Sesagoa, Axis Bank, Maruti, Hindalco made their new 52 week low.
After a worst ever week for KFA last week, It gained more than 20% this week. FDI involment in the retail sector was good news for the stocks like Pantaloon. Amar raja batteries after its results have gained 6%. Cipla gained 9% while Patni after its delisting news closed up with a gain of 23%.
Nifty made a low of 4837. In the past also we have seen Nifty taking a support at 4800 levels and turned back. But according to me this time the 4800 levels could be broken and could go beyond the recent low also.
Astrologers betting big on this date. 11.11.11 is a date which is seen once in a century. Bets from the release of movies to Indian Actress Aishwarya Rai Bachan’s delivery have been played on this date. But what about the Indian equity investors. How did they feel? How many of them were lucky on the brousers.
But this week was surely bad for most of the Investors as the Indian rupee falling past 50 per dollar, making it more difficult for the country like Indian which have huge and huge of imports. Rupee hit a low of Rs.50.35 on Friday and the carnage can continue past Rs.51 if RBI does not intervene in the Forex Market and the Eurozone issues does not resolve. Oil refineries companies feel more heat, as their recovery on Oil is not improving and on top of that Rupee depreciating. Banking stocks have been trashed after the Moody’s downgrade. Long commodity traders have surely had a good time when Gold neared its all time high of Rs.29000.
Inflation numbers not ready to come down even after increasing in the lending rates. To add to the worst IIP growth for September Month came at 1.9% vs 4.1% in Aug.
Yields on two year and ten year Italian bonds rose above 7%.With the debt burden of about E1.9 trillion, its seems, Italy is considered too difficult to bail out. In case of default, Europe will surely come to a stop and slip into recession. World is in a greater danger than it was in 2000 or 2008. The debt of US and European countries are ever growing. Printing more and more money is not going to solve the problem. It will add to the issue of Inflation which will sky rocket and would get worse and worse.
Smaller trading week seems to have kept the traders out of the market. Last week also markets corrected 1.5% and the carnage continued this week too. Nifty and Sensex lost another 2.5% this week. Few days back most of the operators or traders had turned bullish as Nifty neared 5400 levels. But the bears again got control of the markets. There was no positive trigger for the markets to surge higher. Small cap and Midcap indices closed down more than 3%.
Most of the Indices closed in red. Bank Nifty tumbled down 6%, Power sector corrected 2.5%, Automobile 1%, Oil & Gas 1.4%, Metals 5%. HUL continued its upward movement and closed higher by 5%, TCS, Wipro& Hero Motor 3%, Cairn India 2.5%.
Global markets corrected heavily on Wednesday on back of worsening Euro crisis. Indian markets continued to face the threat from rising rupee, rising Inflation and bad IIP numbers. Indian markets corrected another 2.5%. Nifty closed at 5169 and Sensex at 17193. As mentioned in the earlier article that the Nifty will face resistance at 5350 – 5400 levels. Nifty face resistance at its 61.8% retracement levels. Nifty corrected and broke the 50% level also and finally took support at 38.2% level. Nifty made a low of 5142 but closed a little higher at 5169.
Nifty below 5112 levels can come down to 5050 levels. On the higher side Nifty will face resistance at 5250 levels.
Last weeks call Buy BOI above 346. SL 341. Did not trigger the price
Sell Bpcl below 622 SL 625 tgt 614. Made a low of 545.
After the failure of the Euro talks. Global markets tanked. Indian followed the suite. Indian markets corrected nearly 1.25%.
Most of the Global Markets corrected almost 5% on Tuesday after the Euro Zone agreement to rescue Greece and keep the sovereign Debt crisis from spreading was upended following the decision of the Greek Prime minister to go for a public ballot on the bailout package. Indian markets also lost over 1% on Tuesday. MF Global filled for bankruptcy this week and there were reports that Credit Suisse shedding another 3% of its workforce.
Technically Nifty seems to have found a big resistance at 5335 levels. Where the Fibonacci Retracement levels comes. If the take the high of 5944 and low of 4720, the 50% retracement levels comes to 5335 levels (marked in the chart).
Nifty and Sensex closed down 1.5%. Tata motor closed down 9%, Sterlite 7%, Icici Bank & Sail 5%, Mnm 6%. Tata Steel 3.5%, Coal India and DrReddy closed down 3% & 4%. The gainers list in the frontline stocks are little less. Hul gained 8%, Rpower & Rcom both climbed 4% each. Sesagoa & Bhel 2% each. SBI 3%. In the Essar Port gained 26%, All Bank 16%, Havells 15%, Pvp venture 35%, Kpr Mill 24%, Pvr cinemas 22%.
Once again Nifty is nearing its over bought position. Indian markets are now a days seems to follow the global trend. Nifty will find resistance at 5400 levels. As everyone knows that the nifty faces strong resistance at 5400 levels, so there is nothing much to say about the same. But we need to think about the sustainability above 5400 levels. In the short run the markets have surely come off but I still have a doubt about the market as the way I had in the past. As I have talked about the same in the previous articles also about the inflation, rising fuel price, falling real estate prices, government issues etc, etc. So keeping all those in mind I still don’t have faith in the India markets. It is still not the right time to invest in the markets.
US unemployment data at 9% as compared to 9%. Seems to be a good news for the International market. But there has been steep drop in Industrial order from 1.5% to 4.3%.
Markets big biggies have declared their result for quarter July-Sep 2011. Mukesh Ambani lead Reliance Ind reported on Sat a 15.80% yoy growth in net profit for the second quarter of financial year 2011.
Hdfc Ltd reported a 20% increase in Net profit for the quarter ended Sep 2011, aided by the strong growth rate. That means that the demand for home loans has been steady and has not been affected by rising interest rates of high property prices.
Tcs posted slightly lower than expected rise in quarterly net profit to 14.7%. Better-than-expected results by IT bellwether Infosys (which posted a 11 per cent increase in net profit to touch Rs 1,906 crore in Q2 FY12), overshadowed disappointing IIP numbers and took the Indian benchmark indices surge last week.
China GDP growth eased slightly in the third quartet to its slowest pace since the second quarter of 2009. Gross domestic product rose 9.1 percent in the third quarter from a year ago, moderating from the second quarter's 9.5 percent. It was slightly below market forecasts for a 9.2 percent expansion. China's inflation, albeit easing, eased to 6.1 percent in September, close to near three-year highs of 6.5 percent in July and well over Beijing's 2011 target of 4 percent.
France is among euro-region sovereigns likely to be downgraded in a stressed economic scenario, according to Standard & Poor's. The sovereign ratings of Spain, Italy, Ireland and Portugal would also be reduced by another one or two levels in either of New York-based S&P's two stress scenarios, the ratings firm said in a report dated today. These assume low economic growth and a double-dip recession in the first set of circumstances, and add an interest-rate shock to the recession in the second.
Rupee falls to 50 against US dollar for the first time since May 2009.
Indices shrink nearly 1.75% in a week. Tcs tanked nearly 8%, Hcl tech 6%, Rel Infra 6.2%, Lnt, Hindalco & Sesagoa 6%. Cairn fell 14% and Jain irrigation 12%. On the other side Hdfc bk gained 3%, Maruti despite the strike gained 6%, Sbi 5%, Axis BK 3%, Coal India 2%. On back of the F1 circuit for the first time in India, JP Infra is being in the race. It gained almost 26% in a single week. Moser baer closed up 24%. Arshiya Intl gained 18% in the small cap and the mid cap group. Raymond was up 15%, Patni 14%, Kpit Cummins 11% & Hero Moto gained 3%.
Technically our markets are trading in a broad range.Nifty is trading in a broad range of 5200 and 4750 levels. If we look at a broader range than the Nifty is trading in a island pattern with the top of 5200 and low of 4750 levels. Either ways breakout will only decide the further path for the Nifty. In the weekly chart Nifty seems to be on the verge of breakout on the upside. MACD may give positive divergence within some days.
Markets have been very stock specific now a days. Arbitragers and Speculators gets on the stock which are newly listed or whose quarterly results a re out. There is not much to talk about the Indian markets as off now, as we are mostly following the international markets.
Italy’s rating was cut by Moody’s Investors service for the first time in almost two decades. Its been lowered from A2 to Aa2 with a negative outlook. They also said that all the European countries with ratings below the top mark AAA may face downgrades as many euro-area governments are facing “ a profound loss “ in investor confidence as policy makers have failed to stop debt-crisis contagion.
Moody’s also downgraded the SBI bank financial strength rating to D+ from C-. As a result of the lower BCA, the Hybrid debt rating was downgraded to Ba3(hyb) from Ba2(hyb). On Wednesday all the banks were the worst effected and so as the market.
Rupee droppedbelow 49 vs $ after data showed the current account deficit widened and concerns about the global economic outlook curbed demand for emerging market assets. Overseas investors trimmed their holdings of Indian equities by $626 million in the week.
Food Inflation index rose to 9.41% and the fuel price index climbed 14.69% in the year to Sep 24.
Markets continued with its volatility. With 4 trading session in a week. Indices closed down 1-1.5% with a sharp bounce back on the last day of the trading session. Sensex bounced back 440 points and Nifty 137 points.
Last week I had mentioned about the trendline, which on break will surely create panic in the markets. Nifty on Monday opened with a deep gap down. The panic selling continued for 3 continuous days. FII’s sold nearly Rs.3KCr in the Indian markets within these 3 days. Nifty once again made a low of 4728 and bounced back on the last trading session and closed at 4888. The last time the same scenario was seen when the Nifty made a low of 4720 on 26th Aug 2011, and from there onwards Nifty once again changed its trend and recovered sharply to make a high of 5169 in just few session. The same situation is not promised this time. As this is the second time it has come to 4720 levels. Break below this will surely take the nifty to 4600 levels.
If the nifty make a double bottom and bounces back then rally should stop at 4911-4970 levels. As I have mentioned in my last article also that the Indian markets are bound to see high volatility. Last time we had discussed about the MACD which was suppose to give negative divergence. And that did happen this week.
FII’s continued selling. They sold stocks worth Rs.3500Cr from 30th Sep to 05th Sep. DII’s bought stocks worth Rs.1600cr.
Last weeks call
Sell Adani Ent close below 523 SL 531. Made a low of 447.
Buy Asian paint above 3170. SL 3154. Did not trigger the price
Sell Axisbank below 1030 SL 1039. Made a low of 945.
Sell Hero corp below 1940 SL 1946. Made a low of 1904.
With inflation so high, no stopping on banks increasing interest rates, unstoppable scams, instability in Indian governments, depreciating rupee, downgrades by most of the FII’s, how we can think the Indian markets are going to out perform the Global markets. We are not going to gain from this rally. Either I should say that we are not going to see any major uptrend from here. Year 2011 was one of the most highly volatile years; next year seems to be more volatile than ever.
US will take a lot of time to recover from recession, Europe sitting on the pile of debts, many countries have been declared bankrupt. In this scenario how can we expect the Indian markets to attract FII inflows? In the quarter ended Sep, Indian markets lost almost 12-15%.
For the week Indian equities closed down in red. Nifty and Sensex both closed down in the range of 1.5-2.0%. IT index lost 5.7% and metal 4.5%. In the gainers were Ranbaxy 9%, Dlf 11%, Infy 8%, JP Ass 19%, Educomp 17%, Jindal Saw 14%, Tata Motors 6.5%, Hcl 6%, Ambuja Cement 12.5%, Financial tech 11%. On the loosers side ADAG lead the pack. Relcap lost 22%, Relinfra 13%, Rcom10%. Ster closed down by 8%, Axis bank 7%, IFCI 19%, IRB 12%.Pantaloon was one of the major stock which lost heavily, it closed down 32%. Opto circuit and Jubilant lost 17% each. Abb and Lnt lost 7-6%.
Technically speaking we had one of the worst trading week this year. The markets were highly volatile. Last weeks close suggested that we might see some bounce back as a perfect Doji pattern was made. But the selling mode continued on the first day of the week also but the same have been absorbed on the very next day when the markets recovered. Every next day of opposite to the previous days close. Nifty found it difficult to close above its 20DMA. And finally on the last day of the trading week close below its 23.60% retracement levels. If nifty closes below the trendline then we may see another round of correction which may take the Nifty below 4800 levels also. MACD is almost on the verge of giving negative divergence. The three parallel indicates that if nifty pulls back then it has to trade in that range. Otherwise the fall could be seen in the Indian markets.
Indian Currency witnessed one of its sharpest and fastest depreciation in the recent times.
Rupee is trading near 50. Commodities are on the way finding support. All the commodities corrected in the range of 8-2% on the last day of the trading session. Silver tanked nearly 8% while Gold corrected 2%. This carnage is all because the appreciation in the Dollar. Dollar has been rising since quite a long against almost all the global currencies.
Indian equities market corrected more then 4% in a week. Last weeks rally was a false rally. Almost all the large cap stocks lost nearly 5 of their market capitalization. Nifty and Sensex lost 4.3% & 4.6% respectively. Small cap and Midcap Index shrinked by 2.5% in a week. Capital goods Index lost the most, closed below by 7.5%. Metal Index and the Oil & Gas Index too were hit severely, which tanked down nearly 6% each. Bankex and IT index closed down 3.7 & 2.5% each.
Amongst the Large cap stocks Lnt, Tata motor, Ster Ind lost more than 9%. Sesagoa, Rel Infra & Ril Ind lost in the range of 6% -7%.Tata Steel, Dlf closed down 5%. While JP Ass lost just 3%. In the Mid cap and Small Cap stocks like Pantaloon lost 12.5%, Jain Irrigation 11%, Godrej Ind 9%, Orchid Chem 8%, Crompton Greaves & Alok Ind lost 7%.
Gainers list are very less as compared to the losers. Reliance Power & Grasim gained 2%, ACC 3%. In the midcap and the small cap stocks Alfa Laval gained 12%, Marathon 77% in a single week, Zandu reality 22%, Sunteck reality 13%, KGN Ind 13% and Inox gained 15%.
In the last article I had mentioned that , if the Nifty falls below then it may correct to 4910 levels and that will be a Lower Top and Lower Bottom formation. We can clearly see that the Nifty made a Double Top at 5160 levels and corrected. Nifty closed down at 4868 down by 4% in a week. On Thursday Nifty closed down below its two parallel after taking support at its 38.2% retracement levels. Nifty on the last day of the trading week made a Doji pattern at the bottom but that don’t suggest that the correction is over. Since the last few weeks I have been informing the readers of the Informed News paper that the Markets are still looking bad and we could continue with the correction. On Thursday Nifty closed below its 20DMA. Nifty will find support at 4800 levels.
If the Nifty closes below 4800 levels, then we may see more carnage.
Calls for the week
Sell Bhel below 1680 SL 1695. Made a low of 1573
Sell Container Corp SL 895. Made a low of 873.
Buy Corporation bank above 456. Could not trigger the buy price.
Sell Hero corp below 2193. SL 2205. Made a low of 2021.
Buy Hdil above 111.50 SL 110. Made a high of 114.80
Buy Maruti above 1117 SL 1106. Made a high of 1162.
The Industrial production for the month of July was way below expectations at 3.3% growth y-o-y compared to a growth of 8.8% in the month of June. The July industrial data indicates that the tight monetary policy by the RBI has started impacting growth. This is the weakest growth recorded in the last 24 months. The Industrial Output for the period of April-July 2011 expanded by 5.8%. The Output was recorded at 7.8% for the fiscal year ending March'11 compared to 10.5% in the year 2009-10.
The Inflation figures for the month of August will be released on the 14th of September. Inflation has been around the double digits for the Indian Economy and which still indicates that RBI may hike the rates by 25 bps in the upcoming policy review.
The Rupee continued to slip down against the dollar, touching its 2 month low of 47.93 on Wednesday. Its good news for the IT and the Export companies but this could deepen the import of the Oil from the other countries. Depreciating Rupee can be biggest concerns for the real economy in the country’s rising oil import bill.
The crisis in the Euro zone has again flared up. This could definitely affect the rest of the world. Greece is close to default. Yield on 10-year Greece note rises to 24% as the country searches for funds to pay of its own Debts.
RBI raised the benchmark interest rates by Quarter of a percent point on Friday and kept Cash Reserve Ratio rate unchanged. The Repo Rate now stands at 8.25% while the reserve ratio gets adjusted to 7.25%. The CRR remains unchanged at 6%. The hike was in the line of the expectation. The rate has been hiked due to the growing demand for the food to the commodity sector. Inflation seems to be the talk of the town, so rate hike was expected. But looking at the IIP and GDP data more rate hike in the near future is not expected. We may be at the peak of the rate hike journey.
After sharp fall in the last week from 5163, we had a gap down opening in Nifty. Nifty made a low of 4911 on Monday. Since Tuesday again nifty inched back to make a high of 5143 on the last day of the week. Markets have been very volatile on back of RBI meet. Traders were very active on the banking stocks. Nifty have taken good support at its 23.6% retracement levels. If we take the Fibonacci levels from 5700 to 4720 levels. On the last day of the trading week nifty closed above its 38.2% levels. Nifty may again inch higher and try to close above the 5170 mark, if that is done then we might see nifty making new recent high and move within the two parallel lines. This could be higher bottom and higher top formation.
But if the Nifty corrects and fails to close above 5170 levels then we might see some more correction and Nifty may slip below 4910 levels. And then it could the lower bottom and lower top formation.
This has been one of the shortest trading weeks in a year and that too with a gain of more than 6% in the Indices. Is this just a technical bounce back or end for the falling markets? Market men finding it really were hard to trade in the market are confused with, which way to trade in. Last week we saw markets collapsed more than 11% in a single week. But this recovered 3%.
Nifty after taking a good support at 4800 levels bounced back sharply to close above 5000 levels. Sensex closed few hundred points below 17000 levels. But the recovery again is too fast and can be short sighted. As discussed in the past also that there has been no major changes in the fundamentals of India, so these kind of fast recovery can be short lived only. This can be just proved as a bounce back from the carnage which happened last week. As the Nifty was trading below its over sold zone and the MACD buy signal on the second trading session helped the traders to take positive trades.
Finally DLF took a break from its long down trend and gained nearly 20% in a single week. Rcom after its likely clean cheat gained 18%. Jsw steel too recovered 19%. Rel Capital 18%. Tata steel 16%. Some of the other stocks which gained were Parasvanth and Chambal Fert 18 & 16 % respectively. T. motor 3%, Mnm, Cairn, Sun Pharma 10% each. Amongst the small and mid cap stocks were Accentia Tech 31%, Panaromic universal & Confidence Petro 27%.
Stocks which lost in the week are Ongc 5%, Ntpc 2%, Maruti 3%, Pnb 6%. In the Midcap and Small Cap Sks Micro finance lost 14%, Kgn Ind 12% and Simple Infra 10%. Pranettaclosed down 42% while Bodal Chemical corrected 38%.
Technically speaking, If we looking at the Nifty chart 1, we can clearly see that the Nifty had taken support at its 161.8% retracement levels from the low of 5177 and high of 5944 after its long downtrend. Its 161.8% retracement levels come to 4703. Nifty since a long time was trading in its oversold zone. But this week the MACD have also given positive trigger and the markets did bounce back. But am still not comfortable with the markets.
