Thursday, August 09, 2012

IIP Vs RBI's Policy Action

Dear All,

IIP data as published today fell by 1.8 per cent versus 2.5 per cent in the month of May. Point here to watch is capital goods sector fell by 27.9% which looks very bad. Now RBI is under Pressure from India Inc to Cut Rates.

RBI is very clear that a Rate Cut at this Point of time is dangerous which may stoke Inflation, as controlling Inflation is the first Priority for it. As Monsoon also remaining as a threat, which may impact our GDP data along with inflation.

So what Mr. Chidhambaram need to tackle the situation - Is he ready to Kick start the Reforms Process -

Will he Reduce the Fuel Subsidy on Diesel and more on Petrol to reduce the fiscal deficit.

Will he pass the bill for FDI retail in Single Brand with the support of their Rebel coalition partner - Mamthaji and Mulayam ji.

What and when will be the GAAR be finalized - Dont forget that Same Mr. Chidhambaram when he was the FM in 2008 - made a Policy in sub Account - when Market had a 2 down circuit.

So the world Analyst and Economist keep on downgrading our Indian Outlook. Who ever it may be S&P or Moody or Fitch - no difference in them.

Moody's Investors Service becomes the latest to cut India's growth forecasts this week.

As already CLSA and Citigroup cut their outlooks for India to 5.4 percent and 5.5 percent respectively.

An Lack of Policy decision, RBI's non-ability to react, Poor Monsoon, Slow Growth and wide range of Corruption every where are the said reason behind these.

>>>> NIFTY <<<<<

>>>Click the chart to see in full screen<<<

As shown in the Chart - looks like a Reverse H&S - But I feel that when ever a IHS formed on the Upper side may not get succeed.

If Nifty keeps falling it must breach 5300 and 5270 to make this pattern invalid. But if gets support from here - then a rally of another 300 points not ruled out.

EW suggest that a fall is inevitable as I have posed on tuesday. Refer that for clarity. As per my count nifty should breach 5032 and should make a low upto 4900 to 4800.

Lets see tomorrow as friday is an week end closing. Cheers!!!