Thursday, September 13, 2012

Can Friday Hold 5400 - Nifty

Dear All,

There are some queries after Yesterday's Post. Why did I turn Bearish when the News are Positive and Optimistic from Global and Domestic.

First Euro Issue is getting resolved.

After German Verdict - the worries are eased. But the Light is far away - tunnel is longer enough to reach it. Actually Euro faces many crisis which need many solutions for solving it. Reacting for any Positive Like news is very common in Stock Market. Only time has the answer.

Secondly RBI is ready to cut Rates.????

Post IIP Data which has worry on India Inc Increased further as fourteen of the 22 industry groups that make up the manufacturing index - the biggest constituent of the IIP - reported a fall, pushing it into its second straight month of decline.

"There is urgent need for policy action from the government to address the deterioration in fiscal deficit and persistent pullback in private investment. In the event of continued inaction from the government, we see high risk of a potential 'deeper macro stress' scenario," said Morgan Stanley economists in a note.

So RBI to meet on monday to decide the monetary policy, even though many Banks are crying for a rate cut, economist still believe that RBI may hold the rates for the fifth time also.

Actually Nifty is moving up on expectation that RBI may cut Rates. Any disappointment may lead to a Big Fall this time, as the Data's are continuously Negative, Fall in corporate results and Poor strength of the Banks.

So How far the Issue is Bad ???? Yes its Poorer than what we think. Read below..

1) HSBC has cut India's growth to 5.2% from its Previous forecast of 6.2%. It also stated that RBI's Policy as one of the reason for slow down in growth.

2) Bank of America Merrill Lynch says loan growth in India is likely to hit 14-year low, which is bad news for the economy. In spite of RBI refused to cut rates, Banks have reduced the Interest rates - which may impact their Balance sheet in FY13-14. PSU Bank may be worst affected.

3) On going Inflation is much above RBI's predication of 5%. It may even get increase due to Rise in Petrol, Diesel, LPG etc by govt. As Govt facing a big Problem on Fiscal Deficit, it may free the Prices soon. The rise in Global Crude indicates that Govt has no other choice.

After all if RBI is holding rates only for Inflation - does it get succeeded. The answer is NO.

It shows that Govt has no control over the issue.

Last Session in Parliament - India Saw what game was played between Govt and Opposition. No Useful Reforms or Bills Passed.

So lets wait till Monday what Happens...

>>> NIFTY <<<

>click the chart to see on full screen<

Nifty facing it resistance near 5448, previous high. The chart shows a "V" shapped recovery - Rise is only on the basis of Expectations.

As said 5458 & 5490 is a Stiff Resistance. Support are 5420, 5390, 5358 and 5310. Below 5310 Nifty may try to fill the gap till 5260 as showed on chart. Tomorrow is a Weak end, Lets get ready to enjoy the thrilling day ahead. Cheers!!!