The Chinese market took most analysts by surprise across the globe after it recorded its steepest weekly fall since 2008 on Friday. The index plunged over 13 per cent in the last five trading sessions.
The Indian equity markets however rallied over 3 per cent in the same period, which raises a question in the minds of most market participants -- is the fall in China good news for India?
The danger is that China's meltdown is happening at a time when Europe/US are overvalued and liquidity shocks could well follow as Greek exit or the Fed rate hike.
The Politburo triggered Shanghai’s 125 per cent run since last summer by ordering the Beijing central bank to slash interest rates, cut bank reserves ratios, inject untold billions in high-powered liquidity as the property market deflated and GDP growth fell to 25-year lows below seven per cent.
President Xi Jinping has now become China’s de facto Paramount Leader, the most powerful head of state since Deng and Mao. Casino capitalism became state policy in the People’s Republic as brokerage house margin loans rose 500 per cent to two trillion yuan in a mere 12 months. This financial Ponzi scheme makes pro-Lehman subprime mortgage credit bubble-era seem like a Sunday school picnic in comparison. If the Chinese stock market bubble bursts, its shockwaves will be felt all over the world.
A fall in China is not necessarily good news for India, said Hans Goetti, BIL, in an interview with ET Now. "Again the correlation seems a bit far-fetched. Investors are going into India because it is a long-term growth story, and to China because of the momentum trade," he said.
This week's correction in Chinese markets was triggered by regulators' fresh moves to tighten margin financing - a key engine of the market's frenzied rally - and worsened by a tidal wave of initial public offerings that greatly increase share supply, Reuters reported
In a report released earlier this week, Macquarie Investment Management said that it has eliminated exposure in Chinese shares after turning bearish for the first time in seven years.
Indian markets corrected sharply earlier in the month on reports that China A shares might get included in MSCI index. However, the US index provider MSCI Inc deferred enlisting of China A shares in the index - a move that was welcomed by experts who said it was too soon to include the scrips in the main indices.
"The withdrawal comes after index provider MSCI surprised investors by announcing that it wouldn't include shares traded in Shanghai and Shenzhen in its widely-tracked global benchmarks due to concerns over China's market restrictions," said media reports.
"The inclusion of Asia in the MSCI index will happen sooner or later. It did not happen on the 9th of June, but even if it does, it is going to be very gradual, they are not going increase everything in one go".
Daljeet Singh Kohli, Head of Research, IndiaNivesh Ltd is of the view that there is no one-on-one relationship or it works that way that when there is selling in China, it will benefit the Indian markets.
>>> Nifty Weekly Chart - Posted Last Weekly Review <<<
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Last Weekly Review mentioned on Nifty Weekly Chart - 7960 as a good Support - See what happened.
>>> Nifty Weekly Chart - Happened <<<
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As Expected - Bounce happened. Price maintained 7640 and made a rally towards 8250. Now if breaks above 50 Week Moving Average - Fresh Rally and Short Covering Expected.
>>> Nifty Daily Chart <<<
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Its Very simple - The second Bearish Cross Over is clearly a Sign of Caution. If Price able to cross above 50 DMA - Rally may continue, Else as usual it happened before, Price to resume the fall - once again.
>>> Nifty Hourly Chart <<<
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It looks like an Irregular Correction for Wave 4 as A-B-C.If the above chart is right, then get ready for the fall to resume once again. Else Rally to continue with a big short covering.
>>> Bank Nifty - Weekly Chart - Posted Last Weekly Review <<<
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Posted Last week as - 50 WMA and Trend line as an important support for bulls.
>>> Bank Nifty Weekly - Happened <<<
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As expected - Price bounced.
>>> Bank Nifty Hourly Chart <<<
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Watch out for the Key resistance at 18000 and 18200.
>>> GRASIM - As Posted on 16th June, 2015 <<<
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Grasim - Gave us Rs.10,000 as Profit.
>>> INDUSINDBK - As Posted on 16th June 2015 <<<
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INDUSINDBK - Gave Us Rs.5000/- Profit.
>>> EXIDEIND - Posted on 17th June, 2015 <<<
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We Booked full Profit on ExideInd @ 148 on 18th June, 2015 with Rs.6000 Profit.
>>> Performance till 19th June, 2015 <<<
>>> Click the image to see on full screen <<<
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