NiftyforAll: Weekly Review

Saturday, February 27, 2016

Weekly Review - 29.02.2016

Dear All,

>>> ECONOMIC SURVEY <<<

The economic survey projected India to grow at 8% in the coming couple of year. Going forward, the Survey said the next year is expected to be a challenging one from the fiscal point of view. As per the road map, the centre's fiscal deficit should come down at 3.5% of country's gross domestic product (GDP) in 2016-17 from 3.9% in the current financial year.

As a cheer to the common people, it stated that consumption can rise if spending from higher wages and allowances of government workers on implementation of Seventh Pay Commission and return of normal monsoon occur.

On the flipside, the survey enumerated three downside risks - turmoil in global economy could worsen the outlook of exports, contrary to expectations oil price rise would increase the drag from consumption and the most serious risk is the combination of these two factors.

>>> GOING AHEAD <<<

Even though most global markets have dropped this year, India has emerged as a surprise underperformer, given its one-of-the-fastest-growing-economies tag.

Sakthi Siva, equity strategist at Credit Suisse, said India’s underperformance was likely to continue due to its valuation premium and also its slew of earnings downgrades.

“India’s premium to the region has dropped from a high of 55 per cent in September to 46 per cent currently. We note that historically India has always underperformed once its premium reaches 50 per cent,” said Siva in a note last week.

The consensus earnings downgrade in India was the biggest in the Asia Pacific region, the note added. India is one of the biggest underweight markets for Credit Suisse.

Outflows from overseas investors at $2.54 billion this year have been among the highest among emerging markets.

“Most investors have an overweight position on India. As the market is over-owned, the selling pressure is more. Last year local inflows were very strong, that too has weakened now. The reality is sinking in that the growth outlook is tough,” said Gautam Chhaochharia, head of research, UBS India.

Experts said concerns over the Union Budget, too, had weighed on the market performance.

“Investors have realised there are challenges around the Budget. It is not a simple scenario where the government can expand the fiscal deficit and stimulate growth. This is also clouding the outlook,” said Chhaochharia.

Worryingly, the fall in the market over the past year has hurt India’s record of being a market with superior risk-adjusted returns.

“MSCI India has been the third most volatile market since the global financial crisis. Only Brazil and Russia have seen higher volatility than India. Relatively higher returns helped India’s positioning on risk-adjusted return parameters. The trend has twisted a bit over the last year,” JPMorgan Analysts led by Adrian Mowat said in a note earlier this week.

>>> Nifty Weekly Chart <<<

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Weekly Chart - Moving Averages - Nearing for a Death Cross. 200 WMA must hold for the Safety of Bulls.

>>> Nifty Daily Chart <<<

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As Daily Chart suggest, some volatile ahead on budget week.

>>> Nifty Hourly Chart <<<

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Hourly chart with an alternative, as per 4th wave completed and if so a bounce can be possible till 7090 or 7150 before next fall.

>>> Bank Nifty Weekly Chart <<<

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Bank Nifty Weekly looks more scary. I use to say Bank Index is a pithamagan bhishma who decides the entire market. In a stressed economy - the first victims are banking stocks. If this is not wrong and if Banking index confirms that by breaking all support and indicators as given above, then bears are ready to stay more with us. Stocks are not going to find any bottom as every stocks going to be a falling knife.

>>> Bank Nifty Hourly Chart <<<

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As a part of the current move, Above 13892 - Price may test the upper end of the channel as shown on chart.

>>> Stock - Follow Up <<<

>>> Apollo Tyre - Hourly Chart <<<

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We have shorted @ 160 and holding for a good Fall. As shown on chart - if 100 HMA or 153.80 breaks - more fall ahead.

>>> Eicher Motor - Hourly Chart <<<