Sunday, June 26, 2016

Weekly Review - 27th June, 2016

Dear All,


Britain's surprise vote to exit the European Union (EU) sent shockwaves across markets and created uncertainty for the global economy. A 52:48 per cent referendum verdict in favour of leaving the EU bloc roiled global financial markets and wiped out billions of dollars of investor wealth.

The European markets went in freefall mode, with benchmark indices in the UK, France, Germany, Spain and Italy plunging between five and 10 per cent. Major stocks in the European markets posted their biggest-ever single-day declines and the indices in the US markets plunged in initial trade. The pound fell as much as 10 per cent, against the dollar, to levels last seen in 1985. The euro dropped around four per cent against the dollar.

Analysts believe the market will continue to remain turbulent as they see the next few months as an uncertain time for the Europe both politically and economically. "We think the crystallisation of a major tail risk for markets is likely to herald a period of volatility as investors digest the full implications of Brexit," said a note by Bank of America Merrill Lynch.

WHO SAID WHAT...
As investors look around the world for safe havens in these turbulent times, India stands out, both in terms of stability and growth
Arun Jaitley, Finance minister

The volatility will hit us. But as markets and investors wake up, they will judge where it makes sense to invest. We should see a calm re-emerging
Raghuram Rajan, Governor, RBI

As trade strategies are reworked, there could be potential advantages in terms of better market access for India to EU and UK
Arundhati Bhattacharya, Chairman, SBI

I think we are overreacting to Britain's exit from the EU. For us, it's business as usual and I do not see any reason for India to worry
A M Naik, Chairman, L&T

Data from 2010 indicate when the broader indices have taken a cut of two per cent or more on a single day, it has had cascading effect on FII flows. FIIs have typically sold Indian equities during such periods. For instance, last year, when devaluation of the Chinese currency took the S&P BSE Sensex all the way from over 27,000 to retest 25,000 between August and September. FIIs sold Rs 21,000 crore of shares in the Indian markets during this period, including Rs 5,000 crore in a single session (August 24).

With the benchmark Sensex plunging 1,000 points intra-day on Friday’s session, provisional data indicate foreign investors have again started exiting (they sold Rs 629 crore of shares on Friday). “There could be some repositioning of weights among emerging markets (EMs) and investors might redeem their funds. So, we could expect FPI sell-off to continue”, says U R Bhat, managing director, Dalton Capital Advisors.

Dhananjay Sinha, head of institutional research at Emkay Global Financial Services, adds that until the impact of global events settles, foreign investors will not be in a rush to return here. “Compared to the foreign currency or bond market, equities reacted more sharply to Brexit, as the event was not priced into equities,” he points out.

The Indian markets, in the short term, cannot be said to be immune to a rising global risk aversion. There are likely to be many moving parts in the global equation in the short term, too. In case of a major risk off possible coordinated central bank action would likely be taken to calm the markets. All this couldmean volatility.

What does it all mean for the markets? It should also be noted that after a 16 per cent rally from the February-bottom, valuations are no longer a major defence against downside. While a recovery in earnings is likely to help lift equity prices in the medium term, the fact that valuations are not cheap means that investors can afford to wait and see the markets stabilise. If indeed, the markets were to go into a deeper correction, investors should be ready to take advantage of such an opportunity. India’s improving economy would mean that markets would float back up over time.

>>> Nifty Weekly Chart <<<

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RSI and candle singing a bearish tone. Price failed to close above the key resistance 61.8% - Shows a caution sign.

>>> Nifty Daily Chart <<<

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Price made a double top and RSI on break down. If Price able to crack below 50 DMA - More correction likely.

>>> Nifty Hourly Chart <<<

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Above chart - assumed as a 5th wave truncation. If not wrong - more fall likely.

>>> Bank Nifty Weekly Chart <<<

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Its a doji on weekly chart. Price made a double top. Just like Nifty - Bank Nifty also had a RSI break down - shows more correction likely.

>>> Bank Nifty Daily Chart <<<

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50 DMA - Key support, price may continue to fall below 50DMA.

>>> Bank Nifty Hourly Chart <<<

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16960 should hold for recovery.

>>> Maruti - Posted on 16th June, 2016 <<<

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Posted on 16th June and before, Maruti for correction.

>>> Maruti - Profit Booked Rs.20,000/- <<<

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Profit Booked Rs.20,000/-

>>> CanBk - Profit Booked <<<

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Can Bank Profit Booked with Rs.15000/-

>>> Performance till 24th June, 2016 <<<

>>> Click the image to see on full screen <<<

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