Sunday, November 27, 2016

Weekly Review 28th Nov, 2016

Dear All,

Software exporters and drug makers led gains in the benchmark S&P BSE Sensex, which reclaimed the 26,000 level after breaking below it on Thursday. The rupee rebounded 0.4% after it breached the record low set in 2013 on Thursday amid a 2.5% decline this month, far less dramatic than the 8.1 % plunge seen in August 2013. The MSCI Asia Pacific Excluding Japan Index also recovered from the previous day’s drop.

Indian equities have been battered this month amid mounting concern the government’s recall of Rs15 trillion of currency notes—or 86% of total bills in circulation—will hurt economic growth. The cash crunch may pull down gross domestic product in the year through March by 0.5 percentage points, Citigroup Inc. said in a report.

Capital outflows from emerging markets after Donald Trump’s shock victory have added pressure on Indian equities. Global funds have withdrawn $1.9 billion from local shares this month, the highest in Asia after Taiwan, data compiled by Bloomberg show. Domestic funds, in comparison, have bought $1.8 billion of shares, the data show.

Analysts believe the government had the right drivers in place to uncheck recent market underperformance.

“Landmark macro reforms aimed at putting India’s economy on a long-term growth path are in place. Implementation of the goods and services tax (GST) in mid-2017 will boost tax compliance and corporate efficiencies. The government’s new demonetisation scheme curbs corruption. The Aadhaar-based e-Governance programme allows widespread financial inclusion and is driving bottom-of-the pyramid opportunities and potential subsidy savings of $7-8 billion. The low-cost housing scheme imparts meaningful upside to the construction sector. These and other initiatives will help reverse 12 months of market underperformance

>>> The Side Effects of Demonetisation :- <<<

It has clearly caused considerable inconvenience as people with perfectly legitimate quantities of old notes of Rs500 and Rs1,000 have to queue up at banks to exchange them into new notes. Tragically, many deaths have also been reported. In addition to inconvenience, the shortage of cash has also disrupted business in the cash-based informal sector, which is where the majority of the population is employed.

Farmers, fishermen, vegetable sellers, small shopkeepers without card readers or Paytm, taxi drivers, truckers, etc., have all been affected with loss of livelihood which may be irretrievable in some cases, for example, loss of daily wages for casual labour, or lower sales for vegetable vendors. Real-estate development will be badly affected because it is heavily cash-dependent, having long been a favourite asset for holding black wealth. Sectors such as hotels, restaurants, catering, the fashion garments industry, etc., which were often paid for in cash from black income, will also be affected. Some of the disruption, as in the case of real estate, can be viewed as an unavoidable rebalancing. However, in the short run, it will disrupt downstream income flows in the form of wages to construction labour, purchases of cement and other construction materials, including steel, paint, glass, etc. This will have downstream effects on both employment and income.

Much of the public enthusiasm about demonetisation comes from the expectation that those with hoards of cash will not be able to exchange it in the banks for new notes, and will therefore lose their ill-gotten money. This group includes businessmen, or politicians (either on their own behalf or on behalf of political parties), or bribe-taking bureaucrats. The public will certainly applaud their loss. However, much of this may be laundered.

Since the notes will be valueless after 30 December, holders of undeclarable cash will be willing to offer 30-40% commission, or even more as the deadline approaches to offload the cash. Intermediaries will organize large numbers of individuals who can take smaller “explainable” amounts of cash to the banks for deposit. Since farm income is free of tax, large numbers of people claiming to be farmers, could make deposits in banks, technically even exceeding Rs2.5 lakh with impunity.

Black wealth held in cash can also be laundered by purchase of gold and hawala transactions but that assumes that the suppliers of gold and the hawala dealers can launder the old notes received before 30 December. Some of this has already happened as evidenced by the sharp rise in gold prices and also the hawala rate for the dollar. Inevitably, higher gold prices will encourage smuggling and divert foreign exchange that would otherwise have flowed through legal channels to finance gold smuggling. This is bound to put pressure on the rupee.

The negative impact on the various sectors of the economy is bound to produce lower growth. Estimates for gross domestic product (GDP) growth in FY17 from financial analysts vary from a low of 3.5% to a range of 5.5-6.5%. My best guess is that GDP growth is likely to slow down to around 6% in 2016-17. More importantly, it will also remain subdued next year. Much depends on what happens to the investment climate.

>>> Nifty Weekly Chart <<<

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

Very Important Support Held by Bulls @ 7930 and Price made a Dragon Fly shows Bulls are preparing for a Race. 8200 may remain as a Major Hurdle for Bulls. So lets watch for a Meaning full decision. Mean while we are long form 7980 onwards and holding for a good Rally.

>>> Nifty Daily Chart <<<

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

7930 if breaks - Bears may pull down the price till 7540 or 7500. Moving Average cross our must be watched. Immediate Hurdle @ 200 DMA 8150.

>>> Nifty Hourly Chart <<<

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

Hope its a simple chart to understand whats next for Nifty. 7930 - 8290-8300 - 8520 are the levels to move in coming days or weeks.

>>> Bank Nifty Daily Chart <<<

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

Previous low made on Demonetisation day 18190 should hold for a meaning full upmove. Any further risky move from govt. side may again beat the sentiments and the price may break the support and fall may start again.

>>> Bank Nifty Hourly Chart <<<

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

18190 had the answer - Make or Break - Lets wait and See.

>>> TataMotors - Hourly - Posted on 21st Nov, 2016 <<<

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Wrote - Tata Motor may rally. See what happened.

>>> TataMotors - Hourly - Missed the Profit & SL hit <<<

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

Victim of Volataile - We missed the Profit - as price reached 475 near our booking area 477. Exited below 450 with loss.

>>> HDFC - Posted on 22nd Nov, 2016 <<<

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

Posted 22nd Nov,2016 - Price may rally.

>>> HDFC - Holding Long for a Good Rally <<<

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

Lot of volatile and we are still holding for a good rally.

>>> Performance till 25th Nov, 2016 <<<

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

Above performance is not a Promise or guarantee for the given Profits or Loss.Performance given based on 1 lot at a time and clients Profit differ as per the margin availability and Number of Lots taken by them. We may or may not re-enter the Calls given here hit Stop Loss, as per market movement. The charts given above are just for educational purpose only and we don't recommend any Entry / Buy or Exit / Sell. Reader must taken their own decision or consult their qualified Analyst before making any decision.

>>> N4A - Services <<<

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