Tuesday, September 6, 2011

#87 Nifty Update

Child in an amusement park and Trader in stock market both have the same feeling!!! Have you experienced TORA-TORA ride in a park as a child??? Same feeling was with NIFTY traders today...Up-Deep down- Up- Down- zooooooooooming up!! NIFTY opened at 4993 then showed a deep fall at 4943 then we came to 5000 which trader thought was a resistance but again it bounced to 5072 after a small correction to 4970. NIFTY outperformed other asian markets and closed up at 5064 which was my mentioned resistance yesterday. IT sector was the most that bleed in last 2 session majorly due to downgrade of IT sector giants by Citi group and other rating houses. This is due to their major exposure to US and European countries which are facing recession at present. An interesting article in a leading magazine quotes CBO's (Congressional Budget Office-a leading economic advisory committee USA) saying that if USA wanna lead its economic run at current GDP then it need to maintain ratio of 8.6% of Budget to GDP which comes out to spending cut of $15 trillion against what actually they have proposed at $2.4trillion. I think the Obama is in biggest trouble. This is was the highest budget deficit after the second world war. So you can imagine how trouble is US economy in?? But a common question arises that why asians are more affected??? There is a simple statistics that can answer that...US in total have $4.15 trillion currency treasuries of which more than 50% is held by asian countries with china leading (around $ 1.4 trillion). Therefore if Dollar tumble's all asia will be affected. Now you would ask then why would whole world other than asian affected??...another statistics says that 66 countries other than Europe and Asia peg their currency against dollars or decide exchange rate on dollars. So now all eyes around the world is on one man and that is you MR.OBAMA.. Kindly save us!!! Increase your tax rates or decrease your spending. European Central Bank has also pleaded EU to meet soon and bailout greece otherwise inflation and lending rates will surge to uncontrollable level. One of the Interesting thing i read about Beijing was they have limited the numbers of new car registration per month..That should be even implemented in india to control pollution and traffic. Domestically PMI (Purchasing Manager Index) was out yesterday. It was at lowest level at 53.8 for august against 58.2 in July. This index suggest the orders of raw material by any firm (if i am wrong plz correct me). So this means manufacturing may further decline in coming months. In banking sector ICICI bank and HDFC has introduced "fixed rate" housing loans which means you can fix ur rate of interest for first few years and then floating rate will be applied.. I think this is a good move. On other hand Brokerage houses are looking to capture foreign brokerage as domestic margins are under pressure and volumes are declining . Stock specfic i would suggest to avoid BHEL in-spite of high order books they are coming with a FPO and it is expected to be below CMP so dont take any longs on thte stock. Technically speaking market took a strong support at 4945 which i mentioned yesterday and it has closed exactly at 5064 level which is strong resistance. Tomorrow early hours of trading will decide NIFTY's move. But i m still bullish for short rally and still suggest you to buy with strict SL.
NIFTY levels for 7th September:-
R-5092                  S-5036
R-5112                  S-5017
R-5127                  S-4994
R-5188                  S-4956

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