Saturday, June 29, 2013

#6 Article: Markets at a glance

Nifty has still been trading in the downside channel. In last month issue I did mention that the market was in crucial range between 5855-6118 and could go either. Unfortunately it was on the downside. India was under-performing its western peers. Last month was full for global events which had some profit booking effects on all equity markets. But all the events have some long term good sign of economic recovery. Fed announced that it may stop easing money inflow to the markets as they believe a recovery in US economy is back on track. Consumer confidence number, retail sales number and Home sales number have been increasing significantly in the US while somewhat similar trend has been witnessed in Europe.  But Asia was little hazy last month with their economy and money market. Japan’s Nikkie was on lower circuits for couple of days as yen got stronger while Shanghai compositie also saw more than 5% cut for 2 days as People bank of China plan to squeeze liquidity in markets by making loan approval a stricter way. Overnight money market rates in China had shoot up to 6% when PBOC stated about squeezing liquidity. But overall US and Europe are sighting some recovery in the economy but yet not completely out of recession.

Coming to our market, most talked about last month was USD/INR. Our currency was at the life time low to around 61. No one could have even imagined that we could get to this low in just few months. On my blog I had posted on 30th October 2012 that we might see Rupee at 62.80 but most of them laughed off but now we are not much far from that level. We might now not see 62.80 ryt now  as RBI has stepped in to protect our economy. Gold import duty was hiked to restrict gold imports and save CAD (Current Account Deficit) but I feel we can save it easily by exporting more goods rather than restricting imports. Technically now as seen in the chart below we May see Rupee strengthening with tgts 59/57.30/55.75-56.20 before making a new low at 62.80. YES!! STILL IN LONGER TIME TGT OF 62.80 ON USD/INR IS INTACT.

Coming to our precious yellow metal, Gold, it still in a downtrend. As I had intimated on my blog on 29th Jan 2013 that we need to short gold with minimum target of 25000 and we got that target. But looking at the monthly chart of the gold we may see some more downside. In dollar terms we have already seen some downside but in rupee term we may see downside in coming days for the reason I mentioned above that I am expecting our rupee to be strong which could bring down gold price. Last week Morgan Stanley has downgraded the gold targets to $1300 upto 2015. So now gold could not be a preferred investment asset with a medium term view of 3-5 years. Our strategy would be to short gold on every rise with SL of Rs. 28000

Coming to Nifty technical, it is still in a secular bull trend but we are experiencing some reaction within. But monthly chart is moving exactly as per the standard Elliot wave pattern. Now we have a strong support at 5678. 100EMA is 5844 and 200 EMA at 5757 which are crucial levels on nifty nearby.  You all should consider these levels to add longs as we might see some downside upto 5678 but now take that as the opportunity for long term investment. Strategy would be going long on Nifty at CMP and add longs on downside at 5757 and with strict SL of 5632

Note: All the data and graph is as of 28 June 2013 closing
Disclaimer: I may have personal position in index and above mentioned stocks. Views and News mentioned above may have Errors and omissions. My views are biased more towards technical analysis. Please read and study the market carefully before investing on my idea. For any suggestion contact me on my email. Some words mentioned in article don’t mean their actual meaning. They are correlated for market.

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