#7 Article: Monsoon Trading

Monsoon has been wonderful for the farmers around the country but still not good for the traders, let it be Commodity traders or Equity traders. All the Agri commodities are pouring down in value even more than monsoon while Nifty has been pretty volatile last month but we did achieve first target 5961 which I intimated in last issue. We still have our upside tgts 6132/6300 intact. RBI was the key market turner last month. Raising money market rates from banks was the step taken by RBI to control depreciating rupee. Our currency did improve against USD but what about our economic growth?  Many analyst including me are of the view that squeezing liquidity from economy at a time when we trying to stand up from recession is little harsh step. But controlling our currency and CAD (current Account Deficit) was also important. So everyone will have their own views and I guess RBI would have taken the right step after studying our economic conditions more carefully. Gold import has been reduced almost 50% over last quarter which has reduced our CAD to large extent.

Earning season has been better than estimates other than small banks which have not performed as per estimation. But this should been taken positive change as companies have performed better than previous quarter.  IT and Pharma sector is outperforming at the index and even at the fundamental earnings. Rupee depreciation has helped both the sectors to outperform as they are more over export oriented sectors. Banking and Commodities sectors are the most beaten and stock prices are just unacceptable for the traders and investors but its hard to believe that this is the right time to go long for investor who has the horizon of more than 5-6 years. Tomorrow we have RBI monetary policy review and we expect something in favor of Nifty and Banknifty.

Coming to Nifty technical’s, 100 EMA is at 5869 and 200 EMA at 5750. We are expecting nifty to consolidate between this range.  Indicators are also expecting a range bound to consolidation movement in near future. Graph adjoined to article is weekly chart of nifty and its running in perfect Elliot wave channel. Currently we are in internal correction mode which can be taken as a long term investment. We have been advising seen last 2 issue’s to go long for long term portfolio builders and we continue to do so. Our SL of nifty would be the same i.e., 5757 and 5632  on closing basis. Targets on upside are 6132/6300/6450