The inflation numbers or the WPI numbers on Fridays took the best of the Bear/Bull by surprise.The Nifty tanked immediately after the unexpected numbers and the markets took a 500+ points beating.The markets are expected to react to Bsp support withdrawal and the Left-UPA Nuke tussle stated for 25th of june starting tomorrow.Moreover the Repo or the reverse repo rate hike by Rbi should also be a matter of days now seeing the unacceptable levels of Inflation.The FOMC meet will have a strong view on Inflationary trends and the fall in dow can be related with the occurrence of the same event.The primary reason for the inflation as of now is Crude hike must have been the headlines of any newspaper.The truth remains in the fact that the present government did not take any measures to hike prices of fuel and to curb inflationary trend that was seen in last 8 months.I believe that traders should remember that markets react at a later stage to any economic event.What the ministers did was curbed the rise in prices of cement and metals without noticing the fact that there was a demand driven price rise.Once there is an external force that limits the functioning of a free market.The market breakdown is bound to happen.
With the hoarding of food grains and expectations of even higher inflation.Occurrence of higher inflation can not be unexpected as of now.Moreover the instability of the government in the centre will be the last nail in the coffin for tired bulls as of now.Tsr Research team expects elections to be held in next 6 months.We expect that the government will try and call early elections when the inflation will be manageable.Any snap polls before this outcome will lead to clean sweep by erstwhile NDA.Moreover even after support of S.P one cannot expect that the government will have a clear majority as it will fall short of 2 vital members (UPA-LEFT+S.P)
If there are announcement of any snap polls in next two months then it will be blessing in disguise for stock markets.We can expect a very sharp recovery as Poll pundits will predict a clear majority for NDA.Moreover the stock markets want reforms at the end of the day and the present government has been a Reform sans government.Stock markets wants divestments,Ipo and less interference of state in free market mechanism.If only the present government would had increased the prices as per the rise in international markets till last year.Inflation figures would had a higher base and the markets would had heaved a sigh of relief.The government is paying its own price by being associated with forces who are more committed to China being the only super power in Asia then India being one.
Coming back to Nifty the charts have become so ugly that its better to talk about the political scenario then talking about Nifty.The closing witnessed in nifty on Friday coupled with the weakness seen in the Dow .One can assume a weaker opening for Nifty.The million dollar question now is that whats next.For me i will try and give trade s on pivots coupled with the news flow to make the most of the Nifty moves this week.Going ahead support zonbe for Nifty will be 4231-4254 if 4194 holds on the downside one can expect an upmove in Nifty.We will face good amount of selling pressure and all leveraged trades should be limited to Intraday.One can go for value buying below 4200 levels.We had given 3 stocks(take solns,oswal chem and diamond cables) and booked 2 of them approx 10 days back with 12-15% capital appreciation in four days.One stock diamond cables is up 12% from recommended levels but is still a Hold as better rates are possible.
SENSEX-in the last weekly report strong resistance given at 15500 and index made high of 15732 and it start its journey to fill the gap of 14455.
Previously we have told that index has broken triangle of 2163 points and last week report told that “this is only pull back rally” and it has follow our words.
Before completing this triangle index has strong support levels at 14455 and 13780.
While resistance are 15390-15600.
NIFTY FUTURE-in the last week report strong resistance of weekly charts given at 4654 and index made high of 4658 for blink and just crashed 342 points.
If you have carefully read our article then you could have made at least 300 points earning.
We have also given alert on Friday that index has made “island reversal” and index will hit 4254 –rest is the history after inflation. Don’t forget we have also told about “triangle “of 616 points in this case nifty will slide to 4040.
Before completing this triangle index has strong support at 4252-4191-two close below 4191 will take to 4040.
While resistance are 4460-4556-4627.
STRATEGY :
- There is meeting of federal reserve on 24/25
-Dow jones technically looks weak-Indian index are entering in to oversold zone on Bollinger bands
-Rbi may take action before the meeting which is on 29 of the month-reliance group is entering in to oversold zone
-Looking at the all situation it is batter to do day trading
POSITIVE FOR MARKETS-
Results of Jun 2008 quarters will come good.
Advance tax has been grown by 40% in the april-jun 2008 quarters.
NEGATIVE FOR MARKETS-
Continue selling by fiis, rising inflation, political uncertainty.
Reserve banks steps toward rates can affect to topline and bottom line as well as expansion plan of corporate.
Cpm may pull down the government.
THINGS TO WATCH OUT:
-Federal Reserve will meet for two days meeting about the rates on 24-25 Jun 2008
-We expect rates will be unchanged.Reserve bank of India will meet on 29th june 2008 to review the quarterly monetary policy.
OTHER MATTER –
Federal Reserve will start rising the interest rates.
Reserve bank will take its actions to keep inflation in control.
GLOBAL MARKET:
Dow Jones- we told blood bath below 12095 and last support is 11990. Now index has strong multiple support at 11635-if fed comes out with positive surprise then expect bounce in that case it will strong resistance of 12200.
NASDAQ –what was written in last week report? Below 2439 all USA traders will become crazy to short and rest is history
In the next few days index has strong support at 2391-2385 below that it will slide to 2348-2328
While on up side strong resistance at 2439-2456.
Nikkei- strong resistance of 14569 three close will take to 15000.
Index has strong support on intermediates charts at 13896 two close below will take to 13612-13222.
Hang sang-strong support at 23098-21472, resistance at 23546.
Shanghai-support at 2677, resistance at 3140
According to weekly & two weekly targets when Nifty Spot do not trade above the level of 4415, 4598 & Sensex---14819, 15489 till then no strength will make in the market but if Nifty Spot open below the level of Friday’s level then once again bloodbath can be confirmed in the market. Difficulties of the market increase Inflation more due to the increase of rates, so please do not do any purchasing. RSI is still doing trade in the bearish zone, its direct meaning is that fall is remains in the market.
Next Week :- Nifty faces resistance at the 4482, 4530,4650,4890 and 5025 levels but 4250,4190,4100, 4070 are its important support levels.
Sensex faces resistance at the 14677, 14800 and 15332 levels but has support at the 14141 and 13989 levels
Resistance will be at 4369-4468-4574.Support will be at 4280-4200-4004
23 JUNE TO 27 JUNE: - Nifty break major medi.term supp. Nifty weak but oversold. 4280 retracement supp.
WEEKLY SUPP-4100, WEEKLY RESI-4530
Sell Nifty July Futures Below 4390 , SL:4435,Target: 4260,4240
Sell BAJAJ Below @ 484 Target 476-465 to 443. SSL 513.
Sell BPCL Below @ 261 Target 256-246 to 226. SSL 287.
Sell CANBANK Below@ 195 Target 190-184 to 172. SSL 211.
Sell ICICIBANK Below @ 728 Target 714-693 to 648. SSL 786.
Sell ITC Below @ 199 Target 193-188 to 175. SSL 205.
Sell KOTAKBANK Below @ 588 Target 572-548 to 497. SSL 650.
Sell ONGC Below @ 864 Target 852-832 to 793. SSL 911.
Sell STER Below @ 764 Target 749-728 to 684. SSL 817.
Sell TATAMOTOR Below @ 489 Target 479-467 to 439. SSL 521.
Sell UNITECH Below @ 188 Target 180-175 to 164. SSL 197.
Sell DLF below 450, SL:455, TGT: 440,433,
Sell Bombay Dyeing below:650, SL:655, TGT: 630,615,
Sell RPL below 175, SL:178, TGT:166,162,158
Sell GMR Infra below 99, SL:103, TGT:95,92
Sell JP Associate below 162, SL:165, TGT:156,150,
Sell HDIL below 518, SL:525, TGT:499,485
CAIRN
Short Below 272 tgt 257
Long above 272 tgt 274,277,280
RANBAXY
Remain Short below 575 tgt 512
L&T
Remain short Below 2612 tgt 2500
WIPRO
Remain Short Below 479 tgt 470. Below 470 tgt 464
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