THE WEEK GONE BY AFTER THE RISING INFLATION DATA, RATE HIKE BY RBI AND GLOOMY PERSPECTIVE BY INVESTMENT ANALYSTS NIFTY ENDED AT 5366.40 AND SENSEX AT 17870.53 WITH LOW VOLUMES AROUND 1.20 LAKH CRORE.
IMF ON FRIDAY PROJECTED THAT THE INDIAN ECONOMY WILL EXPAND @8.2% IN 2011 WHICH WAS ALSO MADE EARLIER IN APRIL 2011,WHICH IS MUCH LOWER THAN THE EXPANSION(10.4%) IN THE LAST YEAR 2010.THE PROJECTION OF IMF CAME AT THE TIME WHEN INDIAN ECONOMY IS GRAPPLING WITH UNCOMFORTABLY HIGH INFLATION THAT THREATENS TO DERAIL ITS GROWTH STORY.INFLATION CROSSED THE 9% MARK IN MAY, WHICH HAS DIM CHANCES TO COOL-OFF IN NEAR FUTURE. IMF MAINTAINS ITS VIEW OF APRIL 2011,THAT IT EXPECTS INDIA TO EXPAND BY 8.2% & 7.8% BY 2011 & 2012 RESPECTIVELY. IT EXPRESSED THAT TIGHT MONETARY POLICY REGIME BY THE RBI TO TACKLE INFLATIONARY PRESSURE IS EXPECTED TO HURT ITS ECONOMIC GROWTH. ALSO FINANCE MINISTER ON FRIDAY SAID THAT "THE MONETARY POLICY HAS BEEN GRADUALLY TIGHTENED...... MONETARY MEASURES MAY END UP MODERATING THE GROWTH IF THEY HAVE TO BE PERSISTED FOR AN EXTENDED PERIOD OF TIME". THE IMF REPORT ALSO CAUTIONED INDIA ON ACCOUNT OF HIGH FISCAL DEFICIT CAUSED BY SPENDING OVERRUNS IN SUBSIDIES.THE COUNTRY'S FISCAL DEFICIT IS PEGGED AT 4.6% OF THE GDP FOR THE FISCAL 2011-12 AND STRESSED THAT FISCAL CONSOLIDATION SHOULD CONTINUE AT THE FASTER SPACE IN SOME EMERGING MARKETS, LIKE INDIA.
NOW,HOW THIS IS GOING TO IMPACT????: IN VIEW OF CONSOLIDATING THE FISCAL DEFICIT THE SUBSIDIES AND GOVERNMENT SPENDING HAS TO BE CUT.THIS COULD BE DONE ONLY AFTER HIKING THE PETROL,DIESEL,KEROSENE,UREA, ETC., PRICES, WHICH MAY AGAIN LEAD TO HIGH TRANSPORTATION AND MANUFACTURING COST, WHICH LEADS TO COST PUSH INFLATION.SINCE THE SUPPLY SIDE ECONOMY, WHICH IS BROADLY DEPENDENT ON THE AGRICULTURAL OUTPUT,WHICH IS DEPENDENT ON MONSOON & INETERNATIONAL COMMODITY PRICES. IF THE MONSOON IS GOOD SUPPLY WILL INCREASE AND MEET THE DEMAND SUPPLY GAP. ALSO THE COOLING OF THE GLOBAL COMMODITY PRICES(mainly the crude & base metals),WILL LEAD TO THE COOLING-OFF THE DOMESTIC PRICES.THIS WILL LEAD IN MARGIN EXPANSION OF THE COMPANIES. HENCE GOOD MONSOON IS VERY IMPORTANT FOR ECONOMY.
WHAT GOVERNMENT & RBI HAS BEEN DOING SO FAR????: FOR LAST 9 MONTHS OUR GOVERNMENT HAS MADE NO EFFECTIVE EFFORT OR INITIATIVE TO EXPAND THE SUPPLY OF COMMODITIES BY IN TIME APPROACH TO THE GROWING DEMAND IN THE ECONOMY RATHER GOVERNMENT VIA RBI HAS ATTEMPTED TO CONTROL THE MONEY SUPPLY IN THE ECONOMY, WHICH WILL CHECK THE RISING DEMAND. THIS IS VERY INJURIOUS TO THE ECONOMY. WHEN THE DEMAND IS CONTROLLED ARTIFICIALLY THAT HAS VERY DANGEROUS REPERCUSSIONS AND LEADS TO VICIOUS CYCLE OF DEFLATION OR STAGFLATION. HERE WITHOUT ANY HEED TO THE GROWTH GOVERNMENT HAS DELIBERATELY ATTEMPTED TO RAISE THE INTEREST RATE TO CURB DEMAND, FOR POLITICAL REASONS LIKE ELECTIONS, PUBLIC ANTIPATHY,ETC.
NOW AFTER THE REGULAR MONETARY TIGHTENING THE CORPORATE MARGINS HAVE STARTED SHRINKING. SEE THE RESULTS OF REALITY AND AUTO COMPANIES. THEY ARE WITNESSING THE WORST DEMAND, WHICH IS REFLECTED IN THE PRICES IF THE SHARES OF THE COMPANIES, WHERE VERY LOW GROWTH IS SEEN FOR NEXT 4-8 QUARTERS.No one wants/likes to put his money with the Reality and Auto companies.
WHAT WILL HAPPEN NOW IN MARKET?????: AS ALREADY SAID MARKETS FORESEE AND ANTICIPATE THE HAPPENINGS/FUTURE EARNINGS AND EVENTS BY SIX MONTHS.MARKET NOW IS ANTICIPATING THAT INFLATION SHALL START COOLING-OFF BY SEPTEMBER-OCTOBER,BUT IT DEPENDS LARGELY ON MONSOON,HENCE MONSOON SHALL MAKE OR DESTROY THE PROSPECTS.HENCE IF BY NEXT 45 DAYS(JULY- MID AUGUST) THE MONSOON PROVES TO BE GOOD THEN THE MARKETS WILL STABLISE FORM INTERMEDIATE BOTTOM(AROUND 5250-5280) AND START INCHING UP(At least the fall will arrest).
HENCE IT COULD BE CONCLUDED THAT MARKETS ARE NOT GOING TO GO BELOW 5300, DECISIVELY IN HURRY.IT WILL WAIT,WATCH,OBSERVE AND ANTICIPATE BY NEXT 10-12 DAYS,OR AT LEAST TILL THIS SETTLEMENT(30TH JUNE).
IF THERE IS GOOD DEVELOPMENT IN MONSOON & COOL-OFF IN CRUDE PRICES.THEN MARKET SHALL CONSOLIDATE IN THE RANGE OF 5280-5300 TO 5450-5500. KEEPING THIS LOGIC IN MIND, ONE SHOULD CLOSE/COVER ALL THE SHORT POSITIONS(IF ANY) NEAR 5300 AND TRY TO GO LONG IN NIFTY OPTIONS OF JUNE SERIES. ALSO THERE IS HUGE SHORT POSITIONS IN JUNE SERIES, WHICH WILL BE COVERED ANY TIME BEFORE SETTLEMENT.
AS PER THE OPTION DATA STUDY MARKETS SHALL SETTLE ABOVE 5400-5450.HENCE FROM THIS POINT OF VIEW ALSO, BUYING NIFTY OPTIONS(LIKE CE5300 & CE5400) WILL MAY BRING SOME PROFITS.
ASTROLOGICALLY: IN THIS WEEK MARKETS SHOULD STOP FALLING ANY TIME AFTER MID-DAY OF TUESDAY, 21ST JUNE 2011. IF NIFTY GOES BELOW 5300 BY TUESDAY AND YOU ARE SHORT IN THE MARKET THEN YOU SHOULD CLOSE/COVER YOUR SHORT POSITION IN PROFIT. SOME BOUNCE AFTER TUESDAY CAN NOT BE RULED-OUT. THERE ARE 20% CHANCES THAT I MAY GO WRONG.
ANY TIME AFTER THE SOLAR ECLIPSE ON JULY 1ST, INDIAN MARKETS SHALL WITNESS A SHARP SELL-OFF, WHICH MAY LEAD NIFTY TO TEST BELOW 5200.
NOTE: A NEW LIST OF SHARES WILL BE UPDATED HERE ON TUESDAY, 21ST JUNE MARKET VIEW.
ELSE THOSE WHO WISH COULD START PURCHSE IN SHARES WHICH HAVE BEEN MENTIONED EARLIER SEVERAL TIMES, IF THEY FIND NIFTY AROUND 5300.
GOOD LUCK AND HAPPY INVESTING TO ALL THE READERS.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.Nothing in this article is, or should be construed as, investment advice.
Disclaimer:
This is neither an offer nor a solicitation to purchase or sell securities. The information and views contained on this blog are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in, or have positions in the securities mentioned in their articles. Neither I (Vikas Srivastava) nor any of the contributors accepts any liability arising out of use of the above information/article. Reproduction in whole or in part without written permission is prohibited.
IMF ON FRIDAY PROJECTED THAT THE INDIAN ECONOMY WILL EXPAND @8.2% IN 2011 WHICH WAS ALSO MADE EARLIER IN APRIL 2011,WHICH IS MUCH LOWER THAN THE EXPANSION(10.4%) IN THE LAST YEAR 2010.THE PROJECTION OF IMF CAME AT THE TIME WHEN INDIAN ECONOMY IS GRAPPLING WITH UNCOMFORTABLY HIGH INFLATION THAT THREATENS TO DERAIL ITS GROWTH STORY.INFLATION CROSSED THE 9% MARK IN MAY, WHICH HAS DIM CHANCES TO COOL-OFF IN NEAR FUTURE. IMF MAINTAINS ITS VIEW OF APRIL 2011,THAT IT EXPECTS INDIA TO EXPAND BY 8.2% & 7.8% BY 2011 & 2012 RESPECTIVELY. IT EXPRESSED THAT TIGHT MONETARY POLICY REGIME BY THE RBI TO TACKLE INFLATIONARY PRESSURE IS EXPECTED TO HURT ITS ECONOMIC GROWTH. ALSO FINANCE MINISTER ON FRIDAY SAID THAT "THE MONETARY POLICY HAS BEEN GRADUALLY TIGHTENED...... MONETARY MEASURES MAY END UP MODERATING THE GROWTH IF THEY HAVE TO BE PERSISTED FOR AN EXTENDED PERIOD OF TIME". THE IMF REPORT ALSO CAUTIONED INDIA ON ACCOUNT OF HIGH FISCAL DEFICIT CAUSED BY SPENDING OVERRUNS IN SUBSIDIES.THE COUNTRY'S FISCAL DEFICIT IS PEGGED AT 4.6% OF THE GDP FOR THE FISCAL 2011-12 AND STRESSED THAT FISCAL CONSOLIDATION SHOULD CONTINUE AT THE FASTER SPACE IN SOME EMERGING MARKETS, LIKE INDIA.
NOW,HOW THIS IS GOING TO IMPACT????: IN VIEW OF CONSOLIDATING THE FISCAL DEFICIT THE SUBSIDIES AND GOVERNMENT SPENDING HAS TO BE CUT.THIS COULD BE DONE ONLY AFTER HIKING THE PETROL,DIESEL,KEROSENE,UREA, ETC., PRICES, WHICH MAY AGAIN LEAD TO HIGH TRANSPORTATION AND MANUFACTURING COST, WHICH LEADS TO COST PUSH INFLATION.SINCE THE SUPPLY SIDE ECONOMY, WHICH IS BROADLY DEPENDENT ON THE AGRICULTURAL OUTPUT,WHICH IS DEPENDENT ON MONSOON & INETERNATIONAL COMMODITY PRICES. IF THE MONSOON IS GOOD SUPPLY WILL INCREASE AND MEET THE DEMAND SUPPLY GAP. ALSO THE COOLING OF THE GLOBAL COMMODITY PRICES(mainly the crude & base metals),WILL LEAD TO THE COOLING-OFF THE DOMESTIC PRICES.THIS WILL LEAD IN MARGIN EXPANSION OF THE COMPANIES. HENCE GOOD MONSOON IS VERY IMPORTANT FOR ECONOMY.
WHAT GOVERNMENT & RBI HAS BEEN DOING SO FAR????: FOR LAST 9 MONTHS OUR GOVERNMENT HAS MADE NO EFFECTIVE EFFORT OR INITIATIVE TO EXPAND THE SUPPLY OF COMMODITIES BY IN TIME APPROACH TO THE GROWING DEMAND IN THE ECONOMY RATHER GOVERNMENT VIA RBI HAS ATTEMPTED TO CONTROL THE MONEY SUPPLY IN THE ECONOMY, WHICH WILL CHECK THE RISING DEMAND. THIS IS VERY INJURIOUS TO THE ECONOMY. WHEN THE DEMAND IS CONTROLLED ARTIFICIALLY THAT HAS VERY DANGEROUS REPERCUSSIONS AND LEADS TO VICIOUS CYCLE OF DEFLATION OR STAGFLATION. HERE WITHOUT ANY HEED TO THE GROWTH GOVERNMENT HAS DELIBERATELY ATTEMPTED TO RAISE THE INTEREST RATE TO CURB DEMAND, FOR POLITICAL REASONS LIKE ELECTIONS, PUBLIC ANTIPATHY,ETC.
NOW AFTER THE REGULAR MONETARY TIGHTENING THE CORPORATE MARGINS HAVE STARTED SHRINKING. SEE THE RESULTS OF REALITY AND AUTO COMPANIES. THEY ARE WITNESSING THE WORST DEMAND, WHICH IS REFLECTED IN THE PRICES IF THE SHARES OF THE COMPANIES, WHERE VERY LOW GROWTH IS SEEN FOR NEXT 4-8 QUARTERS.No one wants/likes to put his money with the Reality and Auto companies.
WHAT WILL HAPPEN NOW IN MARKET?????: AS ALREADY SAID MARKETS FORESEE AND ANTICIPATE THE HAPPENINGS/FUTURE EARNINGS AND EVENTS BY SIX MONTHS.MARKET NOW IS ANTICIPATING THAT INFLATION SHALL START COOLING-OFF BY SEPTEMBER-OCTOBER,BUT IT DEPENDS LARGELY ON MONSOON,HENCE MONSOON SHALL MAKE OR DESTROY THE PROSPECTS.HENCE IF BY NEXT 45 DAYS(JULY- MID AUGUST) THE MONSOON PROVES TO BE GOOD THEN THE MARKETS WILL STABLISE FORM INTERMEDIATE BOTTOM(AROUND 5250-5280) AND START INCHING UP(At least the fall will arrest).
HENCE IT COULD BE CONCLUDED THAT MARKETS ARE NOT GOING TO GO BELOW 5300, DECISIVELY IN HURRY.IT WILL WAIT,WATCH,OBSERVE AND ANTICIPATE BY NEXT 10-12 DAYS,OR AT LEAST TILL THIS SETTLEMENT(30TH JUNE).
IF THERE IS GOOD DEVELOPMENT IN MONSOON & COOL-OFF IN CRUDE PRICES.THEN MARKET SHALL CONSOLIDATE IN THE RANGE OF 5280-5300 TO 5450-5500. KEEPING THIS LOGIC IN MIND, ONE SHOULD CLOSE/COVER ALL THE SHORT POSITIONS(IF ANY) NEAR 5300 AND TRY TO GO LONG IN NIFTY OPTIONS OF JUNE SERIES. ALSO THERE IS HUGE SHORT POSITIONS IN JUNE SERIES, WHICH WILL BE COVERED ANY TIME BEFORE SETTLEMENT.
AS PER THE OPTION DATA STUDY MARKETS SHALL SETTLE ABOVE 5400-5450.HENCE FROM THIS POINT OF VIEW ALSO, BUYING NIFTY OPTIONS(LIKE CE5300 & CE5400) WILL MAY BRING SOME PROFITS.
ASTROLOGICALLY: IN THIS WEEK MARKETS SHOULD STOP FALLING ANY TIME AFTER MID-DAY OF TUESDAY, 21ST JUNE 2011. IF NIFTY GOES BELOW 5300 BY TUESDAY AND YOU ARE SHORT IN THE MARKET THEN YOU SHOULD CLOSE/COVER YOUR SHORT POSITION IN PROFIT. SOME BOUNCE AFTER TUESDAY CAN NOT BE RULED-OUT. THERE ARE 20% CHANCES THAT I MAY GO WRONG.
ANY TIME AFTER THE SOLAR ECLIPSE ON JULY 1ST, INDIAN MARKETS SHALL WITNESS A SHARP SELL-OFF, WHICH MAY LEAD NIFTY TO TEST BELOW 5200.
NOTE: A NEW LIST OF SHARES WILL BE UPDATED HERE ON TUESDAY, 21ST JUNE MARKET VIEW.
ELSE THOSE WHO WISH COULD START PURCHSE IN SHARES WHICH HAVE BEEN MENTIONED EARLIER SEVERAL TIMES, IF THEY FIND NIFTY AROUND 5300.
GOOD LUCK AND HAPPY INVESTING TO ALL THE READERS.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.Nothing in this article is, or should be construed as, investment advice.
Disclaimer:
This is neither an offer nor a solicitation to purchase or sell securities. The information and views contained on this blog are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in, or have positions in the securities mentioned in their articles. Neither I (Vikas Srivastava) nor any of the contributors accepts any liability arising out of use of the above information/article. Reproduction in whole or in part without written permission is prohibited.
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