Nifty Futures Update 29th Nov 2016

SGX Nifty Futures

LTP   10,940.00   +26.00 +0.24% High 11,041.50 Low 11,001.00 (Change Vs Today’s Nifty Futures (NSE) Closing)

SGX Nifty

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Nifty Futures Update 29th Nov 2016

Nifty Futures / SGX Nifty closed the day marginally in the green post the gap down opening seen today morning.

As per our analysis we had clearly mentioned yesterday that we do not see near term bearishness due to the policy measure taken by the Reserve Bank of India. Reserve Bank of India has raised CRR for banks by 100 percent mainly because RBI started running out of bonds that banks were wiling to buy but simply there were not enough bonds available and hence to stop the avalanche of money coming RBI moved the CRR higher so the question that many of you are asking me is that what sense does it make to hike CRR? The answer to that is simple RBI just has moved in a nee jerk manner for the time being and will be forced to cut rates very aggressively as hike in CRR will not solve the problem neither does it give it much time.  There are still huge deposits that are taking place and the only way to manage them is to force lending and loan off take or in other words credit off take has to take off and for that to happen rates in terms of PLR has to start moving lower and not lower by 0.25 bps it has to move lower significantly if not drastically.
Since most banks are now stuck in a odd situation we do not think the banks will wait for long to cut rates both deposit rates and lending rates as frankly they are left with no choice but to ensure that loan off take starts and picks up pace at a drastic pace because everyday banks are still getting huge deposits and withdrawals are very slow for a variety of reasons but whatever the reasons that may be banks will have to pay interest on those deposits and the  only way for them to pay and service their interest cost will be to lower both deposit and lending rates aggressively if not drastically.  Once again understand the Banks situation and even the RBI’s situation and put yourself in their own shoes and think what is the way out? and you will land up with only one answer cut deposit and lending rates drastically.
There is no other way out of the situation.

Some may argue with the fact that rupee has been very weak off late and cutting deposit rates means lower bond prices which fell almost to a 7 year low to 6.1 percent last week so many may argue that RBI may not move because of the rupee for the fear that rupee will witness a further pressure due to the outflows from bonds but personally I see that equity inflows will take care of that part of the problem and I do not see that if rate cut and sharp rate cut takes place then beyond a few minutes it will impact the rupee but anyways regardless of whatever the rupee does it does not matter because frankly what choice do the banks and RBI have? The only way for them is to ensure sharp rise in credit off take and we see that happening at lower rates from current levels.  The move by SBI last week signals that very same thing that what options are available and logically there are no options available for now other than cutting rates drastically and keep in mind that it is nothing but a time bomb  the more time these people take the larger the degree of the rate cut will have to be it is as simple as that, if the banks and RBI start cutting now then and only then can this problem of excess liquidity be take care of.

Nifty in the near term we do not see much downside though we could see volatility and then whenever the news of rate cut comes in we could see a very sharp rally though we do not see that lasting for long but in the near term we do not see any sense in being short. The sentiment indicator also which we have developed shows almost same reading that we have seen at around the 6900 levels last seen in late FEB 2016 so when suddenly nobody wants to buy and everyone wants to just sell that has always been a area of a sharp pullback and we believe that history repeats itself and future is nothing but a repetition of the past so same sentiment indicators suggest that near term short selling will not make money but please keep in mind that once this pullback ends we see prices heading lower towards the 5872 target so this is not a buy and hold zone it will be a trade in and trade out and in between in this pullback also we do expect to see a lot of volatility so if you are only trading on the basis of this post then please use appropriate risk management and then only trade. Please do not over trade and keep your risk under control at all times.

Good Trading To You!

73 thoughts on “Nifty Futures Update 29th Nov 2016

  1. Sirji, a very good evening to you as well as to all my fellow investors.
    Sirji, today idea cellular had a stellar run. I had 6 lots at 74.10 and, phew, after touching 69.90, today I sold all at 75.80. I was really going to pyramid at 67 with 12 lots to bring down C O P drastically down. Also wockhardt and tataglobal were sold handsomely.
    Today taken btst in bata 3 lots and godrej industry 2 lots and stbt in hindzinc hpcl. All the overbought stocks mentioned last day like hindalco rec PFC were down substantially today. OB are hindzinc, hpcl, Engineers India tech mahindra mindtree and OS are bata godrej tvs arvind m&m divis zee McLeod’s and one should keep keen watch.
    Sirji, I always buy below E89 and at lower end of BB / DC/ KC and KD 14,3 oversold.
    Sirji Your today’s insight of banking system was commendable, for a science student like me, and what really touches me is Your profound knowledge & your humility to share your views. Great! Unparalleled blogsite.

  2. Dear Mallav, I find some flaw in your analysis. I.e You are Saying that there is no other way other than cutting interest rates…that means you are thinking that Government or RBI or Finance ministry did not anticipate this problem that’s why they do not have any option other than cutting rates…. I feel that all these problems might have been thought through and they may have their own plans including or other than cutting the interest rates…. But by the way , I will be the happy person., if interest rates comes down.

    1. Dear Siva:

      Its not a problem, it is the intended cause. By demonitising the economy, the Govt., by design is looking to build a low interest environment. It is imperative that the country aligns itself with a global interest rate regime, we are competing with countries where long term financing is available at 2-4%.



  3. Sirji, good evening to You and all my fellow brethren of this esteemed Site. All 3 lots of Bata and 2 lots of godrej Ind btst sold & one lot each of stbt hindzinc & hpcl squared off handsomely. Today stbt in Engineers India & BEL and btst in Icici, indusind, banknifty, mm and telco done.
    Still holding McLeod, 2 tataglobal, 3 jublfood, & 2 sail and one short in IOC.
    Sirji, jublfood RL was 896. Above 896 1st padaav is 1003 ~.
    Sir, I think nifty 1 st tgt would be E89 or E 65, above which would be SAR & then upper band of DC. This is according to my studies, which may not be cent percent √.

  4. With reference to your response ” “Please tell me the way out ” .
    …RBI has given the way out with their notification today
    …”Now we can with draw whatever we deposit ”

    Please do not treat that I am just retarding to you and defending myself. Co incidentally, I saw your response and the news at a time..

    1. Sir,
      Please read the news properly. The amount that can be withdrawn is only against the new currency deposits. E.g. if new notes you have deposited 1 L then you can withdraw 1 L.

      In case you have deposited old notes then you cannot withdraw over 24 K / week in case of savings account and in case of current account & Over Draft account it is 50 K / week

  5. Sir,
    What’s your view on idea cellular? It’s nearing crucial resistance of 81-83. Do you see shorting idea making money or as Nifty trend is up now, we should not be shorting Nifty stocks? Kindly advise


      1. Hello Sir,
        I have sold my position of PE of 8000 last week and recovered my last losses…thanks to you. Your views are spot on but I miss the details (including timeline, dates, levels) which you used to give before. I know the reason as well. But I think those people already left and beaten up by your performance.

        Waiting for the answer for short term target and long term target level with dates.

        Thanks again.

      1. Even RBI does also the market has discounted that from 7913 to 8250 till do not expect much..see the world now..All on reverse mode..once trump enters white house collapse begins which wl be done by obama team. Many secrets are there in US market. All this fall will be led by US

  6. Those who are critics of mallav Sir should just quickly go through his crude oil analysis in last 2 months. It’s been damn spot on. Though I don’t trade in commodities it’s really noteworthy that it was an excellent analysis.


  7. i think 25 bps or no rate will be cut from RBI, because bank doesn’t have money, money is shortage, people ko hi bank se paisa withdrawal ka limit hai toh bank ke paas paisa nahi other loan dene ke liye, nobody will take loan, no money in bank, so i think rate will not be cut. old currancy stock is zero value, need new currancy but woh bank ke paas daily withdrwal mein finish ho jati hai, so isliey rate cut nahi hoga.

    if bank have lot of stock of money then rate will cut.

    1. Sir,

      Your have mixed up many issues here.
      Banks have been receiving record deposits for which they have to service the interest cost, since there is shortfall of cash (not money) withdrawals are restricted. Since banks will have to service the interest cost they will have to cut deposit and lending rates both in order to manage their own system.

  8. Hi Sir,
    Today down move a shocker breaking all intermediary support levels 8222, 8180, 8150 and 8100, how do you interpret this fall ? Any hope for short term uptrend to continue?

  9. if both repo n reverse repo will cut by rbi. then how it will goin to help the banks in near term. please give clarification.

    1. repo rate cut will help in being down cost of funds as deposit rates will move lower and in turn reduce lending rates which means more credit off take so better profitability.

      reverse repo cut will help the Banks to park money in reverse repo window there by they will be able to park excess liquidity

    1. it is not only rate cut but multiple other things like commentary from RBI which will be dovish and also revoking of CRR and also cut of 50 bps

  10. SIRJI, good morning.
    For short-term delivery, the following stocks are oversold and worth buying in staggered manner (like 33% on Monday 3.25 pm & 66% on Tuesday 3.25 pm):
    idfc bank
    Tata Motors and TataMtrDvr
    Kotak Bank
    Ashok Leyland
    MM Fin Best are IDFC Bank &
    Axis Bank Tata Motors.
    India Cement
    Relcap & Relinfra
    Asian Paints.
    The following are slightly overbought BEL ONGC EIL Infratel & TataElxsi.
    On Wednesday, Nifty had given breakout and it was a buy for 2% rise with 1 % stoploss, but unfortunately, on Friday the stoploss was triggered. So I personally feel, as per my analysis, that Nifty cash would come to 7929.10 & Nifty FNO to 7955.25 to 7939.20 in 2 days and then sharp upside can be seen till 8435 to 8566.55. Sirji, Kindly correct me if my analysis is incorrect.
    ThankYou, Sir.

  11. Hi Mallavv,
    Wanted to check if you’ve analysed highly beaten down stocks like Just Dial – I’m also into technical analysis but this is one stock I’ve failed to predict even remotely – do you see a bounce anytime soon and if so upto what levels ? And also if you could project an upper limit for Nifty for Dec …

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