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SGX Nifty 16th Aug 2016
PLEASE NOTE THAT THIS IS MY OVERALL VIEW ON THE NIFTY AND THAT DOES NOT MEAN PRECISE ENTRY AND EXIT POINTS WILL BE MENTIONED IN THIS POST. IF YOU ARE TRADING ONLY ON THE BASIS OF THIS POST PLEASE USE APPROPRIATE RISK MANAGEMENT AND THEN ONLY TRADE. PLEASE DO NOT OVER TRADE.
SGX Nifty / Nifty Futures tips today was moving higher and finally managed to close the day in the green by 80 points at 8672 spot Nifty levels mentioned. As per our Indian stock market analysis we see that the current topping process is in matured stage and we expect the reversal now. The up move has been done more or less and we should start the next leg down. Please keep in mind that before that happens we do expect volatility to come in and there by some wild up’s and down within small range is possible as bulls and bears will try to control the move but as per our Nifty view eventually the bear market that started on 4th March 2015 will resume and that in turn will start taking prices lower much lower from here. As we have said the prices will eventually reach such lower that no one today would have expected to find such cheap valuations and price.
Yesterday the notable data that we track very closely came out. IIP and Inflation while IIP we do not see much reliability not only for these numbers but even numbers that were very bad hence we do not see IIP taking much effect but the inflation numbers that came out yesterday showed another sharp rise in inflation and please note that this is the 5th month in a row that inflation has moved higher and this is exactly in line with our overall prediction that inflation will move higher not only in India but across the world. Yes I agree that it may take some time for other countries to start seeing higher inflation numbers but as we have said that higher inflation will be seen worldwide. What this has done for India is that no matter who ever takes the place of Dr. Rajan he will not be able to cut rates in India to start with so the hypothesis that the new Reserve Bank of India Gov would be more dovish will go down the drain. Even if he is dovish and wants to cut rates under the instructions of North block officials he will not be able to do so at least in the present scenario so he will have to wait for wait for Inflation to stabilize which we do not see happening and contrary to everyone’s expectations he might even have to raise rates in the near term. This is not going to be restricted only to India it will be across the globe that rising inflation will force central banks to stop printing money and raise rates in order to control inflation. So the next effect will be high inflation, low growth and that will eventually have a massive risk off globally. Now when the risk off does happen prices have to at least come to mean averages and those mean averages for most world markets are 40-50% lower from current prices. If we go by history like in 1929 and 2007 or take any other case study where such cycles are about to end the prices have fallen by 80-70 percent in all those cases. I am not suggesting a dooms day scenario as bad as that but with Rahu (North Node) not having the company of Jupiter any more and Saturn the planet of reduction changing directions shortly we do not see that current prices will sustain.
As we have been saying the star performer for the next few days could be Crude Oil. Yes this is headed higher and is going to move up in style when this moves higher to levels which will not give comfort to Govt of India and most other commodity importing countries the fisc and CAD will go out of balance there by forcing INR lower towards may be even 72 (I am really being optimistic for the INR )
Good Trading To You!