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SGX Nifty 25th April 2016
SGX Nifty / Nifty Futures today opened flat and continued moving throughout the day in a small range of 7925-7873 Nifty spot levels mentioned. Regular readers and clients of this website are well aware that for the moment we are not bullish anymore and in fact we have been advocating short selling Nifty Futures and Nifty May Calls to play the downside move. We once again reiterate our view that these are not prices to buy and these are prices to exit your portfolio with the exception of high value stocks like Kesoram, Maharashtra Scooters Ltd, NMDC, Renuka Sugar, Bajaj Hindustan, Eid Parry, Tata Coffee and our new multi bagger trade that has been communicated to our clients these stocks must be bought on dips regardless of the Nifty Futures movement as these stocks will be doing very well in the coming time and we will see excellent returns from these stocks over the next few years. Some of these stocks will even give 5 X returns and hence it does not make any sense to try and time entry into these stocks. Keep that in mind and invest in these stocks whenever you see dips in the stocks mentioned.
If we take a closer look at the Nifty Charts and Global Indices we can see a very clear over bought situation and we do not expect Indian Stock Market or the Global Stock Markets to rally much higher from here now in fact as per our analysis the Global Stock Market rally that started in last week of Feb 2016 is about to have a break and that will create a pullback in all Global stock markets which includes the Indian Stock Markets / Nifty Futures. So please keep that in mind once again we are seeing extreme signs of complacency (around 7000 levels there was total complacency on the bearish side and now there is total complacency on the bullish side )in all the world stock markets and whenever there has been such high degree of complacency the following move has always trapped traders and investors in the wrong direction. What is showing us the complacency ? Well yesterday we updated about the VIX (Volatility index) the volatility index is showing a rosy picture as though Global head winds are out of the way when in reality the problem is only getting worse. Further Sentiment Indicators are showing us that bulk of the traders and investors are now positioning themselves for 8250-8400 and that is another red flag to keep in mind. The sentiment is totally bullish and no one is talking about 7600 and everyone is talking about higher side targets ranging from 8400-8150 so that gives us another confirmation of a pullback. In addition to these indicators we further have Trailing PE which for your information at 8400 levels will be same as that of 9118-9000 spot Nifty levels and whenever Nifty has reached such high price to earnings multiple that in hind sight has always turned out to be a topping area and now there are lot of fund managers who come out to various media channels and say “We see green shoots” “We are positive about growth picking up in the next q” “India growth story is intact” and many such statements and all of them will say this is now a buy on dips market. In short they will only talk of the rosy side of the picture because if they tell you don’t put money in and don’t invest what will they do?
Most of these fund managers are talking about growth story and macros. Has anyone even calculated what impact Crude Oil from 27 to 44 is going to have on the fiscal side. I really don’t think many people have calculated that with Crude oil stabilizing and Indian Exports which continue to contract for past 16 months in a row we do not think these valuations are good to buy Indian Equities. Money has never been made by buying expensive. Money has always been made when stocks are bought at value bargains and current prices are not at all value bargains. Anyways let us come to the bottom line the Charts that Indian Stock Markets are making are not showing any real signs of pick up in the Indian economy and we strongly advise investors to be on as much cash as possible. Traders can short sell at appropriate levels as told. As per our Nifty Prediction / Nifty Futures Tips the oncoming downsides could be very sharp and could look like a mandi cycle so please keep that in mind.
Nifty spot support and resistance for tomorrow us at 7710 and 7980. If we take a look at the astro factors at play this week Nifty Share price reversal can be expected or even a back and forth correction is possible from 28th April 2016 when Mercury goes retrograde. Mercury rules communication and hence during the next few days expect a lot of rumors and false information that could come out to misguide traders and investors. If we take a closer look most people would say that Mercury goes retrograde every 88-90 days and hence that is not of much importance but this one sure is for a simple reason that the retrograde takes place in Taurus and Taurus rules banking sector and currency movements or rather Treasuries / bonds. So do expect the USD to gain in value during this time period. We could very easily see USDINR heading towards 68.10 Spot USDINR levels mentioned. As far as its effects on Equities we can see counter trend moves every 1-5 trading days so whatever the fall will be keep in mind the trade will be to keep booking and reentering short selling trades again on the higher side. Overall Trend will remain that of a pullback so if we look at the Nifty Chart it will keep showing false signs of moving higher but actually Nifty Chart when analyzed closely will show that it was actually a pullback within a down move. So when we do begin the down move in this week we could see Nifty Share Price falling sharply and from 28th April 2016 we will see ample no of pullbacks on Nifty Chart which will take place every 1-5 trading days. Hence the ideal trade would be to sell higher and cover lower only to again sell higher which in other words means trading in and out. This astro signature is of further more importance because this Mercury retrograde has a eclipse of the sun around 9th May 2016 which will take place for 7-8 hours during that period keep in mind to double check on your communication with your broker. Also do keep a watch on Silver the next 2-3 months post this astro cycle has historically been very good for silver. The rallies in silver have been to the tune of 12-18 percent so in INR terms we could see Silver around 45000.
Since there have been some no of phone calls w r t our position and worries about Nifty moving higher please make a note of the following since I have to explain this to people multiple times I am putting this in the public domain for everyone to see.
1) We took shorts in first round 21st March 2016 and post trading our avg for 1 part was at 7850
2) Our avg for covering was at 7550-7600. Net avg we made 250 points in that trade and covered our shorts on 8th April 2016
3) We re-initiated selling from 7612 onwards and our avg for 4 parts today w r t spot price comes to 7612+7685+7850+7972=7779
4) Since the previous trade in which we booked profits of 250 points was a continuation trade 250/4=62.5
5) 62.5+7779= 7841 spot prices mentioned for calculation
6) CMP 7899-7841=57.5 points M to M for now.
7) It is not only our view it is also how we take the trade
Good Trading To You!