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SGX Nifty 5th April 2016
SGX Nifty / Nifty Futures today was seen overall consolidating and one look at the Nifty Chart and it is clear that there was clear lack of momentum on the higher side. It is now extremely clearly evident that there are many resistances coming in at higher levels and Nifty Futures does look tired for the time being at least. If we look at the internals of the wave then we can clearly the downside moves are coming in with a lot more thrust and the upside moves are taking much more time than the downside moves which is a clear indicator that demand is clearly reducing. As per our Nifty Prediction / Nifty Futures Tips we do not see Nifty sustaining on the higher side and we once again reiterate that we are expecting a correction of the recent move from 6825 onwards so as of now from a tactical stand point it does not make any sense to be long and we have explained then in our previous post also.
Tomorrow is the all important Reserve Bank of India policy meeting and we are expecting a 0.25 Bps rate cut. We know that most of the Stock Market participants are calling a 0.50 Bps rate cut but we see a 0.25 Bps rate cut and some CRR tweaks to infuse liquidity. We could hear some noise on the OMO (Open market operations ) front. The idea of these moves would be to infuse liquidity in the system which as of now is running well short of desired no as per the guidelines put out by the Reserve Bank of India. Hence we are expecting a move from the Reserve Bank of India on the liquidity management front. Also assuming for one minute that a rate cut by 0.50 bps does come in still we see that as just a bump up and then down for the Indian Stock Markets for the simple reason that RBI would have then more hawkish statements to make in its post policy meeting in the afternoon and it would be very highly possible that no further rate cuts would come in in this financial year so keep that in mind too. Overall post policy we expect a dip in the Indian Stock markets as the markets will be disappointed with the overall outcome of the policy meet. In the near term we could see 7600-7500 post the policy meeting. (When to sell what to sell where to sell how much to sell etc all details will be given live to our clients if you are trading only on the basis of this post then please use appropriate risk management and trade accordingly)
Nifty spot support and resistance for tomorrow 5th April 2016 is at 7570 and 7840. Use rise to exit Indian equities and the buy again at lower levels or may be short sell at higher levels and then reenter at lower side. Use all dips to buy and hold Renuka Sugar, EID Parry, Bajaj Hindustan, NMDC, Tata Coffee, MSL, Kesoram all these stocks will do very well in the time to come. SGX Nifty / Nifty Futures Minor Trend is down / bearish. SGX Nifty / Nifty Futures Major Trend is also bearish / down. The coming results season is going to be much below estimates as per our understanding and we see many companies getting down graded due to bad Q4 results. The Trailing PE on Nifty is now heading higher and with bad results it will move almost 100-120 Bps higher and that will not allow Nifty to run away from here. (The technical picture is very clear and is suggesting a top out but in addition to that Nifty trailing PE and forward PE is also indicating headwinds for the Indian Stock Market)
Good Trading To You!