Nifty Update 21st Feb 2018
Nifty has been moving perfectly along expected lines and has been providing bounce backs from time to time. Yesterday Nifty made a low of around 10300 spot Nifty levels mentioned and then today gave a pullback till 10430 and although the pullback could move up a bit more but the important observation is that is clearly visible with respect to the Indian Stock market as of now is that we are under performing all major global Stock markets, there have been good bounce backs from lows in most global stock markets however Indian stock markets both Nifty and the sensex have not been playing catch up with the world stock markets . Many are asking why that is so. Probably the answer lies in having a deeper look at the overall fundamentals of the Indian economy. We have been highlighting that India is facing multiple headwinds in terms of higher crude oil prices, rising bond yields which today has touched 7.66, expected rise in inflation which as per our estimates will be well above 5 percent in the coming months which will be lead by fuel inflation and food inflation both of which will eventually force the RBI to raise rates much more faster than most of the market participants expect. Also even at current prices we see very high valuations and we do not expect high or double digit earnings growth in the coming months which will justify the high valuations as per the hypothesis that most people are expecting. The immediate headwind which has now started for India is depreciating rupee. The Indian Rupee is currently over valued and the sharp decline in exports has rattled most people and now it could be an effort by the Govt to systematically let rupee move lower which they were protecting till now. A depreciating rupee will further add to FII’s moving out of the Indian stock market and will further add pressure from a near term perspective.
The point is that there are way too many macro headwinds which are already present and now to add to that we have a new problem in terms of fraud in PNB bank. As per our understanding the problem is not restricted to PNB and many other PSU banks and some private sector banks are also going to take a hit in this. I have given some detailed update to our clients on the same.
Overall we do not see value in stocks for now to be buying. Be careful and very stock specific if you intend to start buying at such hefty valuations. From a near term technical picture we see resistance for Nifty at 10660 and near term supports are at 10255, break below 10255 with volumes will open the gates for much more lower targets. We will keep updating our clients as when to add sell and where to add sell or where to book profits in sell or when to buy for the pullback.
Part Of what we recommended is enclosed below
2/19/18, 9:04 AM – Glen Drago: Good morning 2/19/18, 9:05 AM – Glen Drago: Nifty hold 4 parts positional shorts and hold 1 part stbt shorts as told 2/19/18, 9:05 AM – Glen Drago: We do not see any pullback sustainable and see downside pressure in the expiry week 2/19/18, 9:06 AM – Glen Drago: Sharp downside could be seen on expiry day or Wednesday so just sit back , relax and hold shorts as told 2/19/18, 9:06 AM – Glen Drago: Will keep updating if anything has to be done 2/19/18, 9:07 AM – Glen Drago: Currency market is shut today due to holiday 2/19/18, 11:07 AM – Glen Drago: Hold positions as told 2/19/18, 12:41 PM – Glen Drago: If anything to do will update 2/19/18, 12:42 PM – Glen Drago: Shanti karke baitho 2/19/18, 12:56 PM – Glen Drago: Stbt trade book profit 2/19/18, 12:57 PM – Glen Drago: Confirmation stbt trade booked profit at cmp 2/19/18, 12:57 PM – Glen Drago: Nifty hold 4 parts positional shorts as told 2/19/18, 12:57 PM – Glen Drago: If anything else to do will update 2/19/18, 12:57 PM – Glen Drago: Continue holding 4 parts positional shorts as told 2/19/18, 12:57 PM – Glen Drago: If we have to sell fresh stbt will update 2/19/18, 2:40 PM – Glen Drago: We once again reiterate that current trend in Nifty remains down and we do not see any changes in our overall wave counts or in the structure to exit or even book our positional shorts which we have build around end of January. As we have mentioned in our previous updates given to you via whats app messenger it will be best to just hold current positions and ride the down wave and not get bothered about intraday or volatility for few days. As we mentioned that the longer the market consolidates between 10276-10637 the better it will be and that has exactly panned out as we have been expecting it to. Please keep in mind that we are not suggesting for one minute that pullbacks will not come, sure there will be pullbacks along the way but the overall picture does not warrant any bullishness and buying as many analysts are suggesting. We reiterate that we as things stand for now do not see any major revival in earnings growth nor do we expect any scenarios that will support bullish trend in the near term so overall the trend remains lower but some major pullbacks will keep coming from time to time and we will cover shorts just before those pullbacks start so till we do not get any confirmation of those pullbacks starting it will be prudent strategy to just wait and let the markets find its own level. The PNB fraud as per our analysis is not just restricted to some PSU banks as per our understanding the same system is operational even in some private sector banks and as and when the news of those private sector banks gets out in the open we do see some hammering in those private sector names also. All this does not argue well for the mid cap universe which will be starved for capital as lending will become much more stricter from the PSU banks from which bulk of the mid cap sector lending takes place. Bottom line keep holding positional shorts as told as and when anything needs to be done will keep updating 2/19/18, 8:37 PM – Glen Drago: Crude Oil after making a high of around 66 dropped till 60 levels and then has now again reached around the 62 area. As per our analysis we do not see any major decline in crude oil prices but at the same time we are expecting some time consolidation between the levels of 66-58 and post this consolidation we do expect crude oil to move higher than the current zone of 66-58 which could be a base area for higher levels to come. Many are thinking that crude oil is heading back to 50$ per barrel but we do not think so at least the charts are not indicating that for now. Trading in and out of crude or rather buying into panic and selling into euphoria should be a good strategy for now. As we have mentioned the ranges are 66-58 but in INR terms there could be some difference which we expect will happen due to a depreciating rupee so please keep that in mind. 2/20/18, 9:10 AM – Glen Drago: Gm 2/20/18, 9:11 AM – Glen Drago: Hold nifty 4 parts positional shorts as told 2/20/18, 9:11 AM – Glen Drago: As and when we need to sell stbt trade will keep updating 2/20/18, 9:11 AM – Glen Drago: Overall we don’t see any upside sustainable and eventually all prices will keep following the main trend 2/20/18, 9:12 AM – Glen Drago: Will keep updating if anything needs to be done 2/20/18, 9:38 AM – Glen Drago: <Media omitted> 2/20/18, 11:03 AM – Glen Drago: Nifty roll to March 2/20/18, 11:04 AM – Glen Drago: Confirmation Nifty rolled to March fut 2/20/18, 11:04 AM – Glen Drago: Confirmation Nifty positional shorts 4 parts rolled to March fut 2/20/18, 11:04 AM – Glen Drago: If anything else to do will update 2/20/18, 1:08 PM – Glen Drago: Good consolidation going on again it’s perfectly in line with estimates 2/20/18, 1:08 PM – Glen Drago: Nifty hold 4 parts positional shorts as told 2/20/18, 1:08 PM – Glen Drago: If anything else to do will update
Good Trading To You!