LTP 8,576.00 -128.00 -1.49% High 8,710.00 Low 8,546.50
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SGX Nifty 13th June 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.
SGX Nifty / Nifty Futures today continued falling and after a minor intraday pullback again fell lower towards 8164 spot Nifty levels. As per our Nifty Futures tips / Nifty Prediction given to our clients we maintain our Nifty View that we do not see Nifty Futures sustaining on the higher side and it is a matter of next few trading days before which we start seeing sharp down side movement. Please note that Nifty can do time pass around these levels for a few more trading days and that is totally permitted our broader point that we are communicating is that we do not see Nifty Futures sustaining on the higher side and the risk reward is now not in favor of buying it is in favor of selling and we expect a fast down side move to take place we do not expect upper side prices to sustain although time pass around the current prices is very much possible. It is not necessarily that Nifty will fall with immediate effect. It may or many not take some more time but from the next 2-3 months point of view we do not see these prices sustaining.
As per per our wave counts we see this current on going move clearly a corrective in nature and we do not see 8800-9000 prices coming now before a sharp down fall (please keep in mind that we stand by our longer term prediction of 8800-9000 but in the near term we see a sharp down side move post which a tezi cycle will take prices higher towards 8800-9000 levels) As things stand right now post Nifty Future doing some more time pass around these levels we see Nifty falling sharply and moving significantly lower from these prices only after we see sharp downside in prices will we see Nifty Futures resuming a tezi cycle so please understand our view correctly (Please read our view carefully) . If we see the hourly charts on Nifty there have been significant divergences which are clearly visible. There are significant divergences even on many index stocks so keep in mind whenever such divergences do take place Nifty has never sustained on the higher side but keep in mind it does not mean that there will be a immediate sharp fall. Fall will come and when it does most traders will be badly trapped in long positions the fall will stun the best of the traders and then everyone will come on some channels and talk about how bad the global growth problems are and how issues on the current account front are hampering the Usdinr pair etc. All the so called experts will then justify why the markets are falling but if you ask them today all of them will say very good prices to buy. The same people were calling out a doomsday scenario at 7000 levels and talking about 6500 now after a rally of 1400 points these people have woken up to say buy India and are offering comments like India is the bright spot.
Lets look at the macro picture (which according to most experts is improving). Crude Oil is up by 100% almost where by our import bill is affected, Inflation is up now for the past two months in a row, exports are falling for past 16 months non stop the rate of contraction is further worrying, Npa’s are consistently rising for all banks, IIP is near zero, FED will be increasing interest rates in the near future. (If not in June then in July if not in July sometime later but the fact is that FED will increase rates there by a out flow will be seen that is the bottom line.) Amount all the EM basket India is almost at 45 percent premium in terms of valuation (note trailing valuations are almost at the same levels of that of 9119) and we have not even taken into account any China problems which seem to have disappeared for the past three months. Keep in mind that problems from there will come. China is not done with its share of problems and that too will add to Indian markets problems. When the picture is such the background is such (after 1400 points rally) we do not see Indian stock markets giving much returns from now in other words we will get much better prices to buy. (Please note that these are just few of the problems that I see, there are many more. i can write for 5-7 days and still we will not be done). Many may argue with me on the commentary but with such a background something will snap it is a matter of time. In addition of these factors which are clearly visible we have many dangerous things going on in our charts. They do not give me the buying signals at these prices. Rather it is very much becoming like a plane about to crash land. Multiple alarms are ringing in the cockpit but as of now no one will realize the intensity till the plane actually crashes. The same will happen with all global markets. (My view I am not God and may be wrong guys. If you short based on your own system and loose please take responsibility for your own trade. If you make money based on our inputs your luck and trading skill. Regardless of the outcome please keep in mind that we are only sharing our view point and we have the right to be wrong also)
If we see the wave characteristics although Nifty has moved higher the overall broader Indian stock market breath ratio has been against the up move and this is surely not a sign of a tezi cycle. In addition to that since this rally has been a global rally and please do not assign a local news flow reason for this like good monsoon or gst bill or so on. The context of this rally has been a global rally and when we look at the charts of most global indices we see a topping out pattern formation. When all the world markets start falling Nifty may buck the trend or outperform for a few days but after 3-4 trading days Nifty will start playing catch up with the falling global indices and we do not expect Nifty to hold out. As per our analysis Nifty will have a sharp reaction in line with falling global markets there is a possibility of a few days here and there taking place but eventually Nifty will mimic the entire falling Global stock markets and risk off trade in line with Global stock markets. I do not see a scenario where Global stock markets will breakdown and Nifty will hold out since the genesis of this rally has been a global in nature not a local one. Also there are a few important events lined up in the coming days and we do not see anything priced in by the markets for now at least. We do expect volatility to start picking up towards these Global events.
Yesterday I was talking to a renowned fund manager and he was saying “Glen markets will blast because of good macro factors. When I asked him how is falling exports for 16 months in a row and crude oil bill going up by almost 100% going to affect Indian macros he said all those problems will automatically fall in place” Sure they will fall in place but before they fall in place Nifty will fall sharply first and then we will see a tezi / bullish cycle. Before that tezi / bullish cycle starts we see a sharp fall and keep in mind this guy was under weight India till 8000 Nifty levels. After 1200 points rally this guy woke up. I am not blaming anyone any person will go right or wrong from time to time and this fund manager has a very good track record but now the fear of not being invested has taken over and he is just suddenly out of now where trying to justify tezi.
Ugar sugar has been a star performer from our portfolio side. We had initiated a buy call in the stock at 23 and in just 3 months time it has given 56% return. I am very happy that all most of our clients do own this stock and they are very happy with the performance. MSL (50066) too has been going up steadily and we maintain that this stock too will do very well in the coming time. We see good value in them. Tata Coffee is the next stock that we see will do very well in the coming time. We see coffee as a commodity doing very well in the next 24 months and that in turn will help the profitability of this stock. Buy Renuka Sugar, Eid Parry, Bajaj Hindustan on dips all of them will do very well in the coming time. Regardless of the monsoon season we do not see good agri output as per our charts and we see most agri commodities prices moving higher in the coming time. Many other commodities will also do very well in the coming time. Silver will also do well in the coming time but it does not mean buying the metal anywhere and any how. There has to be a proper entry system. Those who have taken positions in silver must trade in and out and not just buy and hold.
From a astro cycle perspective there are important events which are coming up the effects of some astro cycle signatures which took place in the past 25 trading days will start showing their power as their orbit of influence nears and when we have done a historical back testing we have seen major tops being formed. They still have few more trading days remaining but when we do see their effects we do see prices going for a toss. Short term time pass can happen but medium term we see that these valuations are not sustainable. It is also important to note that in our back testing we have not seen a corrective wave going higher than some degree of valuation and we are near that point too.
Bottom line is too many factors indicating that Nifty will have a sharp fall but some more time and patience will be needed to capitilize from that. Patience will be tested and please keep that in mind (Please don’t call me on Monday at 10 am and say how much more patience is needed?). In the near term more or less we are at the top so the trade is to manage your positions for next few trading days. Please do not over trade and if you are trading on the basis of this post then please use appropriate risk management and trade. Please do not blindly trade only on the basis of this post I am not God. I am clear that Nifty will fall but managing your position during volatility is the key. If I do go wrong then you must be having your risk management in place. For our clients we will keep guiding them how to adjust positions or tactically trade in order to hold on to the positions suggested by us.
Good Trading To You!