Weekly wrapup (week ending 23/Mar/2016)

Weekly wrapup ( week ending 23/Mar/2016 )

                                           by Dr. N. R. Phade

Dear Friends,

Welcome to Fortunes at nrptrends.

This is weekly wrapup of Indian equity market for the week ending on 23/Mar/2016. 

It was a truncated week for Indian Equity markets, with NSE NIFTY 50 ending 1.5% up, trading higher for six consecutive day. Indian markets were closed on Thursday for Holi and Friday for Good Friday holiday.

On Wednesday The Equity benchmarks covered up losses in late trade which helped the NSE Nifty 50 to close higher for sixth consecutive day. It was helped by positive European cues. Technology, FMCG and metals stocks were gainers while banking & financials and oil stocks were loosers. 

On Wednesday the BSE Sensex rose 7.07 points to 25337.56. The NSE Nifty 50 advanced 1.60 points to 7716.50 after hitting an intraday low of 7670.60. The broader markets marginally outperformed and were up 0.24 percent. The Benchmarks and NSE Bank Nifty gained 1.5 percent each on hopes of rate cut by RBI in its upcoming monetary policy meet, scheduled on April 5. FIIs were net buyers to the tune of Rs 15,000 crore worth of equity in the month of March till Tuesday. 

On the weekly basis, The NSE Nifty 50 closed the previous week at 7604.35 to close at 7716.50 this week, about 112 points higher before hitting a high of 7728 and a low of 7617. 

Recently the Union Cabinet has approved some important policies and schemes as under :- 

The national capital goods policy.

Implementation of rural housing scheme.

Nutrient-based fertiliser subsidy worth Rs 21,275 crore. 

USD 1.5 billion World Bank supported Swachh Bharat projects. 

These and a rate cut shall have a positive bearing on the Indian Equity Markets. 

In my previous OPINION dt 08/mar/2016 ( Are Indian Markets headed towards a new Bull Run ) we had discussed and identified that Banking, Auto, Fmcg, Housing finance, Agro, Infra, Steel & cement sectors shall be the drivers of the forthcoming bull run subject to fulfillment of certain prerequisites. We had also identified those factors influencing the Indian Equity Markets which have the potential to turn the equity markets into either a bear market or a bull market.  

In the previous Weekly wrapup ( week ending 18 Mar/2016 ) I had conducted a technical analysis on the major of the above sectors to check how they performed and had maintained a buy on most on them. All these sectors performed well to expectations and in tune to the analytical observations. In the preceding Technical Analysis, we are going to have a peep at how the above mentioned sectors performed this week and what would be in store for the coming week.  

TECHNICAL ANALYSIS :-  

NSE NIFTY 50 :-  

It was indicated in the previous Weekly Wrapup that NSE NIFTY 50 would continued its uptrend. I had maintained a buy on NSE NIFTY 50. It was expected to touch 7780 this week, but fell somewhat short of the target owing to a truncated week. It moved as  expected to close the week strongly at 7716.50, a strong 112 points upmove week-over-week.

NSE NIFTY 50 INTRADAY

NSE NIFTY 50 EOD

As per the NSE NIFTY 50 INTRADAY CHART, NSE Nifty 50 closed well above all the important trendlines of MAE 7, MAE 35, MAE 100 & MAE 200 indicating good strength in the market. The uptrend is most likely to continue this week too.

As per the NSE NIFTY 50 EOD CHART, NSE Nifty 50 closed above MAE 7 (7628), MAE 35 (7444) and MAE 100 (7589) and is yet to cross MAE 200 (7777). It is quite likely that NSE NIFTY 50 cross 7780 this week, after which, it shall enter a highly bullish territory. I would maintain a buy on NSE NIFTY 50 with stoploss at 7630 levels.  

NSE BANK NIFTY :-  

In the previous Weekly Wrapup I had maintained a buy on NSE BANK NIFTY with a strict stoploss at 15560 , which was technically a strong support, and had indicated that it faces resistance at 15780 crossing which it can reach 16400. Supported by global cues and an expected rate cut,  NSE BANK NIFTY opened the week at higher note, easily crossed that resistance  to make a inter-week high of 15967 and low at 15735 to end the week at 15887, around 233 points rise in just 3 days. 

NSE BANK NIFTY INTRADAY

NSE BANK NIFTY EOD

As per the NSE BANK NIFTY INTRADAY CHART, NSE Bank Nifty crossed all the crucial trendlines of MAE7, MAE35, MAE100 & MAE 200 to close at 15887 indicating good strength in the banking sector. As per the NSE BANK NIFTY EOD CHART, NSE Bank Nifty closed above MAE 7, MAE 35 & MAE 100 but is yet to cross MAE 200 at 16427. Going forward, its likely to face resistance at 16145 & 16295 crossing which, it can reach 16400 levels.

I would maintain a cautious buy on NSE Bank Nifty with a strict stoploss at 15780.  

NSE NIFTY FMCG :-  

In the previous Weekly Wrapup, I had maintained a buy on NSE NIFTY FMCG with stoploss at 19430 and indicated that it faces resistance at 19614, crossing which, it shall enter into a bullish territory  with an expectation of it reaching 19625. NSE NIFTY FMCG made a weekly high of 19960 and a low of 19463 to close at 19629.

NSE NIFTY FMCG INTRADAY

NSE NIFTY FMCG EOD

As per the NSE NIFTY FMCG INTRADAY CHART, Nifty fmcg closed above, but just a hairline above all the crucial trendlines of MAE 7, 35, 100, 200 indicating some short-term weakness. As per the NSE NIFTY FMCG EOD CHART, Nifty fmcg has retraced for Monday highs, making new lows each day. It seems correction is on cards for NSE NIFTY FMCG. I would avoid any positions in this sector for the time being till a clear trend js seen.  

NSE NIFTY AUTO :-  

In the previous Weekly Wrapup, I had maintained a buy on NSE NIFTY AUTO with stoploss at 7690 levels,  expecting it to reach 7920 levels. The target was achieved as it made a weekly high of 8004 and low of 7767 to close the week at 7990. 

NSE NIFTY AUTO INTRADAY

NSE NIFTY AUTO EOD

As per the NSE NIFTY AUTO INTRADAY CHART, Nifty Auto closed above all the trendlines of MAE 7, 35, 100, 200 displaying good strength. As per NSE NIFTY AUTO EOD CHART, Nifty Auto closed well above all the crucial trendlines of MAE7, MAE 35, MAE100 & MAE200 thereby entering a bullish territory 

I would maintain a buy with stoploss at 7900 for a target of 8300.  

NSE NIFTY METAL :-   

In the previous Weekly Wrapup, I had maintained a strong buy on NSE NIFTY METAL with a stoploss at 1840. I had also indicated that it faces resistance at 1905 crossing which, it shall enter a extremely  bullish zone. NSE NIFTY METAL made a weekly high of 1951 and a low of 1868 to close the week on a bullish note at 1948.

NSE NIFTY METAL INTRADAY

NSE NIFTY METAL EOD

As per the NSE NIFTY METAL INTRADAY as well as EOD CHART, Nifty Metal closed strongly above all four crucial trendlines of MAE 7, 35, 100, & 200 which indicates that it has entered a very bullish zone.

I maintain a strong buy with a stoploss at 1890 levels.  

With many a events, positive as well as negative, on the global front and the expiry coming week, I feel we are likely to experience a mixed trend in Indian Equity Markets. Thereby caution is the key word of some sectors.  

This is all for now. Keep visiting for more updates. Happy Investing from Fortunes at nrptrends. 

-- Dr. N. R. Phade

Weekly wrapup (week ending 18/Mar/2016)

Weekly wrapup ( week ending 18/Mar/2016 )

                                          by Dr. N. R. Phade

Dear Friends,

Welcome to Fortunes at nrptrends.

This is weekly wrapup of Indian equity market for the week ending on 18/Mar/2016.

On Friday the BSE Sensex closed 275.37 points higher at 24952.74 and NSE Nifty closed above 7600 mark up 91.80 points at 7604.35. The market breadth remained balanced between weakness and strength as 1291 shares declined and 1297 shares advanced on the BSE. 196 shares ended up unchanged. The upmove in the Indian Equity Markets  was a part of the upmove in the US and Asian stocks triggered by stronger currencies relative to the US dollar due to US Federal Reserve's decision to keep rates unchanged and slashing its projections of rate increases to two in 2016 from an earlier projection of four, in tune to global economic concerns at the monetary policy review on Wednesday, 16 March 2016.

The BSE Mid-Cap index rose 0.29%. The BSE Small-Cap index rose 0.30%. Both these indices underperformed the Sensex .Hindalco, TCS, SBI, Adani Ports and GAIL were top gainers while Lupin, Sun Pharma, HUL and Maruti Suzuki were losers in the Sensex.

On the weekly basis, The NSE Nifty closed the previous week at 7510.20 to close at 7604.35 this week, about 94 points higher before hitting a high of 7613 and a low of 7405.

In my previous OPINION dt 08/mar/2016 ( Are Indian Markets headed towards a new Bull Run )  we had discussed and identified that Banking, Auto, Fmcg, Housing finance, Agro, Infra, Steel & cement sectors shall be the drivers of the forthcoming bull run subject to fulfillment of certain prerequisites. We had also identified those factors influencing the Indian Equity Markets which have the potential to turn the equity markets into either a bear market or a bull market.

In the previous Weekly wrapup ( week ending 11/Mar/2016 ) I had conducted a technical analysis on the major of the above sectors to check how they performed and had maintained a buy on most on them. All these sectors performed well to expectations and in tune to the analytical observations. In the preceding Technical Analysis, we are going to have a peep at how the above mentioned sectors performed this week and what would be in store for the coming week.

TECHNICAL ANALYSIS :-

NSE NIFTY 50 :-

As indicated in the previous Weekly Wrapup NSE NIFTY 50 continued its uptrend. As per the NSE NIFTY 50 INTRADAY CHART, NSE Nifty 50 closed well above all the important trendlines of MAE 7, MAE 35, MAE 100 & MAE 200 indicating good strength in the market. The uptrend is most likely to continue this week too.

NIFTY 50 INTRADAY

NIFTY 50 EOD

As per the NSE NIFTY 50 EOD CHART, NSE Nifty 50 closed above MAE 7 (7513), MAE 35 (7394) and MAE 100 (7581) and is yet to cross MAE 200 (7782). It is quite likely that NSE NIFTY 50 touch 7780 this week. I would maintain a buy on NSE NIFTY 50 with stoploss at 7550 levels.

NSE BANK NIFTY :-

In the previous Weekly Wrapup I had maintain a Sell on NSE BANK NIFTY with a strict stoploss at 15181, which was technically a strong resistance, and had indicated that crossing that resistance, NSE BANK NIFTY would easily cross 15350 levels. Supported by global cues, NSE BANK NIFTY opened the week at higher note, easily crossed that resistance and even 15350 to make a inter-week high of 15704 and low at 15178 to end the week at 15654.

BANK NIFTY INTRADAY

BANK NIFTY EOD

As per the NSE BANK NIFTY INTRADAY CHART, NSE Bank Nifty crossed all the crucial trendlines of MAE7, MAE35, MAE100 & MAE 200 to close at 15654, indicating good strength in the banking sector. As per the NSE BANK NIFTY EOD CHART, NSE Bank Nifty closed above MAE 7 & MAE 35 but is yet below MAE 100 & MAE 200. Going forward, its likely to face resistance at 15780, crossing which, it can reach 16400 levels.

I would maintain a cautious buy on NSE Bank Nifty with a strict stoploss at 15560.

NSE NIFTY FMCG :-

In the previous Weekly Wrapup, I had maintained a buy on NSE NIFTY FMCG with stoploss at 19130 with an expectation of it reaching  19625. The target was nearly achieved as it touched an inter-week high of 19602 to close the week at 19555.

NIFTY FMCG INTRADAY

NIFTY FMCG EOD

As per the NSE NIFTY FMCG INTRADAY CHART, Nifty fmcg closed at 19555, strongly above all the crucial trendlines of MAE 7, 35, 100, 200 indicating good strength. As per the NSE NIFTY FMCG EOD CHART, Nifty fmcg closed above MAE7, MAE35, and MAE100. Going forward,Nifty fmcg would face minor resistance of MAE200 (19614), crossing which, it enters a new bullish territory. I would maintain a strong buy on NSE NIFTY FMCG with a stoploss at 19430.

NSE NIFTY AUTO :-

In the previous Weekly Wrapup, I had maintained a buy on NSE NIFTY AUTO with stoploss at 7600 levels, indicating  resistance at 7742 levels, expecting it to reach 7900 levels. The target is yet to be achieved as it made a weekly high of 7831 and partially tested the stoploss level of 7600 as it made a low of 7596 to close the week at 7767. 

NIFTY AUTO INTRADAY

NIFTY AUTO EOD

As per the NSE NIFTY AUTO INTRADAY CHART, Nifty Auto closed at 7767, above all the trendlines of MAE 7, 35, 100, 200 displaying good strength. As per NSE NIFTY AUTO EOD CHART, Nifty Auto closed above MAE7, MAE 35, MAE100. 

I would maintain a buy with stoploss at 7690 for a target of 7920.

NSE NIFTY METAL :-

In the previous Weekly Wrapup, I had maintained a strong buy on NSE NIFTY METAL with a stoploss at 1810. I had also indicated that it faces resistance at 1895. NSE NIFTY METAL made a weekly high of 1882 and a low of 1808 to close the week on a bullish note at 1877.

NIFTY METAL INTRADAY

NIFTY METAL EOD

As per the NSE NIFTY METAL INTRADAY CHART, Nifty Metal closed at 1877, strongly above all four crucial trendlines of MAE 7, 35, 100, & 200. As per the NSE NIFTY METAL EOD CHART, Nifty Metal closed MAE 7, 35, 100 Moving forward it shall face resistance at 1905, crossing which, it enters a extremely bullish zone

I maintain a strong buy with a stoploss at 1840 levels. 

With the Global Markets closing on strong note, we are likely to experience a strong upside in the Indian Equity Markets

This is all for now. Keep visiting for more updates. Happy Investing from Fortunes at nrptrends.

-- Dr. N. R. Phade

Weekly wrapup ( week ending 11/Mar/2016 )

Weekly wrapup ( week ending 11/Mar/2016 )

                               by Dr. N. R. Phade

Dear Friends,

              Welcome to Fortunes at nrptrends.

This is weekly wrapup of Indian equity market for the week ending on 11/Mar/2016.

On Friday the  BSE Sensex closed 94.65 points higher at 24717.99 and NSE Nifty closed above 7500 mark after a turbulent ride, up 24.05 points to 7510.20. The market breadth remained weak as about 1459 shares declined against 1104 advancing shares on the BSE. The market bounced back amid consolidation, majorly supported by Europe and crude oil rally. The broader markets ended flat. On the weekly basis, The NSE Nifty closed the previous week at 7485.35 to close at 7510.20 this week, about 24 points higher before hitting a high of 7547 and a low of 7424.

In my previous OPINION dt 08/mar/2016 we had discussed and identified that Banking, Auto, Fmcg, Housing finance, Agro, Infra, Steel & cement sectors shall be the drivers of the forthcoming bull run subject to fulfillment of certain prerequisites. We had also identified those factors influencing the Indian Equity Markets which have the potential to turn the equity markets into either a bear market or a bull market.  ( Are Indian Markets headed towards a new Bull Run ).

In the preceding Technical Analysis, we are going to have a peep at how the above mentioned sectors performed and what would be in store for the coming week.

TECHNICAL ANALYSIS :

NSE NIFTY 50 :-

NSE NIFTY 50 INTRADAY

NSE NIFTY 50 EOD

As per the NSE NIFTY 50 INTRADAY CHART, NSE Nifty 50 closed well above all the important trendlines of MAE 7, MAE 35, MAE 100 & MAE 200 indicating good strength in the market. As per the NSE NIFTY 50 EOD CHART, NSE Nifty 50 closed above MAE 7 (7440.36) & MAE 35 (7351.62)  but below MAE 100 ( 7587) and MAE 200 (7795). It seems the market would face slight resistance at 7587 level, crossing which we can see NSE NIFTY 50 moving up to 7800 levels. I would maintain a buy on NSE NIFTY 50 with stoploss at 7424-40 levels.

NSE BANK NIFTY :-

NSE BANK NIFTY INTRADAY

NSE BANK NIFTY EOD

NSE Bank Nifty proved to be a dampener for the markets. It had been discussed in the previous OPINION dt. 08 Mar 2016 that NPA woes are bound to prove a hurdle for the Banking Sector to perform. Secondly, in the Gnyaan Sangam it was expected that the government announce concrete measures to bring all defaulters to books, which is yet to meterialise. The markets are expecting a rate cut by the RBI. Any move on these frontiers shall send Nse Bank Nifty spiraling forward, the absence of which have put pressures on further run pushing Nse Bank Nifty into negative territory.

As per the NSE BANK NIFTY INTRADAY CHART, NSE Bank Nifty the crucial trendlines of MAE 100 & MAE 200 (15181) , marginally below MAE 7 (15169) at 15168 indicating weakness in the banking sector. As per the NSE BANK NIFTY EOD CHART, NSE Bank Nifty closed above MAE 7 & MAE 35 but well below MAE 100 & MAE 200. It seems that NSE Bank Nifty would be in a trading zone between 15351 on the higher side and 14986 on the lower. I would maintain a sell on NSE Bank Nifty with a strict stoploss at 15181 crossing which we are likely to see NSE Bank Nifty pushing above 15350 levels.

NSE NIFTY FMCG :-

NSE NIFTY FMCG INTRADAY

NSE NIFTY FMCG EOD

As per the NSE NIFTY FMCG INTRADAY CHART, Nifty fmcg closed at 19354, strongly above all the crucial trendlines of MAE 7, 35, 100, 200 indicating good strength. As per the NSE NIFTY FMCG EOD CHART, Nifty fmcg closed above MAE 7 (19136) and MAE35 (18955). Going forward Nifty fmcg would face minor resistance of MAE 100 (19369) crossing which, it shall test the level of 19625. I would maintain a buy on NSE NIFTY FMCG with a stoploss at 19130.

NSE NIFTY AUTO :-

NSE NIFTY AUTO INTRADAY

NSE NIFTY AUTO EOD

As per the NSE NIFTY AUTO INTRADAY CHART, Nifty Auto closed at 7723, above all the trendlines of MAE 7, 35, 100, 200 displaying good strength. As per NSE NIFTY AUTO EOD CHART, Nifty Auto closed above MAE7 (7605)  & MAE 35 (7500). Going forward it shall face minor resistance at  MAE100 (7742) crossing which, we shall find it crossing 7900 in no time. I maintain a buy with stoploss at 7600 levels.

NSE NIFTY METAL :-

NSE NIFTY METAL INTRADAY

NSE NIFTY METAL EOD

As per the NSE NIFTY METAL INTRADAY CHART, Nifty Metal closed at 1856, very much the level of all four crucial trendlines of MAE 7, 35, 100, & 200. As per the NSE NIFTY METAL EOD CHART, Nifty Metal closed MAE 7, 35, 100 Moving forward it shall face resistance at 1895, crossing which, it enters a extremely bullish zone. I maintain a strong buy with a stoploss at  1810 levels.

With the US Markets closing on strong note, we are likely to experience a strong upside in the Indian Equity Markets.

 This is all for now. Keep visiting for more updates. Happy Investing from Fortunes at nrptrends.

-- Dr. N. R. Phade

Are Indian Markets headed towards a new Bull Run

Are Indian Markets headed towards a new Bull Run          
 -- A hurdle-race ; A bumpy road ahead.

 --- Dr. N. R. Phade

Dear Friends ,
         Welcome to Fortunes at nrptrends.
Today we shall discuss upon the present state of Indian Equity Markets. Lets see into those main factors that are driving the markets at the moment which shall help us to decide weather the markets are headed towards a new bull run.

After hitting 52 week low on the budget day at 6825.80 Nifty bounced back the day after to mark the rise of little over 500 points in just 3 trading sessions. The story about Sensex is the same with a rise of around 1700 points.

The markets crossed over its key resistances in a matter of just few days , fueled by fresh buying commitments by the FII and supported by a pro-development budget by the FM. But such a sharp spike has raised many a doubts about the sustainability of this rally. During the period FII poured around a little more than Rs 4000cr. into the Indian market while the DII were sellers to the tune of Rs 1700cr in the same period.

Many a analysts are surprised by this sudden jerk and are unsure weather the markets have really found the bottom. Some stocks have rebounded around 25-30% in just two days, which is a thing that can't be taken with a casualness of a bull market. Many feel that this was a short covering of some kind which usually comes when the markets are tired of going short day in and out , and some event sparks a reverse sentiment. Such a move definitely doesn't warrant a making of a bull rally. Hence some extra caution.

Nifty has negated its short term negative trend by crossing above the resistances of 7240 and 7365 closing the week at 7485. The index has made a double bottom with positive divergence on indicators which helped it to move higher led by short covering and supported by fresh buying activities. But now consolidation followed by investment based buying need to follow for this rally to continue to higher levels. But if Nifty50 falls below 7302, it shall again enter into trading zone between here to 7000. ( see here )

What are the factors, the hurdles that brings such a pessimistic view : Lets give a thought to those :-

There are some troubles on the international front that haunt all the economics worldwide- like US FED meet, The Yuan, Tokyo, Moscow woes.

Fed meet : The US Federal Reserve meet is due on March 15-16. It is expected that the Fed will not hike rates, and instead look at reversing the cycle. But strong data points in the US put analysts in a fix. This remains a big risk for equity markets across the globe along with India.

Yuan devaluation : The risks of further currency devaluation by the People's Bank of China looms large. Its believed that the risk from the continuous devaluation of the yuan can impact the currency and moderate growth momentum going forward. ( see here ) It is bound to stress most Asian currencies including India as the real effective exchange rate shall be affected. INR has depreciated by almost 80% against Chinese Yuan in the last 10 years. Even though that, India imports much more from China but exports to China are very much less in comparison. There prevails a great disbalance in this trade wherein India is always in a stressed condition.

The Japanese and the Russian economics too are struggling with their own problems which definitely leave a substantial impact on the Indian economy.

On the domestic front there are some factors, which may prove to be detrimental or favorable for the Nation depending on how they are addressed to.

Rate Cut : A very nice budget has provided room for a rate cut by the RBI. Markets are expecting this since some time now. A cut in rate would surely boost the sentiment of the market and send Bank Nifty spiraling further. With the government sticking to 3.5%  fiscal deficit target and a lower borrowings have led to a rally in fixed income market. This has created a good room for a rate cut. The market would keenly watch this move. If a rate cut wouldn't materialize then the market will take stock of the situation and some selling would be seen.

Earnings : The Corporate India is continuously struggling with weak earnings which doesn't show signs of improving in near future. In-fact there can be more pain in coming months. The external demand is quite weak and wouldn't improve for some time now. The commodity prices have negatively affected the manufacturers. There was some solace from falling crude prices but recently a strong recovery is seen in that sector too.

Banking Npa : PSU banks are reeling under the pressure of NPAs since long. The market had expected quite a higher allocations for ailing banks in tune to Rs one lac cr. Non-compliance of those expectation is an unspoken message by FM Mr Arun Jaitley which is quiet clear. He has announced that he shall take all the necessary measures to make the banking system healthy once again. The Gnyaan Sangam is one step towards this goal.

GST : The markets were disappointed to know that nothing has been done in the matter of GST.

"The most critical things that the government needed to do in any financial management is to widen the tax base and for that the silver bullet in India really is the GST and because we all know where it is stuck and hopefully, it gets through once the Rajya Sabha math allows it, that really kick starts the whole taxation cycle" Manish Chokhani, Director, Enam Holdings, said in an interview with ET Now.

"In theory GST alone can add five percentage points of GDP to government tax revenues, leave alone the fact that it may actually boost GDP by one or two percentage points. So that to me is one big silver bullet," he said.

But against all this, the FM has provided a very pro-growth budget. The focus on development of rural India, sops given to boost the housing sector, and aim to improve the health of banking system by nipping the problem of NPA in the bud instead of finding short-lived solutions like capital infusion to manage bad debts; all this is going to have a welcome effect on the Indian economy

Secondly, the Seventh Pay Commission's guidelines are very much in the door of implementation. This shall put immense purchase power in the hands of common man which turns to be a boon to housing, Auto & fmcg  sectors. This, though a bit inflationary, is bound to put new energy into the Indian economic eco-system.

To sum up this discussion, there are some sectors who can potentially be performers for the Indian economy, The Indian Equity Markets. These sectors namely Banking, Auto, Fmcg, Housing finance, Agro, Infra, Steel & cement shall be the drivers of the forthcoming bull run.

This is all for now friends. Take good care of yourselves. Have a great time. Keep visiting for more. Happy Investing from Fortunes at nrptrends.

  -- Dr. N. R. Phade

CAN THE DRAGON SUSTAIN ITS OWN WEIGHT

CAN THE DRAGON SUSTAIN ITS OWN WEIGHT

                                                   --  by Dr. N. R. Phade

Dear Reader,

           Welcome to Fortunes at nrptrends. 

Today lets peep into the state of affairs of The Dragon - China.

China has set itself a growth target between 6.5 - 7 % of gdp. What explains this optimism, this future -telling ? Its been of the observation that Chinese targets, once set, have ways to come true. The economic slowdown, the turbulence in cash market, the near to meltdown of currency, fall in exports, uncontented population, unrest - all these concerns melt away to naught in face of their leaders conviction. To achieve their goals, it seems, their leaders have many a ways in store.

There is always some prudence in setting a target range as against China's past practices of setting a single specific number and burning all in a strife to achieve it. It seems practically unfruitful in managing an economy as large and complex as China just to hit a virtual target. It always has its owns negative implications. China has always borne the brunt of such policies in the past.

Yet China remains a developing country (its per capita income is still a fraction of that in advanced countries) and its market reforms are incomplete. Official data shows that about 98.99 million people still lived below the national poverty line of RMB 2,300 per year at the end of 2012. With the second largest number of poor in the world after India, poverty reduction remains a fundamental challenge. ( see here )

Flexibility is always meritful when nations economy is concerned. There be good governance and not an attitude to drive for a nation to truely prosper. Hence keeping such flexibility, as China seems to be in favour of now regarding targets is a healthy sign. But the actual problem is quiet large. The target range set seems to be quiet higher in the present world economic scenario. Many a economists and even the IMF has pegged Chinese growth below 6.5% this year. But the Chinese Premier's report has quiet surprised the economic society world over. There are always two implications - two temptations China creates for itself when it sets a higher target for itself, both are dangerous in a sense.

The first would be to manipulate and present a picture wherein growth is to the mark when its actually not. Resorting to such tactics wouldn't be the piece of pie for the Chinese government but concerns about the same would loom large as the headwinds to growth intensify. A scenario of doubt shall always prevail this year.

The second temptation would be that the government act as a growth engine; a growth driver, as has been done in the past. But such bubbles surely burst some day. Many a nations have learnt this truth out of experience. This and other things make it important to refer to the PM's report.

Lets peep a bit into Chinese PM Li Keqiang's report. It seems that China shall lean more heavily on fiscal as well as monetary policy to achieve its target. It is planned that it works a deficit of 3% of GDP, which is higher from 2.3% last year. It is also aiming for 13% growth of M2 (a broad gauge of the money supply), higher than 12% last year. Though both don't sound quite a increase, they are enough to signal the mindset of the government. It is indicative that the government would ratchet-up pro-growth measures. Its noteworthy that the deficit includes only budgetary expenditures. Since the government has many a expenditure heads it would be difficult to contain the deficit to 3%. The credit growth in January, with 2.51 trillion yuan ($385 billion) in new lending by Chinese banks was the most ever in a single month. This may indicate quite a loose monetary policy.

Historically China has proved its concept to turn to stimulus when growth is weak but the nature of stimulus is changing over time. Previously China relied on heavy government spending. But this time it aims for a lower growth rate in fixed-assets investment which was targeted 15% previous year. This year much of the fiscal push appears to come from lower taxes, which there-by shall put more money into the pockets of consumer. This shall, in turn, help to increase spending and consumption in markets, thereby improving the bottomline of the economy without increased stress on the government treasury. China is aiming for just 3% growth in this year’s budget revenue, much lower than a target of 7.3% last year. This is in line with supply-side economics of which China has gained since some period now. The basic stance is to clear the path for corporate, instead of pouring more money into Government dominated infrastructure projects.

The administration seems to be quiet realistic in its view on global trade as of now. China had aimed for 6% growth, but both imports and exports contracted, and they badly missed at it. Now the government hasn't set one this year. It has realized that the external environment is beyond its control and it wouldn't want to be embarrassed again.

As against that, the government seems to be confident of its grip on domestic side. Mr Li not only set the target for year 2016 but also confirmed a central objective of new five-year economic plan ( which to be approved during the parliamentary session ). It is that the economy will grow by an average of 6.5% between now and 2020. “By that time, our economy’s size will have exceeded 90 trillion yuan,” he said. Surely a great Dragon of determination China is, it seems to me that its weight isn't too heavy for itself to sustain and carry.

Weather this comes true, Time is the only answer.

That's it then friends. Have a great time. Keep visiting for more. Happy Investing from  Fortunes at nrptrends.

Weekly Wrapup ( Week ending 04/Mar/2016)

Dear Reader,
               Welcome to Fortunes at nrptrends.
This is weekly wrapup of Indian equity market for the week ending on 4th of March 2016.

Continuing its uptrend, the equity benchmarks closed marginally higher for fourth consecutive session. Banks, metals and select auto stocks led the drive deriving support from a pro-development budget by the FM. Positive global cues also supported the market.

 BSE Sensex rose 39.49 points to 24646.48 and NSE Nifty 50 advanced 9.75 points to 7485.35 after hitting an intraday high of 7505.90. The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 1.1 percent and 0.75 percent, respectively.

The equity benchmarks post biggest weekly gains (6.4 percent) since May 2009, aided mainly by banks. The rally was supported by government's fiscal prudence in Union Budget. This has renewed hopes of rate cut by RBI which is being expected by the Corporate community.

New RBI capital rules have also helped to improve the market sentiment. Secondly, major of the NPS's have been identified by the RBI and its confident to identify the remaining till end of march.This and the Central Vigilance Commission is bound to provide great confidence to the Banks.

The allocations by FM to ailing banking system in this budget was firstly seen a trifle one by the market but FM has assured of greater inflows wherever necessary. This made Bank Nifty surge more than 11 percent (in a week), the biggest weekly gain in 10 years. Positive global cues has played its role too.

Coming days markets will watch out for rate cut in immediate term. Happening which would definitely fuel up the uptrend in select sectors. Secondly the implementation of the policies would have to be watched out. Quarterly results could be a dampener for the uptrend though. It is highly difficult to be optimistic about the results.

TECHNICAL ANALYSIS :-

NIFTY 50 :- 

As per intraday chart Nifty 50 is well placed above the 200 MAE trend line and closed marginally above 35, 100 MAE trend lines but breached MAE 7 which indicates that there is some weakness in the market sentiment. This situation calls for a correction. But the EOD chart speaks differently. ( see image )

NIFTY 50 INTRADAY CHART

NIFTY 50 EOD CHART

As per the EOD chart Nifty 50 is trading above MAE 7 & MAE 35 which indicates that long positions are building up in market but is yet to crossover crucial resistances at MAE100, & 200. Nifty 50 is likely to face resistance at 7594 crossing which we are likely to see it reaching 7800 flawlessly. ( see image)

This is it for now in this weekly wrapup. Keep visiting for more. Good bye and take nice care of yourself. Happy Investing from Fortunes at nrptrends.
   -- Dr. N. R. Phade