Food for Thought........!

S S

Well-Known Member
What we see now, is the effect of demonetization of Rs 500 and Rs 1000 currency notes. All the companies, where some kind of cash deals were taking place, like the real estate, gold and jewellary, along with the NBFCs (Non Banking Financing companies) like HDFC, Bajaj Finance, etc have got seriously affected.

In addition, the US$ is still getting strong and lot may depend upon the decision for increasing the interest rates in the US.

Therefore, there is a strong possibility for the spot Nifty not only re-testing the recent low of around 8000, but it may even go below to the level of around 7940, or lower, as expressed in my posting dated 23rd July 2016.

A lot shall depend on the current cash position and it’s handling by RBI.
 

VJAY

Well-Known Member
CNBC said that two-wheeler sales may be severely affected.
Dear TP ,
I think this scenerios for a short time only....once this hawks clears (mostly this month)everything on track :) any way newyear should be good for traders and investors
 
Dear TP ,
I think this scenerios for a short time only....once this hawks clears (mostly this month)everything on track :) any way newyear should be good for traders and investors
In that case, auto finance companies should do great :)
 

S S

Well-Known Member
The useless Paid Media is still continuing with their anti-national activities. Almost in all the cities and in many towns (smaller cities), Banks and their Debit/Credit cards exist. Many Bank account holders too have their debit cards, but these people are NOT used for actually making use of the debit cards.

Media should highlight this facility available, to make the people aware of it, but instead they are acting otherwise. When people realize this available option, in order to have their own vehicles in running condition that they shall fill Petrol using the debit cards. With that, their need for filling petrol in the vehicle gets satisfied and also the liquid cash in their pockets remain intact. This shall happen, but the action shall be a delayed one.

Many cities also have larger super markets like Big Bazaar, Reliance Fresh and alike, where one gets a chance to buy things available under discount to MRPs, and payment is accepted by debit/credit card. When the medium and small shops realize that, this could be the reason for reduction in their sale, they shall have to move for installing this facility at their shops.

In short, the country shall be moving from Cash Predominant Economy to Bank Predominant Economy, and hence shall have more transparency. This surely is good for the country on a long run. Black marketers however, are trying to get this delayed as much as possible, so that they can continue creating problems and put the blame on the government, especially the Hon’ble Prime Minister.

In short, sale of petrol/diesel and of 2-3 or even 4 wheelers will be affected due to the confusion created by the media and black marketers, but for a shorter duration.

Good part is that the rates and prices of apartments and plots shall fall rapidly. The seller would expect some cash amount, which the buyer will not be in a position to provide. Entire amount being through banking transactions, the government shall earn better registration tax and stamp duty, which is usually born by the buyer. But as the buyer has one’s own budget, the total cost must fit into that budget, which can only happen if the basic prices get reduced. For this, the Housing Finance companies, shall have a temporary set back. But with the GST getting applicable, things shall start improving faster.

To understand the real effect of demonetization on the market, check the USD-INR rates. If US $ is getting strong, which means dollar is leaving the country, which could mean that FIIs and selling their holdings in the stock markets, which inevitably fall. But as this rate starts becoming favorable to the Indian Rupee, it would indicate inflow of the foreign exchange in the country, which when invested in the stock markets make them move upwards. This would be the scenario for most of the global markets. Any deviation from the same shall get contributed to demonetisation.

And like I have many many times earlier, wait for a real fantastic budget this year, after which everyone is going to say “Achhe Din Aa Gaye”
 

S S

Well-Known Member
Hi!

Today, let us start with the US$ INR Future status on Nifty. One could see, how the US$ has suddenly strengthened in the last week, indicating scarcity of it or rather, it’s withdrawal from Indian Stock market Even if we assume that the earlier fall is going to get retraced by 50%, then the target level is around Rs 68.57 per US$ as can be seen in the chart shown by Yellow horizontal line.



In the extreme case though, it may retrace 61.8% of the fall, in which case, the US$ may rise to the level of Rs 69.07 per US$.

From the chart for spot Nifty at the end of trading session on Fri 18th Nov 2016, one could clearly see the fall in Nifty that appeared almost in line with the rise in the value of US$.



So, if the US$ may further get strengthened, then Nifty may fall further. In this case, if we assume the US$ to rise to the level of Rs 69.07, Nifty’s target could be the previous low it had made on 24th Jun 2016, which was around 7927. The US$ on that day was equally strong as it is currently seen.

All my comments are usually NOT for day traders. They have to be on their toes for the intraday movement of spot Nifty.

My comments usually are for positional traders and investors, mainly as some guidelines for things may happen, but one cannot be sure.

Therefore, in my opinion, if the US$ gets corrected only to about 50% of the retracement of the fall, that is around Rs 68.57, which may happen in a couple of days. The Nifty is already in the extremely oversold region, and hence the buying may commence shortly.

However, there is a little chance that the US$ rises further to the level of around 69.07 per Rupee, then the Nifty may get massacred to around 7927.

In any case, the status of the US$ for the next week is crucial. However, as the next week closes on Fri 25th Nov 2016, by which time the concessions given by the government for old currency notes of Rs 500 & 1000 comes to an end, most of the TV channels are unnecessarily going to forcibly connect it to Nifty, which I personally would not agree.

So, be alert for the next week.

My opinion based on my understandings of the markets and the charts and I could be wrong.

Cheers & Good Luck !
SS
 

S S

Well-Known Member
Hi,

It was an absolute different and unexpected Friday today, for some traders, which was obvious as could be seen from the USDINR Futures chart at the close of Friday 25th Nov 2016. The chart shows that on 25th Nov 2016, there was a large inflow of foreign exchange, which led to purchases of stocks all around, that finally pushed the markets up.



It is not over because there could be a reaction again, as this rate reached around 68.07 Rupees pr US$, when the foreign exchange may leave the country again for some time, and markets may fall to some extent.

The chart for spot Nifty as at the close of Fri 25th Nov 2016 shows that the fall from the high of around 8969 on 7th Sep 2016 to the low of around 7916 on 21st Nov 2016, is likely to be retraced upwards. If this is say around 50%, then the spot Nifty may proceed towards 8440-8450 levels, which lie inside the downward sloping channel.



Today, the spot Nifty has marginally closed above the 10 DMA Red line. If it opens around/above this number and stays above it on Mon 28th Nov 2016, then it shall proceed toward the channel, when the lower dotted black line may act as a resistance. And even if the spot Nifty manages to cross this line, it shall again be in the channel till another breakout occurs.

Incidentally, no TV channel connected today’s rise to the demonetization, which they had been doing for the fall that occurred. Sick !

One must remember that 5th, 11th, 12th Dec 2016 are important dates when one or the other announcement is expected. Of these, the one from RBI, which is likely to reduce the interest rates, may push the markets high up, depending on the amount of rate cut that gets declared.

In any case, one must remember that one can never catch a bottom for value buying. This could be the last time one could buy good stocks. Because I expect that after about 50 days from today, the markets could have gained 10 to 15% levels, or even more.

My opinion based on my understanding of the markets and the stocks, and I could be wrong.

Cheers!
SS
 

S S

Well-Known Member
Hi!

We had seen that over a month now, the global markets had been dancing to the tune of the US markets and US$, and Indian markets were no exception to it. So, let us understand the position of the US markets from the Dow Jones chart as at the close of Fri 2nd Dec 2016, given below.



From the chart, we see that the daily candles had been moving up continuously, had been above the 10 DMA Red line all along, and have now reached near the upper Bollinger Band. This indicates that hereafter, for some time, the Dow Jones is likely to move sideways, and also likely to remain range bound. This also means, that the likely increase in the interest rates in the US has already been factored in by the markets, and when it actually happens, there shall be no additional impact on those markets.

With this background, now let us see the chart for spot Nifty as on the close of Fri 2nd Dec 2016. On Thu 1st Dec 2016, the spot Nifty made an attempt to come back in the downward slopping channel of the two lack dotted lines, but the lower line acted as a strong resistance and the candle closed below the channel. Then on Fri 2nd Dec 2016, there was a gap down opening, and the candle closed below the 10 DMA Red line.



One must understand the scenario currently existing in India. The thrust on less-cash economy is forcing the citizens to turn to use the available debit/credit cards. Those who had not opted for debit cards, it is now time to get them issued.

We all have been used to the mindset of withdrawing cash and doing the cash purchases, which always suited everyone. But the compulsion of using plastic money, net banking and mobile banking facility, is slowing down the purchases. In my opinion, the cash crunch has been intentionally created for the citizens to learn about the less-cash economy and make use of it.

People in Rural area have been facing a major problem due to absence of bank branches and ATMs in that area, which has led to the demand for having more branches and ATMs in rural area. Once upon a time, a rural citizen used to clean one’s own teeth with his finger by using carbon ash. But today, almost all the villagers use tooth brushes and one or the other toothpaste. Likewise, the Rural area shall slowly move to banking economy, forcefully though.

With most of the transactions now taking through the bank, that there shall be a complete transparency. Any and every transaction could now be traced back. The government shall get the correct data about the earning of all levels of people, based on which the Taxation norms could get set, which shall have a Tax Bonanza for a common man. Almost everyone is likely get benefitted due to reduction in direct taxes like Income Tax and also like Indirect Taxes like GST, which is set to get introduced by 1st Apr 2016.

The current scenario in the India stock markets is the result of confusion created in the minds of a common man, by those, who have been holding black money in piles of cash, which has now become useless. These people are now frustrated and their current behavior is the result of this frustration.

I expect the RBI to come out with reduction in the interest rates, better than anticipated, which shall give a thrust to Indian markets, pushing the pot Nifty back inside the downward sloping channel.

By this time, the Nifty should be above the 10 DMA Red line, and also should be touching the upper Bollinger band, which shall make the Nifty to remain sideways for some time, and consolidate.

This year, the Budget is on 1st Feb 2017. If there is a pre-budget rally, as is seen for most of the earlier years, then the spot Nifty shall be trying to break the upper dotted line of the channel and move above it.

Whatever effect we saw on Dow Jones as Donald Trump got elected in the US, I expect a similar effect on spot Nifty, after the budget is announced on 1st Feb 2017.

My opinion based on my understanding of the markets and the charts, and I could be wrong.

Cheers!
SS
 

S S

Well-Known Member
TP,

I doubt, as I have a different view point. Just see the USDINR Future chart on Fri 2nd Dec 2016. The Rupee is strengthening, which is an indication of the foreign exchange flowing inside the country. And yet, the markets had a miserable fall.





The chart shows a further chance for Rupee getting a little more stronger, but one cannot be sure that the inflowing foreign exchange necessarily gets invested in the stock exchange.

I attribute this to the TWO Most Useless things in our country. First, the Paid Media and the other, the Opposition Parties.

Long before Narendra Modi got elected as a Prime Minister of the country that these two had made a lot of noise against him. People abroad, Indians and Foreigners, saw what was shown in the media, and almost all were against Modi for even a consideration for his being a Prime Ministerial candidate. What happened thereafter is a History. The kind of respect Mr Modi commands abroad is phenomenal. This was not the Modi that was portrayed by the Paid Media and the other parties then in Power.

Likewise, what is being shown in media, especially the anti-Modi news, in my opinion, is only a Bullshxt. And yet, people believe it and sit on the fence, which the foreign investors are currently doing.

I am extremely Bullish on the Indian Stock markets, especially from 1st Feb 2017 onwards. Believe me, people are going to curse themselves for not having invested in stocks, when a golden chance was available.

I do hold some stocks, because of which my broker gives me margins for daily trading. Only when I wish to take a position that I need to move margin money to the broker’s account. For daily F&O trading, not a single Rupee is required as a margin because the stocks held give the required cover. This facility is offered almost by all the brokers, and yet day traders prefer keeping cash with the brokers for their day trading than ‘investing’ in stocks, which get appreciated over a period of time.

The demonetization had a strong reaction, because no one was ready. Government was not ready because they could not take any steps to keep up the secrecy. People were not ready because they did not know anything. There shall be a similar reaction occurring once again when the GST gets introduced from 1st Apr 2017.

Once again the Paid Media and the Opposition Political Parties will raise objections. Once again the foreigners shall fall for it and sit on the fence for some time.

I may be wrong, but even if the monsoon in 2017 remain normal/average, I expect Nifty to be above 12000 by Diwali 2017.

Finally, I find Modi has taken all the steps in a planned manner, and is expected to proceed according to his plan. His goal is to make the country strong and beautiful, which no other political leader appears to have even considered in last 70 years. That is why, mindset of a common man is neither in a position to see what the PM is trying to do, nor is in a position to understand what is going on. In addition, he is being misled heavily.

But by Diwali 2017, you will also see a major cleaning being done on the Political scenario also. I am waiting for that more, than the Nifty hitting 12000.

Cheers!
SS
 

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