Commodity Trade Mantra

Nifty Accelerates to a 19 month High – Beware of a Skid

Nifty at 19 month High

Nifty Accelerates to a 19 month High – Beware of a Smooth Skid

The Nifty & the BSE Sensex hit their highest level in 19 months. Key benchmark indices surged as firm global stocks boosted sentiment. The INR (Indian Rupee) appreciated & rose sharply by 1.20% against the US Dollar for the first time in several weeks. Goldman Sachs pegged the December 2013 Nifty target at 6,600 points. The BSE Sensex was provisionally up 335.20 points or 1.78%, off about 30 points from the day’s high and up close to 300 points from the day’s low. Market sentiment was also boosted after the deadlock in Lok Sabha ended today, 29 November 2012. The Equity Markets surged in early trade. It extended initial gains to hit fresh Intraday high in morning trade. The Nifty strengthened to hit fresh Intraday high in mid-morning trade. The Nifty Index continued upward journey to hit fresh Intraday high in early afternoon trade. Foreign institutional investors (FIIs) made heavy purchases of Indian stocks on Tuesday, 27 November 2012 which also boosted sentiment. FIIs bought shares worth a net Rs 1082.74 crore on Tuesday, 27 November 2012, as per provisional data from the stock exchanges. Nifty hit a high of 5,833.50, its highest level since 28 April 2011. The index hit a low of 5,736.10 in Intraday trade. The BSE Sensex was up 335.20 points or 1.78% to 19,177.28. The index surged 363.25 points at the day’s high of 19205.33 in late trade, its highest level since 2 May 2011. The Stock Market is awaiting the September-quarter gross domestic product data due to be released at 11 a.m. on Friday, with growth seen slowing to its lowest in nearly a decade for the year ending in March. Banks also rose on hopes that government would raise the cap on foreign direct investment in insurance, and open the pension sector to foreign investors, tracking new-found optimism around FDI in retail.

Target Achieved – Nifty Tech Specs:

I had posted on 26 Nov – The Nifty is gaining ground around its support of 5617 & seems poised for a rise to its first resistance towards 5680- 98, which if overcome with sustained strength, will lead to further bullishness in order to achieve 5815 its next resistance. The targets given for Nifty, though large have been accurately been achieved immediately in the next 3 days. Read more: Loss in Rupee is Gain in Gold – Nifty to Rise

After having shot up massively for 2 days back to back, profit booking in the Stock Market is sure to set in. Friday & Monday (Next week) may see no major movements. The Nifty will now gather support around 5725 & again rise. Upside resistance for the Nifty at 5950 is a tad short of the psychological 6000 level. After having booked some gains today, I would prefer to re-enter on some declines & book gains around 5950 & wait in the sidelines for a correction or a breakthrough above the 6000 level. Better to be cautious when greed sets in.

India Credit Rating:

Moody’s stable outlook on India has also eased a potential ratings downgrade worries from Standard & Poor’s and Fitch in the near term, adding to positive sentiment. The credit rating agency, Moody’s said on Tuesday, 27 November 2012 that the outlook on its Baa3 rating for India is stable, in part due to the country’s high savings and investment rates. In its annual credit analysis on India, which Moody’s said does not constitute a rating action; the agency also cited the country’s large, diverse economy and strong Gross Domestic Product growth as supportive of the rating.  Last month, Standard & Poor’s warned India still faced a one-in-three chance of a credit rating downgrade over the next 24 months, although it said a series of reform steps launched in September had slightly improved the country’s prospects. The RBI – Reserve Bank of India next undertakes monetary policy review on 18 December 2012, which is a mid-quarter policy review.

Vote on Retail FDI soon as Govt bows to pressure:

The government bowed to intense opposition pressure and agreed on Thursday to a vote on its decision to let foreign supermarkets set up shop in India, taking a major step towards ending a deadlock that has paralyzed parliament for days. The deadlock had threatened to derail the government’s efforts to drive forward its stuttering economic reform agenda with new legislative measures to allow greater foreign investment in the insurance and pension sectors. The debate will begin on Tuesday in the lower house, with voting likely the next day, members of parliament told reporters. A vote will also take place in the upper house. India’s economy is set to grow at its slowest pace in a decade this fiscal year. Manufacturing is contracting and exports are falling. October’s trade deficit of nearly $21 billion was its worst on record. While the government is confident of mustering a majority in the lower house of parliament, or Lok Sabha, the vote in the upper house, or Rajya Sabha, will be harder to win. The ruling Congress party and its coalition allies have fewer seats there, reported Reuters. After the house speaker announced plans for the vote, parliament resumed operating normally, if noisily, for the first time in months. The summer session was washed out by opposition protests over sweetheart coal deals with power companies. Critics say allowing foreign players into the $450 billion retail sector will destroy the livelihoods of millions of small shop owners. The government says the move will bring down waste and costs in a country where one-third of fresh produce rots and food Inflation is a persistent worry.

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