in todays article,i am trying to present my thoughts on fundamental projections of india economy based on techniacal analysis of our indices.before looking at technical position of sensex and nifty,i would like to draw attention to the fact that since mid-july our indices started to deviate from the world indices,especially the asian inidices quite dramatically..i as a student of the great subject of technical analysis have been learning one very very important so called golden rule of the subject ..MARKETS DISCOUNTS THE FUTUE.. i have read this one sentence time and again in almost all the great books on the subject,and i do believe and i always express my thoughts on technical picture keeping this in mind.the deviation of our indices from other markets from mid -july onwards ,now as on yesterday if one observes charts of world market indices, its easy to find out that only 4-5 indices have not broken the july lows,,and india is one of them..this is clearly the net effect of the deviation process started from mid july.now the question is ..that weather this clear strenth shown by indian indices is the indication of great strenth of indian economy as well ???..i am here trying to have an answer of this question using my way of doing technical analysis.their are very very clear two possibilities of where our markets are headed..its not that they are either going to go up or down...the answer of what lies ahead depends upon a trading range breakout and in my opinion the breakout will be coming very soon ,perhaps within next 2 months..
i here would like to note some fundamental developments in last 2 months,
1} oil coming down from 147 usd to less than 100 usd and looking to its weekly charts i think its headed much lower ,atleast in the medium term future, india is among very few countries where lower commodities price ,especially is a boon to its economy....inflation must come down in the medium term..so the interest rates may also have topped out.
2} reliance industries ,the giant of indian companies announced last week the driiling of oil and gas from the KG-BASIN has been started ,and one important ALMOST UNNOTICED ANNOUNCEMENT from mukesh ambani was that within 18 months from the start ril will be able to produce 40% of indias total oil demand per year,,as on today, indian oil import is 1/3 of its total import and should be roughly more than 50 billion usd...{was 44 billion usd in 2006},now just take out 40% out of this amount which will ultimately be REMAINING IN THE COUNTRY ITSELF....i am not an economist but my commonsense suggests me it will have a huge impact.
3} clearance from NSG and neuclear deal with the USA ...it will take more than 5 years for the real impact of this factor ,but the different sorts of news that will follow in coming months ...like a new nuke deal with france or germany or any other country,,,than news that indias old nuke plants actually getting uranium from other countries and news that a certain company announcing building of nuke plant ...and so on ..will surely have positive psychological impact on investors..
4}THE USA in last few months seen quite a few of its major financial companies collapsing starting from bear sterns to fennie and freddy ,to the giant lehman and wamu followed by wachovia.....none of the indian banks have any MAJOR IMPACT OF THIS SORT .this shows atleast upto this day that theres no direct impact of subprime crisis OF USA in india.
these are the few fundamentl changes took placed in last months,their positive impact is yet tobe felt on the markets in a big way..more on technicals today evening.but would love to mention one technical aspect of yesterdays close ,was that yesterday a new quarter was ended,and quarterly charts of SBI,HDFC,ONGC...only a few of more..is showing quarterly bullish canlestick patterns suggesting trend reversal on quarterly basis !!!!!...simply put..only a day after the US markets closed down collapsing the most after 1987..some of the indian major are showing signs of bullishness...quite unbelievable.. but thats true...as the saying goes on charts speaks..we have to hear them...........................
bjnaik.
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