Trading view for 02.03.09- www.Niftyviews.com
Published on Sunday, March 1st, 2009 at 3:10 PMAuthor: niftyviews (39 Articles)
Source : www.Niftyviews.com
Dear Friends,
Nifty ended the truncated week down approx 1%. It will be a mistake if one tries to summarize the news flow in the markets from the above statement. Traders will agree with me that a selected coterie knew about the excise and the service tax deductions before it was announced. I can’t find any other reason for the market to move up before the announcement was made. I believe the occurrence of a General election and the funds needed by a national political party might be a potential answer for the above statement. Let me state here that I have no information whatsoever as to why the statements were made one week after the announcement of the Vote on Accounts. Perhaps the statements of previous Divestment Minister in an Indian Express column aggravated Our Finance Minister. ” Extraordinary economic circumstances merit extraordinary measures,” declares the finance minister in his new Budget, the last one of this government. “Now is the time to take such measures.” And then proceeds not to take them at all!” I don’t have any other answer as to what else could have prompted the Finance Minister to change his stance, all in a week.
Ril has announced the board meeting for merger of its refining subsidiary Rpl with itself. I believe the above action move will make one individual glad. Sitting right in heaven Father Dhirubhai Ambani will be satisfied on the Business acumen of his son Mukesh Ambani. Where else in world will you get an example of such fine business acumen? Ril had invested 2700crs for 270crs shares of Rpl issued at par. It had invested another 5400 crs (20% equity) at 60rs per share for 90crs shares. Thus the total investment of Ril in Rpl was approx 5400+2700=8100 crs for 360 cr shares .It is to be noted here that in January 2008,Ril had sold in open markets 18.04crs shares for 4023crs Rs. Thus the Net investment of Ril till date in Rpl is approx 4077 crs. Even if RIL buys the 5% Chevron stake at 60Rs per share there is no other example of such fine business acumen in recent history. Only a smart businessman can create a 28mtpa refining capacity with an investment of 4023 crs Rs. It is believed that the refinery is one of the most complex refineries in the world with a Nelson Complexity index of 14.0. I do remember that when the news of Ril pruning its stake in Rpl was made public Anil Ambani ADAG group had made the right noises on Corporate Governance issues at Ril. With recent disclosures on the pledging of shares by ADAG one will have to believe the business sense of Mukesh Ambani. Do note that at the heights of the Bull Run MDAG and ADAG had almost identical market capitalization.
Almost a quarterback we had mentioned that Tea might be just in the beginning of a Bull Run. One can visit the Tea Board of India website and take the figures which will complement the said observation. If one broadens his observation a good number of Agri commodities are in beginning of a Bull Run. We have heard the right noises on Sugar for almost a year now. We might as well hear the same on a good number of more agro commodities.
A fortnight back we had mentioned that JPY –USD might breakout above the 94 odd levels and might retrace the entire down move from the 110 to 88 odd levels. Last week Jpy almost touched 99 odd levels. We need to know where the Yen carry trade is moving for the movement of the Hot Money in emerging markets.
A reader mailed me a query last week as to why Nifty is almost every time retracing up near to the support zone of 2662. I have two reasons for the same. Let me tell you here that when markets don’t react to Fundamental news flow one needs to be foolish to make money. My two foolish reasons for the movement of Nifty near to 2662 zone are: -
1. Due to the general elections the Government of the day doesn’t want the markets to breakdown below critical levels as it might accelerate the down move. Do note that the movement of the markets won’t affect the General Indian voters but it might as well affect the sentiment on the economy as a whole.
2. My second foolish reason is that Bears cover their shorts around 2700 odd levels in any down move and are simply trading the range. I don’t pay any heed to the NAV stabilization theory of market players. Anyone who knows the Insurance industry will agree that a Buyer of a ULIP won’t differentiate between a 33% negative YOY returns and a 43% negative YoY returns.
Broadly Nifty is in a trading range and you need to trade the range with tight system based sl .In case the sl triggers one should exit and then think over the same. Nifty RSI is at 45 odd levels and MACD is showing negative divergence as of now. Do comment on what is your take on RIL-RPL merger
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