In this blog post we explore the impact of the Agusta helicopter scam on the Indian stock markets. Find out what NIfty is expected to do in the aftermath of the scam coming to light?
Augusta scam expose has the unintended consequences of damaging the economic revival
The glaring expose by the Time Now channel of the Agusta helicopter scam and the possibility of many political bigwigs in the ruling party being involved will be a big handicap to the Finance Minister P. Chidambaram’s plans for a full blown Dalal Street ‘bulls only party’. The sad part is that this expose will bring more questions than answers and like the coal scam and other scams before it will further impact decision making at the policy level. Beaurocrats and politicians will hit the go slow button which has the unintended consequences of damaging the economic revival and further negating fiscal consolidation.
Mind you this time the Agusta helicopter scam has fool proof evidence of bribes being paid and could crash the ruling party and its dreams for winning the 2014 elections. This is one scam the UPA would wish did not see the light of day. It has virtually opened up the Pandoras box. This could also mean lights out to the bulls party on the bourses. Probably this is the trigger that our Gann analysis of the markets Nifty Futures Sell Off to 5600 on Cards – A Technical View is discounting unconsciously.
Nifty Futures breakdown imminent
Over the last five sessions the Nifty Futures have really held onto the 5880 – 5900 levels supported by the trend line MU. Yesterday it did try to rally but the very trendline XN which provided support the last few months, has now turned resistant and price drifted sharply away from it to 5880 where it has found support from the MU trendline and the 1×2 Gann angle plotted from G. However breakdown from these levels looks imminent and we have forecasted two short term targets based on Fibonacci retracements, price projection techniques and use of Gann angles.
- 5835, which is the 50% retracement level of the XY rally and also gets support from the previous bottom and gap area, and
- 5760 – 5775 which is the 62% retracement level of the XY rally and also the target for 100% range for the trend YU projected from N. Incidently the Gann angle 1×2 drawn from the June 2012 lows also falls in this zone providing a high probability target.
Nifty Futures could crash despite strong global cues from World markets in the medium term
Currently the global markets are experiencing a strong drift upwards due to liquidity and the Asian markets are also expected to rally sharply. Despite the strong global environment for equities we could be the contrarian market given the fact that we are the second most expensive market with low earnings growth expectations amongst the BRIC nations and developed markets. (Nifty Trading Strategy | Overview of Earnings, Valuations and Fund Flows )
Trading Strategy on Nifty Futures- Continue to hold shorts recommended yesterday
We hope you had initiated shorts that we had recommended in our yesterday’s post. We had recommended on the break of 5920 and the markets ended a shade below 5900. We pat ourselves on getting the timing right as currently the market environment is very volatile and extremely difficult to trade. We are targeting 5835 and then 5760 – 5775 from current levels. In case you have bought 5900 Puts, we would suggest writing 5700 Puts during late market hours to protect against time value loss given the weekend holidays. However do not open up a ratio trade.
We would like our readers to bear in mind that the two targets provided are only short term halts on our projection of 5600 levels of Nifty on the downside.
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Disclaimer: The opinions expressed here in are strictly for education purpose only. Before investing please make your own thorough analysis or speak to a qualified Certified Financial Planner / Advisor. We are not in any which way responsible for trading losses arising out of trading decisions taken based on the above.
This blog is the personal blog of Vinit Bolinjkar. The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.
|Vinit Bolinjkar Head of Research, Ventura Securities Ltd|
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