India Morning Report: And here is the 5850 test again

ICICI Bank Headquarters
ICICI Bank Headquarters (Photo credit: Wikipedia)

The Nifty lows hit in the week of 22nd July 2012 at around 5100 were a strange time with the upcoming dampening of India’s growth prospects in the fourth estate seen as a future buying opportunity by the Domestic Institutions. That buying then with all the fund flows that have supported the rally since in these 33 weeks could have avoided the loss of opportunity most DIIs faced.

As the markets fell from 5300 in the first week of July 2012, DIIs were waylaid by the extra correction and instead of buying into positive policy announcements have been net sellers for the period on a daily, weekly and monthly basis in most cases. However, even today 5800 is unlikely to be breached and that itself be a cause forWmarkets to be buoyant again.

The Israeli branch of the "State Bank of ...
The Israeli branch of the “State Bank of India” located in Ramat Gan (Photo credit: Wikipedia)

In the meantime Banknifty is back to 11600 again, opening the day with Houlihan and Lokey’s signing up with Kochar’s Avista a small positive for the sector and the sector tracker(Banknifty is an index)  overshadowed by  disciplinary actions as the punitive sting of wealth acquisition (Cobragate) engendered 20 suspensions in the other Kochar’s ICICI Bank, always the worst offender on discipline and the fastest in Covering CYA, and other disciplinary action promised even as HDFC Bank, Axis, SBI and ICICI Bank prepare for the inquisition in their own banking tradition.

The Banknifty was in fact below 11500 , its new support being 11600 barely two weeks ago and any new test of the sectoral and market indices are unlikely to take markets south. India’s 6% growth being protected keeps India the ultimate defensive in this turbulent environment and the growth story is still out there hidden by old IIP series and mismatched inflation data.

Even if Economic data does not improve its semantics, and network analysts from Ashwini and SS (TV18) continue to search for lower levels to improve volatility, those tracking the fundamentals like Mitesh Thakkar and us, would be backing the bull move to the hilt with buys on M&M, Bajaj Auto and IDFC to start with. The energy sector also looks tractable now with petrol price reductions and Diesel hikes and its preponderence of investible large caps would be a veritable fest for Foreign portfolio investors and our own DIIs again.

The range being capped at 6100 and the RBI Mid term on Tuesday make it unlikely however that more interesting times that await us, indeed start off in this week or next and the improved volatility still no good for lasting F&O bets, writers riding the low volumes as one time trades expire in two weeks now.

COAL INDIA is also just being repriced for the new liquidity hitting the markets today down 5%.  The new Euro periphery bailout to Cyprus and the conditions affecting bank depositors (9.9% /6.75% levy) also means a new low for the Euro and thus for the Euro zone as the new liquidity’s wider impact is broken for the next 2-3 months by the fire fighting

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