Banknifty was ripe for starting an uptrend at yesterday’s close at 12250 and as AptartIndia had assessed in late afternoon seems most acceptable to institutional investors of a range at 5890-6080 it was as taken in F&O positions selling new OI into 6100 calls. Also Hero Moto, though the 1700 Call held the unreasonable premium of 40 as a fair indicator of the opening bump, hero fell as we suggested to below 1650 yesterday and is still weak yesterday. Dimensions picked up the lack of pick up for the 6 month gain and as was probably to be expected from those on the sell side with no clear disclaimers 9 without any insinuations on their professsional interest) Dimensions led the "sane conservatives’ into a group herded by the tiring 10 month stalemate, questioning the likelihood of an uptick equivocating in their assessment a final chance for markets to breakdown before fundamentals recover but still mostly we are looking at an incoherent short pitched squeal in the track from shorts hoping for a bargain bottom to get in on the big market as Indian markets despite their depth remain in the orbit of anybody who is everybody and discourage newer trading strategies. uneven liquidity robably discourages algorihmic strategies in this market too and traders should be more careful if they refer to the available references on detailed, backtested strategies that nevertheless rely on even liquidity and trading interest to ensure profit.
In light of the above successes then, let us forewarn you that we are still clear that even as Food inflation rends down and CPI remains sticky at above 8-9% in the final reckoning, commodity cycl and the rush of credit will show up in the second half of the yar. Technically, though there have been short calls on new economy leaders like Yes Bank also as realty cos and IT buyrs try to recycle old fundamentals based trading ( not really strategies, right?) markets have decided on good enough new research and will keep the bottoms from falling on the Nifty. Economic data spruces up this week after Manufacturing PMI only had good news across Asia in New Export Order bumps( except in Taipei and Vietnam). That means Services PMI jump to 53 today will count despite continuing weakness in order backlogs (in services)and WPI reports, Loan Growth and earlier next week, reports on IIP and manufacturing output ( 8-core?) Also as I would b highlighting in this week’s trends report after the US jobs data report on Friday, the situation is quite unevenly poised at iger economies like Korea and turnaround cases like Japan or those faltering in Turkey but today’s resurgence in the Rupee is probably still not the end of that stock movement across Asia against the Dollar force into an even trade with the Dollar as Yen stays above 100 yen
To wit for this report’s purposes, Indian markets are seeing a rather unthought flurry of shorts at this time, Don Quixotes slashing at the windmills to force the deeper Indian equities into a straight dive in line with the currency but these shorts will probably come unhinged before the time decay for the June series takes over in two weeks. Rate cuts are certainty not just on june 17 but also in july if inflation continues to respond, so as the business investment gap is likely filled up and will show to the good side of policy execution in six months. However the rush of exits show a hardening of exit intentions on the waiting game as Indian performance has been anachronistic in the past locking in hopes of a faster recovery than is likely to unfold into the technicals.
Yes Bank for example is positively buoyant with continuing good business and still has room for more fresh QIPs as well but equity traders want to follow the line of profitbooking to an unseen exit in such a scrip where continuing long term interests like at kotak will reap multiples in rofitsto finance many other such stay at ay investment sin the frontier markets which it may be equatedt o in invstmnt /wealth folios
Not just YesBank, short strategies may have a very quick unprofitable half life even in other banks like HDFC Bank and PNB, or pharma companies like Sun (Not DRL) and Cipla. Those waiting for later to enter Cipla however should start accumulating now and traders especally need to get ina s moves upwards may also end well short of expectations, rupee still bound south as QE expectations brought to normal have nevertheless calendarised the final withdrawal of QE and meanwhile US yields also rush north continuing from last week, bringing to fore the discomfort from bon sell offs for Korea, Japan ad most bulls across global asset classes.