Nifty may slip towards 3900 in medium term

Nifty may slip towards 3900 in medium term

Emkay Global Financial Services Reliance Money Nirmal Bang

Pick your online broker wisely D-St's expectations from the Budget Top 5 picks of the day Mid-term picks of the day MUMBAI: Benchmarks indices are poised near psychological support levels following correction in the global markets in the wake of debt concerns in Europe and jobless claims in the US. Technical analysts hold bearish view on the market and expect Nifty to slip below 4000 levels in the medium term. PA Rajan, technical analyst, MF Global while speaking to ET Now said that the correction is not over and Nifty may slip to 3900 levels. “The correction is not over yet. Nifty is more volatile than other indices as its high-beta index. Nifty may find support at 4600 in the short-term but it may hit 3900 in the medium term,” Rajan added. “We are bearish on the market and see Nifty slipping to 3800-4200 in next three-six months time. Investors should book profits and stay in cash while traders should go short on the market,” said, Sarvendra Srivastava, technical strategist, Emkay Global Financial Services. “Till we don’t see consolidation around support levels of 4540, the Nifty is likely to slip lower and lower depending on the global economic situation. For positive momentum, Nifty should hold above 4960 levels,” said Bhavin Mehta, technical analyst, Reliance Money. However, Michael Pillai, technical analyst, Nirmal Bang, is not expecting a major downturn from 4710 levels. “Nifty trend is weak as the global sentiments are not in favour of the stock markets. If we look at the Indian markets, Nifty has fallen by only 11 per cent from their recent high of 5310 but technically trading near to its oversold region as the oscillator RSI is at 29 on the daily chart. In the short term we don’t see a major downtrend from this current level of 4,710 and chances are that we could bounce back from the level of 4,660 / 4,580 levels. And to the extreme the fall could extend upto 4,410 / 4,140 if any major negative news flows from the Asian or Western countries or if the Indian budget is not encouraging. In the near term strong resistance is seen around 4830 / 4950 levels and this downtrend could reverse only if Nifty holds above its 50-day moving average,” Pillai said.

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Biggest bubble in history is growing every day


Real estate, stocks, credit. China sure has its share of bubbles. Oddly, little attention is paid to the biggest one of all. China’s currency reserves grew by more than the gross domestic product of Norway in 2009. Its $2.4 trillion of reserves is a bubble all its own, one growing before our eyes with nary a peep out of those searching for the next big one. The reserve bubble is actually an Asia-wide phenomenon. And we should stop viewing this monetary arms race as a source of strength. Here are three reasons why it’s fast becoming a bigger liability than policy makers say publicly.

One, it’s a massive and growing pyramid scheme. The issue has reached new levels of absurdity with traders buzzing about crisis-plagued Greece seeking a Chinese bailout. After all, if economies were for sale, China could use the $453 billion of reserves it amassed last year to buy Greece and Vietnam and have enough left over for Mongolia. Countries such as the US used to woo the Bill Gross’s of the world to buy their debt. Now, they are wooing governments. Gross, who runs the world’s biggest mutual fund at Pacific Investment Management, is still plenty important to officials in Washington. He’s just not as vital as the continued patronage of state asset managers in places like Beijing.

You have to wonder what folks at the International Monetary Fund are thinking these days. Their aid packages tend to come with messy requirements, such as ‘get your economy in order’. China’s are merely about scoring resources or geopolitical points. We have already seen China throw lifelines to Wall Street giants, including Morgan Stanley. Entire countries seem like the natural next step.

China’s huge arsenal of reserves is increasing its global influence. The trouble is, China is trapped in an arrangement of its own making. As China and other Asian nations buy more and more US treasuries, it becomes harder to unload them without causing huge capital losses. And so they keep adding to them. “This is a titanically large foreign-exchange trade,” says David Simmonds, London-based analyst at Royal Bank of Scotland Group. “It’s the biggest one history has ever seen and there’s nowhere for these reserves to go.”

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China aims to diversify out of US treasuries into other assets and commodities. The question that governments are grappling with is which markets are deep enough to absorb China’s riches? Gold? Oil? Euro-area debt? The Madoff family’s next Ponzi scheme?

The challenge for China alone is like trying to park an Airbus A-380 super-jumbo in a Volkswagen. Like all pyramid schemes, there’s no easy end in sight and things could end badly. If the dollar collapses, panicked selling by central banks looking to limit losses would shake global markets more than the US credit crisis has.

Two, reserves are dead money. The wisdom of currency stockpiling came from the chaos of 1997. Speculators sensed authorities in Thailand were sitting on few reserves, and they were right. Their attack on the Thai baht set the stage for an Asian meltdown. Governments spent the 2000s determined not to repeat the mistake.


Src: ET