28 February 2013: Nifty Elliott wave analysis: It will take DOW effect in opening minutes and then it goes in the hand of Mr. P. Chidambram. Have an eye on Union Budget 2013-14. Technical support is at 5748!!!

You must read previous articles and watch the given chart carefully to understand this article completely.

For 28 February 2013: -

On 27 February 2013, FII bought INR 106.36 crs and DII bought INR 24.70 crs.

This is not surprising at all. A day before budget, both FII and DII came with buy figures. I always believe that it can only give an idea about money flow, not the market direction.

Technical charts say, it has formed double bottom at 5748. Then, we have seen a little bounce. It is good enough to buy? I cannot conclude this with one day of rise and that’s a day before budget. I can sense that one need to prepare for wild trading day.

I never trade budget day. I will follow my rules even this time and I will not participate. It is better to wait-watch and then makes some study to conclude. Remember, it is not easy to understand politician’s words just by listening. Look at rail budget!!!

Now, the most important, what is happening in global markets? It seems that USA forget Monday’s drop. Dow Jones closed at 14075 which are within reach of new all-time high. I am against the believe of US market. I do not think that whatever Ben Barnanke is doing can help USA. He is now saying that stimulus will continue till 2016. Well, we need to focus on Union Budget in India only.

No one can say anything perfectly before Mr. FM speak out. For stock market, I have just one sentence, “What looks good for vote can never be good for economy”.  With this budget, our nation will enter in the heat of election speculation. Take a note that half of India will be under election in the next half of year.

I work out to some extent about sector’s demand from budget and its impact.

1. Sugar sectors – There are talks of sugar pricing decontrol. It is looking like sugar will be sweeter than ever for market.
2. Housing stocks – Something need to done on housing front. Stock price before budget suggest that this sector is ready for another wave of rise.
3. Tobacco – I have no great reason to believe but it seems that FM will not hike tax on cigarette. Hence, positive.
4. Automobile stocks – This is my single biggest concern. You can expect hike in excise duty. I heard so many things in past few weeks. It may have negative impact as FM may try to find an instrument to bring some money for government.   
5. Banks – It is fair to say that banking stocks are very nervous before budget. There must be something which can disappoint.

Biggest challenge is control fiscal deficit but it is not possible if FM comes with food security bill. Do remember, we have derivative expiry too. Charts are saying that nothing can bring it 5900 on Nifty but nothing is impossible on budget day.

Strategy for Nifty February future – I never trade budget day so I will not act any anything. You cannot able to place stop loss on any side. Charts are suggesting that it may open near 5840 backed by Dow Jones. We can see some selling just before budget speech from 5840+. It may try to stabilize near 5810-5800 only before budget speech. Then, Nifty future will dance on Mr. FM words. I will update more during budget hours on my official web.    

S&P 500 – What Mr. Ben Barnanke wants to do, he cannot do. What he is doing, he is not wanting. Firstly, he gave a hint for roll back of QE and market reacted violently. He was not wanting fall in stock price because it is his agenda from years. Then, he said for stimulus to continue till 2016. He took out reasons for Monday’s selling and market goes back to high. S&P is still 1% away from its recent peak while Dow Jones goes higher. I am still saying that technical charts are not giving me reasons to buy above 1500 on S&P.