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.
- Sugar sectors – There are talks of sugar pricing decontrol.
It is looking like sugar will be sweeter than ever for market.
- Housing stocks – Something need to done on housing
front. Stock price before budget suggest that this sector is ready for
another wave of rise.
- Tobacco – I have no great reason to believe but it
seems that FM will not hike tax on cigarette. Hence, positive.
- 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.
- 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.
