Sunday, June 21, 2015

Greece still holds the Key

The markets rallied sharply by about 3 pc this week for the Nifty to close at 8224. This rise had certain strange characteristics. Let us see what these are and what could be the future probable path of the Nifty.

1. The monsoons worries were swept aside and in fact we have received 11 pc surplus rain till about 18th June. A few more weeks of this rain and the monsoon worries will get swept aside.

2. The Greek drama continues and it looks like the drama will be played out till last possible minute. There is a EU Heads summit on Monday where we would get further clues on the market action.

3. All rises in the Indian Markets have always been traditionally on the back of FII flows. This almost 300 point rally has been on the back of FII outflows. FIIs have sold for the past 12-13 sessions consecutively with buying maybe for a couple of sessions in between. On the back of outflows of Rs 1900 crores for May, June has seen about 5500 crores outflows so far.

The markets closed at 8181 on April 30th. So, the markets now at 8224 have absorbed 7400 crores or almost 1.2 billion USD outflows.

4. The monsoon session of the Parliament is only after July 20th and the results also will start flowing in only after 12th July. So next for the next 3 weeks there are no major triggers for the markets except the Greek drama.

5. Technically, 8350 becomes a very critical level both from retracement levels perspective as well as trend line levels.

A weekly close above 8350 would signal the end of ongoing correction. The markets may oscillate in the 8100-8400 range for few more weeks before see a clear move on the either side of the range.


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