BSE SENSEX closed today 3rd June 2016 at a bullish level of 27000 nearly an eight month high and so also did NIFTY at 8250. Indian equity markets from here on are contingent on the progress of SW Monsoon.
Since our last
post the RBI cut Repo
Rates by another 25 bpts to 6.75 %. The Indian economy grew
at 7.60 % in the
fiscal 2015-16 – highest annual GDP growth rate. The fiscal
situation was also
in control with fiscal deficit at INR 5320.00 ( US $ 79.40
billion ). The next
trigger for the Indian economy and equity markets is the
position of the SW
Monsoon. A normal SW Monsoon is bull trigger for the economy
and the equity
markets. FIIs will pump in money in July and August 2016 –
if the Indian SW
Monsoon is normal or above normal.
We still stick to
our prediction that
global markets will be bearish in 2016 as ^SSE COMPOSITE in
Shanghai will test
2000. Chinese economy is sluggish and huge amount of stimuli
by PBoC has had
little impact on the economy. Brazil continues to contract.
Japan is in
“de-flation”. USA and EU are growing at below 2.50 % per
Gold is the best bet as an investment class for the balance period of calendar 2016.
BRENT Crude Oil
could at best US $
are not posting a detailed report for April 2016. We are waiting
for ^SSE COMPOSITE Index in Shanghai, China to test 2100 or
2000. We predicted that we will see these levels for ^SSE
COMPOSITE in Shanghai in Q1 2016, but we only saw a low level of
2656 in January 2016.
COMPOSITE Index closed today 3/31/2016 at 3000. We still stick
to our prediction that ^SSE COMP will test 2100 or lower at 2000
in April or May 2016
BSE SENSEX closed today 3/2/2106
at 24243 down marginally from the last reference close of 24455. NIFTY also closed
marginally lower at 7369 against the last reference close of
SSE COMP closed today at
2850. We have predicted a level of 2100 or 2000 for ^SSE
COMPOSITE WITHIN Q1 2016. Let us see how does this index move
in the month of March 2016 and ho close are we to our
Union Budget was presented in India on 2/29/2016. Union Budget was pro-farmer and pro-poor man’ budget with high allocation to the sagging Agriculture Sector in India.
We had predicted that global equity markets will test further lows in February 2016 and we were accurate. The following indices tested fresh 52 week lows in the month of February 2016.
1. ^N225 15429
2. ^BSESN 22525
3. ^NSEI 6823
4. FCHI 3951
5. DAX 8773
6. FTSE 5596
7. NASDAQ 4213
8. FTSEMIB 15849
9. IBEX 7862
10. AXJO 4707
These indices after testing their fresh 52 weeks lows rebounded but the rally may not sustain because of the situation in China and low Crude Oil prices.
Gold is bullish as long
as it trades above US $ 1140.00. Spot Gold NY closed today at
$1239.00 pto. The prices tested a high of $ 1260.00 pto in
WTI Crude oil is trading
near a very critical support level of US $ 34.00 pbbl. Last
trade at CME was at US $ 34.80 pbbl for April contract.
If prices of WTI Crude Oil fall back to the recent lows of
about US $ 26.00 pbbl - then expect global equities to test
further lows. Even lower than February 2016 and August 2015
lows. If WTI Crude can sustain US $ 34.00 pbbl level - then it
can rise to US $ 38.00 per bbl. Geopolitical - If there is war
in the Middle East - Iran and Saudi conflict then prices can
zoom to US $ 60.00 pbbl.
China will spook the
global equity markets and Gold prices will zoom to $ 1290.00
to 1320.00 pto. Keep a very close on the Chinese equity
markets and price of Crude Oil.
repeat the perils in the equity markets are linked to economic
situation in China and Crude Oil prices. Investors to keep their
powder dry and buy in deep cuts.
We had mentioned in
our last update that Chinese equity markets will correct and
will play a spoil sport for bulls. ^SSE COMPOSITE corrected from
2900 levels as of 15th January 2016 to test a fresh 52 week low
of 2656 as of today 2/1/2016 ( near 10 % correction ). FIIs have
pulled out approx. US $ 600 billion since the past six months
and the trend continues the same way.
PBoC has devalued
the Yuan further and it is felt that they will let it devalue to
a level of 7.00 Yuan to a US Dollar. The Chinese banks still are
struggling with NPAs. The next support levels to watch for ^SSE
COMPOSITE are : S1
2250 S2 2050 S3 2000
We have mentioned in
our last update that we predict a level of 2000 for ^SSE
COMPOSITE. This level will create a chaos in global equity
markets with a sharp cut.
advised to keep a very close watch on the extremely volatile
^SSE COMPOSITE Index and plan their investment strategy.
Gold was bullish and tested a high of US $ 1130.00 pto NY SPOT on 2/1/2016. Gold will be extremely bullish if it trades above its 200 DMA of US $ 1140.00 pto. Investors can buy Gold if it sustains US $ 1142.00 pto for two weeks or so.
We wish all our investors, associates and partners in India and around the globe a prosperous and profitable 2016 ! This December 2015 post was skipped as we were waiting to see the impact of interest rate hike by US Fed on 16th December 2016. Interest rate hike by US Fed @ 25 bpts had no impact on the US and global financial markets.
January 2016 is delayed as we waiting for the start of correction in global equities. The large correction we were anticipating in Q4 2015 is in fact underway as we post this update. Most equity indices around the globe are near their 52 week lows and a few are now in bear territory as they trade below their 52 week lows.
BSE SENSEX closed today Friday - 1/15/2016 at 24455 down 6.50 % from the last reference close of 26155. NIFTY closed at 7427 breaking the September 2015 low of 7546. We are bearish on Indian equities except Sugar stocks for Q1 2016.
^DJIA, NASDAQ and major European indices are also in the correction mode. They will correct further and re-test lows of August/September 2015.
Crude Oil prices tested 12 year low today. WTI March Futures 2016 tested US $ 29.13 pbbl and BRENT March 2016 Futures tested a low of US $ 29.72 pbbl. This is not a good news for global financial markets and economies. This level of crude over-supply shows a deep malaise in world economic system. Brazil is having a negative GDP growth. Resource based export economies – Russia, Australia, Latin America, Africa and GCC are all having budget deficits. Commodity indices are at record lows with levels close to the year 1991. More pain to come in 2016.
China will spoil the party and the undergoing correction will cause further pain with our target of ^SSE COMP at around 2000 for Q1 2016. ^SSE COMP closed on 1/15/2016 in bear territory at 2884.
A stronger US Dollar may mitigate losses in ^DJIA but this leads to further lower prices of commodities and also Gold. We advise investors to allocate 15 % of funds to Gold, 15 % to Equities and balance in pure debt funds. When the global equity markets bottom out in Q1 ( we will advise ) – investors should re-enter the equity markets.
We advise investors to stay away from investment in Gold till further advise.
We are not publishing a detailed post
for November 2015 as we expect a correction in global equities
lead by ^DJIA in Q4 2015. This was mentioned in our last
The trigger would be the US Debt ceiling - which will need to be hiked by US Congress as we feel that in November or December 2015 - US Fed will be "out of funds". US Fed will request US Congress to raise the Debt ceiling from the current cap of US $ 18.10 trillion.
US Fed would request the US Lawmakers
to hike the Debt ceiling from US $ 18.10 trillion to US $
20.00 trillion till 2020. This is our estimate.
If this Debt ceiling request is indeed made to the US Congress with Q4 2015 - we will witness a serious correction in global equities.
Economic activity is further slowing
down in China and India. All other countries are also having
GDP growth issues. Gold prices have again been hammered down
by speculators on the back of strong US Dollar.
We still stick to our prediction that
US Debt ceiling will be hiked in November or December 2015.
Hence we are bearish on global equity markets including India.
Gold may spike if what we have predicted does happen within Q4
BSE SENSEX closed today on 31st August 2015 at 26283 down 6.52 % from the last month’s reference close of 28115. BSE SENSEX closed below its 200 DMA of 27680. This is bearish signal for the near future. NIFTY closed today at 7971 down about 6.00 % from last month’s reference close.
The levels to watch for BSE SENSEX and NIFTY are as follows :
R1 26680 R2 27180 R3 27680
S1 25800 S2 25000
R1 7810 R2 8080 R3 8230
S1 7800 S2 7580
We were correct in our predictions that Global Equities including Indian Equities will be bearish in the month of August 2015. China and Brazil spoilt the party !
We are reproducing excerpts from our 5th October 2007 – webpage as under :
I am advising investors to exit from the equities. Investors who hold blue chips for “keeps” can sell the same in the ‘F & O’ window so as to avoid erosion of capital. Invest in Gold and/or sit on cash
WE ARE AGAIN ADVISING GLOBAL (INCL – INDIA ) INVESTORS WELL IN ADVANCE THAT THEY SHOULD TRIM THEIR EXPOSURE TO EQUITIES TO AS LOW AS 10.00 % to 15.00 % AND BALANCE SIT TIGHT ON CASH. WE PREDICT A MAJOR CRASH IN GLOBAL EQUITIES IN A PERIOD FROM SEPTEMBER THOUGH DECEMBER 2015.
We predicted a major correction in global equity markets on 5th October 2007 for 2008 and advised investors much in advance. We advised investors to invest in Gold or sit tight on cash. We all know global equity markets corrected by about 25 % in January 2008. Then the markets corrected from July 2008 to September 2008 ( Lehman Bros crisis )
We were also partially correct on Greece political scenario. PM Tsipras resigned after getting Euro 86.00 billion bail out from ECB and EU. IMF did not participate in the third bail out as it feels Greek Debt is unsustainable. There is a political chaos in Athens with no Govt in place till 20th September 2015 when there will be fresh elections. FITCH feels that with the new Govt without Tsipras as PM – what is the guarantee that the new Govt will honour the terms of the Euro 86 billion bail out ? Very difficult to answer this query from FITCH ?
The monthly high for BSE SENSEX and NIFTY were 28316 and 8592 respectively. On 24th August 2015 global equities markets crashed including India. Traders called it a “BLACK MONDAY”. BSE SENSEX tested a intraday low of 25625 and NIFTY tested a low of 7769. At close on 8/24/2015 BSE SENSEX had lost whopping 1624 pts and NIFTY lost 490 pts. SENSEX and NIFTY fell by nearly 5.90 % each at close. It was the worst daily fall in BSE SENSEX and NIFTY since 2008.
Intra day lows on 8/24/2015 and 8/25 for some important indices were as follows :
^N225 = 17747
^HSI = 20,865
CAC 40 = 4230
DAX = 9338
FTSE = 5768
MIB ITALY = 20,158
IBEX SPAIN = 9502
^DJIA = 15,379
S & P 500 = 1867
BSE SENSEX = 25298
NIFTY 50 = 7667
^SSE COMP = 2851
The first trigger for correction in the global markets was Chinese Equity markets. This had worldwide impact. Chinese Govt could not stop the crash in the Chinese equity markets even with direct purchase of equities through PBoC and Pension Funds. The latter is hara-kiri as per our analysis. In mid August PBoC stunned the world by Devaluing Yuan – three times against the US Dollar to fix the peg at 6.3306. The PBoC devalued the Yuan by 4.50% against the US Dollar in three consecutive days. There was a global impact on currencies and commodities including Crude Oil as they further corrected to new lows. The US Dollar soared in August 2015.
^SSE COMP lost another 8.49 % on 8/24/2015 at close- this was the single largest daily fall in ^SSE COMP in its history – to close down by 8.49 %. Black Monday – 24th August 2015. Again ^ SSE COMP closed on 8/25/2015 at 2965 down 7.63 %. There was a panic in China and global equity and commodity markets –serious cuts were witnessed. Details of levels of some important global equity indices testing their multi-year lows is as per above. PBoC panicked to calm down Chinese Equity markets.
Even with the devaluation of Yuan - the ^SSE COMPOSITE was not buoyant. ^SSE COMP breached the important 3000 level and tested an intraday low of - 2851. The PBoC swung into action on 8/27/2015 and announced – cut in interest rate for one year tenure, cut in RR ratio and announced liquidity induction of US $ 200.00 billion (equivalent Yuan ) through two main Chinese Banks. There was calm at the Shanghai and Shenzhen equity markets today as ^SSE COMP closed today at 3206 after recovering from a whopping monthly low of 2851.
authorities may let CNY slip to these levels
of 6.45 to 6.66 to a USD. The might US $ moved
up almost against all currencies in the world
specially currencies of EMs.
On Black Monday (8/24/2015) ^DJIA also tested an intraday low of 15379 – down whopping 1081 pts on 8/24/205, but recovered to close today at 16528 (down 3.94 % ). S & P 500 also corrected to a low of 1867 but recovered to close was 1893 (down 5.48%). NASDAQ COMP tested an intraday low of 4292 but recovered to close at 4526 (down 3.82%).
investors pulled out US $ 190.00 billion in
the last 7 weeks from China, primarily from
the Equity markets. US $ 90.00 billion were
pulled out in July 2015 and in three week
July 2015 – US $ 100.00 billion have been
pulled out by the FIIs. They are a bit
disturbed over authenticity of Chinese data
especially on the annual GDP growth figures.
China announced its GDP growth for Q2 2105 at
7.5 % but global economists feel that China is
growing only at 4.00 to 5.00 % only. Plus the
devaluation of Yuan gives an indication of
pressures in China.
major European Equity markets fell by about
5.00 % at close ( CAC, DAX and FTSE ) on
8/24/2015. Europe STOXX was down by 7.33 %.
These indices recovered at close today.
Athens opened for trading on 8/4/2015 and the
index crashed to a new decade low of 615
and was down 22.93 % at the opening of trade
after a five week break till the close of the
trading hours. This was the biggest daily fall
in GD.AT after Greece became a member of EEC.
GD.AT corrected again on 8/24/2015 by 10.67 %
to a multi year low of -568 but
recovered to close at 624 today.
South African Rand crashed to 13.80 to a USD on 8/24/2015. Rand was worst performing currency in EMs after Brazilian Real. Brazilian Real was hit today to test a low of 3.6823 level against the US Dollar -which is a multi year low. Brazil is now officially in recession. There is a threat to its Sovereign Bond rating be cut to junk status by global rating agencies as Brazil faces a tough fiscal imbalance. Plus there is the China effect also in play – as Brazil exports iron ore and other metal ores to China. Chinese imports are down as its economy is slowing down.
tested to a low of 66.7325 of closed at 66.645
on 8/21/2015. This is fresh one year low for
the Indian rupee. INR recovered to close today
Gold moved up to USD 1171.10 pto at NY Spot on 8/24/2015. This was a 5 week high. Gold closed today at US $ 1135.40 up 3.58 % from the last month’s reference close of US $ 1096.20 pto. We remain bearish for Gold in September. Unless Gold starts to trade above US $ 1183.00 pto it will be bearish. Hence Gold should be bought only is it sustains US $ 1183.00 pto
Crude Oil prices corrected about 27.00 % in August 2015.
ENT Crude Oil February 2015 futures tested a six year low of $ 45.19 pbbl on 1/13/2015 at London ICE – lowest since April 2009. October 2015 futures tested a low of $ 42.23 at ICE on 8/24/2015. BRENT can test a level of US $ 40.00 pbbl in the next few months. BRENT October futures closed today at 53.97 pbbl
WTI Crude Oil April 2015 futures tested
a six year low of $ 42.51 pbbl on
3/18/2015. This was the first time since April
2009 that WTI Crude Oil futures were trading
at levels of below $ 50.00 pbbl. March 2015
levels were breached in August 2015. October
2015 futures tested a low of $ 37.75 ppbl
at CME on 8/24/2015. A fresh 6 year low. WTI
and BRENT have fallen for 8 straight weeks in
the international markets – at CME and ICE
respectively. This is biggest losing streak
since 1986. WTI can test a level of US $
35.00 pbbl in the next few months. October
2015 futures closed today at 47.30 pbbl
corporate sector had one of its worst years in
the fiscal year that ended in March.
Industrial output grew by a modest 3.2%
year-on-year in the quarter through June 30
compared with 4.5% in the same period last
year. GDP data for the quarter is due Aug. 31,
but on Aug. 17, Moody’s Investors Service
reduced its GDP growth forecast for the
current fiscal year to 7% from 7.5%, citing a
near 10 % deficient SW Monsoon season and
slowing momentum for reform. The Indian Govt
announced its GDP growth figures Q1 FY2016 at
We are again cautioning global investors to take profits home in equities or even book losses in equities and sit on cash. There will be a “tsunami” in the global equities and commodity markets in September through December 2015. The above lows mentioned in the update will be breached and one will see much lower levels. We will advise accordingly when to start buying equities.
are advised to square their long positions on
all commodities including Gold. We will advise
via special updates when to start buying
equity markets (including India) will correct
savagely from 1st
September 2015 to 14th September 2015 and so
also commodities. Hard Commodities are already
near their six or seven years low. Gold may
rally in the said period but will again be
hammered down by global bear cartel.
PLEASE BE PREPARED TO SEE ANOTHER BLACK MONDAY ON 14th SEPTEMBER 2015. TRADERS TO TAKE POSITIONS ACCORDINGLY ON THE FORTH COMING TSUNAMI.
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