Technical view by Nooresh

GDP at 5.3% Nifty reacts 10-15 points. This market needs some big reason to move.




In the last 9-10 months since August 2011 we have been in a range of 16000-17300 most of the times or 4700-5200 apart from a move in January which was a very good period and well timed.


Today there was a GDP data number which came out to 5.3% which is a pathetic number but as a trader market reaction is 15 points on Nifty !!. It seems there is no interest in the market to take a bet on either side.

Globally markets may be down recently but they are way better then they were in August-December.

A petrol price hike lead to some bit of jump but there is hardly any negative reaction to GDP as of now maybe till end of day it could be a different story.


USD-INR has surprised with a move beyond 55. The co-relation is gone. My expectation was we may see a bigger crack in Sensex if USD-INR breaks 55. Now USD-INR is into new territory and there can be no technical resistance levels but its now difficult to gauge the reaction to Equity markets.


Basically its a difficult to take big trades and one has to reverse very fast and risk-rewards are 1:1 or 1: 1:1:1.5. So one needs to be very right and quick.


But from what i see a slew of good news can change the whole sentiment suddenly and i would be betting on that with 5.3% gdp , 56 usd-inr, market cap to gdp ratio at 60% , 5 yrs of no cagr seems the worst is not far and sentiments is at the worst in last 6 years. So all one can do is digest the pain and be patient for the gain.


Disclosure: Totally invested and seeing a 10% cut :( and might have to see up to 15% or more also. Will be going leveraged if we see some more drop.

Article by Nooresh Merani

Nooresh has written 2532 articles.

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{ 2 comments… add one }
  • bhanu May 31, 2012, 14:20

    This thought is plaguing me even since , we always look into future based on what has happened in the past. What if we are writing a new history, new averages? I mean to say it is always possible that this time we may be doing something totally different in equity market. We also analyze post facto and in retro anything can be rationalized. Let me give an example. A student scores 60% since his first class averaging 60% till his 10th standard. in next 2 years that is 11th and 12th standard he averages 45%, which averages 57.5, is it correct to say his life best is average 57.5 and he is a second grade student?
    Or we say that he was first grade student and has now averaging third grade student in last 2 years?
    ok. What I am trying to say is if technical analysis is based on past and historical data then how does it predict something new that is happening now in present circumstances? Another issues with decision made based on past historical data is it will force you do act with the same bias.
    Again my simple question is how do we know that something new is happening/trend changing ?
    I like you analysis and most of the time you also speak out your gut feeling and common sense.


    • Nooresh May 31, 2012, 23:19

      hi Bhanu,

      One of the principles of technical analysis is History repeats itself. So we had a scam in 1992/2000 and 2008. Ponzis continuing for decades. Markets is a mix of sentiments of a huge no of humans and that tends to repeat. Technical Analysis just tries to increase the probability of making money and losing less.

      Well we just take an exit call when things break down and then dont think why. So a cash call was initiated in early part of 2011 and cash deploy in 2011 end worked well. At the same time a buy at 5100 a bit early has hurt. So you gain some and lose some.


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