22 March 2015

Technical Analysis of Market Trends - March 2015 :: Edelweiss

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  • Indian benchmark indices showed signs of exhaustion post the recent upmove after forming a swing high of 9119 post RBI’s second rate cut announcement on 4th March, 2015. In our previous report, we anticipated a fresh upmove in the index into all time high territory towards 9100 / 9350 levels. The index entered into a consolidation phase post hitting our first target.
  • The weekly chart of Nifty continues to show higher high and higher low formation confirming that the medium term trend is up. The momentum oscillator continued to stay in positive territory.
  • FED says that it will raise rates after further improvement in labour market and when it is “reasonably confident” that inflation will move back to its 2% objective over the medium term. Fed as expected dropped its pledge to remain “patient” about raising rates in its statement. FED officials forecast slower pace of future rate hikes, slower growth and inflation but continued job gains. The mentioned stance is positive for global equity markets as ECB, BOE and BOJ are into quantitative easing mode.
  • RBI governor taking an aggressive approach has reduced repo rate twice by net 50bps in a quarter and has cut in SLR by 50bps. This shows a commendable approach by RBI to boost demand and economic growth.
  • IIP expanded ~2.6% YoY in January and Current account deficit (CAD) for Q3FY15, came in at ~USD8.2bn (1.6% of GDP), which was lower than expected USD11bn. This data presents a much improved picture of the economy and reinforces the belief that the recovery process is intact, although fragile.
  • Approval of Insurance Bill by cabinet and speedy initiatives on reforms will be key drivers for growth in the long term and active approach by government to implement will build confidence towards investments in India.
  • In the entire corrective move over the last couple of weeks, the Nifty has seen slower declines and loss in momentum. The overall pattern suggests sideways trend for the short term. Considering the above factors, we maintain our “neutral” bias on Nifty. Change of short term trend will be seen on close above 8850 level which will help in resumption of momentum. We continue to remain bullish for the long term and expect the index to move higher towards 9300 levels in the medium term.
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https://www.edelweiss.in/research/Technical-Analysis-of-Market-Trends--March-2015/10005741.html

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