NIFTY FUTURE TECHNICAL VIEW FOR AUGUST'12

LOOKS GOOD ABOVE ( BUY ABOVE ) >>>>>5194.40

CROSS & TRADE ABOVE 5194.40 , THEN IT WILL TOUCH

5220.00-------5255.00------5280.00-------5340.00-------5374.40--------5406.70--------5431.30-------5455--------5494.90--------5535-----5570-----5594----5619-----5641



LOOKS WEAK BELOW ( SELL BELOW ) <<<<< 5160.20

BREAK & TRADE BELOW 5160.20 , THEN IT WILL TOUCH

5120-----5068.80----5035.40-----5009.90------4966.40------4915.20-------4864.00----------4815.40---------4786.00--------4746.20--------4718.10-------4669.40





Disclaimer :



Investing in any equity is risky.Our recommendations are based on reliable sources believed to be true & correct, and also is technical analysis based on & conceived from charts.The information provided is not guaranteed as to accuracy or completeness. All investors should consult a qualified professional before trading any stock or Investors should take their own decisions. We assume no responsibility for any transactions undertaken by them. I am not liable or responsible for any legal or financial losses made by anybody.

BANK NIFTY TECHNICAL VIEW FOR AUGUST' 2012

LOOKS GOOD ABOVE ( BUY ABOVE ) >>>>> 10285.00

CROSS & TRADE ABOVE 10285.00 , THEN IT WILL TOUCH

10359------10423-------10523-------10613--------10667------10748------10801------10848------10925----------11084------11170-------11248-----11316------11401.90-------11522.00



LOOKS WEAK BELOW ( SELL BELOW ) <<<<< 10224.00

BREAK & TRADE BELOW 10224.00 , THEN IT WILL TOUCH

10187.90------10139.00---------10065.15--------9956.10--------9875.50-------9822.90-------9749.50----------9701.20--------9581.15--------9520--------9460.25--------9370.30-------9319.60---------9275.10-----9163.90





Disclaimer :

Investing in any equity is risky.Our recommendations are based on reliable sources believed to be true & correct, and also is technical analysis based on & conceived from charts.The information provided is not guaranteed as to accuracy or completeness. All investors should consult a qualified professional before trading any stock or Investors should take their own decisions. We assume no responsibility for any transactions undertaken by them. I am not liable or responsible for any legal or financial losses made by anybody.

Subbarao’s credibility rises with firm policy stance

The Reserve Bank of India’s (RBI) credibility appears to have risen among global peers as the central bank stuck to its guns and refused to reduce the benchmark repo rate on Tuesday, 31 July, opting instead to target inflation management as its chief priority.

Experts and RBI-watchers have lauded Governor Duvvuri Subbarao’s move of keeping rates unchanged, pointing to the ‘nail-biting’ global conditions which have compelled other central banks to cut rates. RBI, on the other hand, sent a signal by cutting the statutory liquidity ratio (SLR), the proportion of deposits banks park in government bonds, by one percentage point to 23 percent so that banks which are short on liquidity can lend to productive sectors.

Says Leif Eskesen, Chief Economist for India & ASEAN at HSBC: “Nail-biting global economic conditions have compelled central banks in advanced and emerging economies to cut rates, and moderate domestic economic growth has drummed up pressures on the RBI to act. However, the RBI kept cool and stayed focused on its objective, which helps cement its credibility.”

Most experts agree that maintaining status quo was a very tough decision for Subbarao given the circumstances building all around. But most agree that preserving the little ammo it has left at its disposal was the right thing for the RBI to do at this stage, should the situation get worse owing to a mix of global and domestic reasons. Acting right now, by cutting rates after it cut rates by a deep 50 basis points in April, could be premature.

Overall, the situation for the RBI is far from comfortable. The central bank has made it clear that the slowdown has little to do with interest rates being where they are, and more to do with supply-side constraints, thanks to lack of progress on structural reforms. The investment cycle has, therefore, taken a hit. Inflation remains a clear and present danger, and RBI is unwilling to risk that by another round of rate cuts.

Says Eskesen: “On the inflation front, the RBI has plenty to worry about in addition to the tight capacity associated with the supply-led slowdown in growth. The depreciated exchange rate is loosening overall financial conditions and countering the decline in oil prices, which has reversed a bit recently. Hikes in diesel and kerosene prices are waiting in the wings, and the deficient monsoons are another headache for the RBI, given the potential implications for headline inflation and inflation expectations.”

That inflation and growth are both going to be different from earlier expectations is amply borne out by the fact that the RBI has altered both projections – bringing down growth to 6.5 percent from the earlier 7.3 percent, and increasing inflation from the earlier 6.5 percent to 7 percent.

The bank’s hopes of fiscal adjustment and consolidation have also not come about. There’s no clarity on when diesel prices will be hiked and the subsidy burden continues to be a huge worry. Big-ticket structural reforms are still nowhere in sight. RBI, therefore, has opted to maintain status quo on rates while giving banks some leeway on liquidity

Chidambaram set to be FM; 3 portfolio changes likely

The government has sent the notification on cabinet portfolio changes to the President house and a formal announcement is expected soon, reports CNBC-TV18's Shereen Bhan quoting sources.

Since Pranab Mukherjee resigned from his post to fight the Presidential election, the Prime Minister was handling the finance portfolio as well. That vacancy has made the portfolio rejig necessary.

It is now indeed confirmed that P Chidambaram is going to be moving back to North Block. This is going to be good news as far as the market I concerned. Chidambaram is seen as an investor-friendly and a progressive reformist. So, it is going to be interesting to see what he can really do in this tenure as finance minister.

In his place at the home ministry, we are going to see Sushil Kumar Shinde, the former Maharashtra chief minister, now the Power Minister coming in and taking over from Chidambaram. That is not going to go down particularly well because Sushil Kumar Shinde has been anything, but short of a disappointment as the Power Minister.

The power ministry under Shinde has been an absolute disaster. We have seen what has happened over the last 24 hours with the northern grid collapsing, not once, but twice. In fact, today even the eastern grid collapsed. We certainly hope that his tenure at the home ministry is at least better than what he delivered as the power minister.

Sources also say that Corporate Affairs Minister Veerappa Moily is going to be taking additional charge of the power ministry. He will be taking over from Sushil Kumar Shinde and holding the power portfolio additionally, but sources also say that a full-time power minister could be appointed shortly, but at this point these are the three changes.

It is learnt that once the Parliament actually resume it is going to be very difficult for the PM to be taking questions and attending to the business of the finance minister specially given the economic conditions at this point in time and hence the government thought it was prudent to move Chidambaram back to the finance ministry.

Oil companies flayed for hike in petrol price hike

Bihar today accused oil companies for increasing the prices of petrol products without consulting the state government on irrecoverable taxes.

"The oil companies have not given any information to the state government about the irrecoverable taxes before increasing the petrol prices," Bihar Deputy Chief Minister Sushil Kumar Modi told reporters here.

He said the state commercial taxes department had sought the details about it from the oil companies.

Besides, there was no change in state government imposed entry tax, VAT and surcharge on petroleum products, he said.

Now, there is one per cent VAT on LPG, 24.5% on petrol, 18% on diesel and 5% on kerosene, he said.

The deputy chief minister said a meeting would be held under the chairmanship of Chief Minister Nitish Kumar soon after receiving responses of the oil companies.

Half of India powerless; Northern, Eastern grids collapse

The Northern and Eastern Grids tripped again on Tuesday, leading to power failure in as many as 14 states of the country affecting hundreds of millions of people. Power supply was disrupted in Jammu and Kashmir, Himachal Pradesh, Punjab, Uttarakhand, Haryana, Delhi, Bihar, Uttar Pradesh, Rajasthan, West Bengal, Jharkhand, Odisha, Assam and Sikkim.

The power crisis led to immediate shut-down of Delhi Metro lines in the national capital, while a host of other services including Railways were also affected."It is wrong to allege that UP is overdrawing power," says UP Power Corporation CMD AP Mishra.

The entire north-east region is unaffected. Sikkim, Assam too unaffected, contrary to earlier reports. "The Bhakra Nangal plant has been started and we are drawing hydel power for the time being for Punjab," said Union power minister Sushil Kumar Shinde. "The Western Grid has not been impacted, though there has been overdrawing from the western grid, said general manger, Western Grid.

"The North-Eastern Grid also affected," say officials."The Kolkata Metro is running normal, as supply comes from CAC power supply," stated Pratyush, DGM, Kolkata Metro. "We will try to restore services of Delhi Metro and the Railways first," said Sushil Kumar Shinde

In the South-Eastern Railways, divisions including Kharargpur, Chakradharpur, Ranchi and Agra are affected. Since South-Eastern Railway is completely electrified and not dependent on diesel power, the situation is really bad in this region. Eighty passenger trains of the South-Eastern Railway are stranded. Fourteen trains of Agra division are stranded.

The states affected are Jammu and Kashmir, Himachal Pradesh, Punjab, Uttarakhand, Haryana, Delhi, Bihar, Uttar Pradesh, Rajasthan, West Bengal, Jharkhand, Odisha, Assam and Sikkim. "Hydel power is being sourced for power to Punjab and the government is trying to make alternate arrangements," Shinde.

Almost 500 trains of the Indian Railways are stuck. Six zones including Northern Railway, Eastern Railway and North-Central Railway are affected," said Anil Saxena, CPRO, Indain Railways. Train services have been halted in Asansol, Sealdah and Howrah divisions in West Bengal after failure of the Eastern grid at 1:00 pm, announced the Indian Railways.

The Delhi Police have realeased an advisory to the public avoid the Connaught Place area.The Central Electricity Regulatory Commission issued an order on July 30 to curb overdrawing by Northern Grid member states. All heads of state power transmission companies of the Northern Grid have been summoned on August 14.

RBI keeps policy rates unchanged, SLR cut to 23%

The Reserve Bank of India (RBI) in its April-June quarter monetary policy on Tuesday left the key policy rate unchanged. However, it cut the statutory liquidity ratio (SLR) to 23% from 24% earlier. This policy action was by and large in-line with CNBC-TV18 poll. Now, the repo rate or the rate at which banks borrow from RBI remained at 8% while the reverse repo rate at which, the banks lend to RBI stood at 7%.

SLR is the percentage of total deposits that lenders need to invest in the government bonds. The reduction is aimed at ensuring free flow of credit growth through enough liquidity in the system.

Cash Reserve Ratio or CRR is the portion of total deposits that banks are required to keep with the central bank also remained unchanged.

"Keeping in view the slowdown in growth, the Reserve Bank frontloaded
the policy rate reduction in April with a cut of 50 basis points. Subsequent
developments suggested that even as growth moderated, inflation remained
sticky. Keeping in view the heightening risks to inflation, the Reserve Bank decided to pause in the Mid-Quarter Review (MQR) of June 2012, even in the face of slowing growth," D Subbarao, the governor of RBI said in the first quarter policy statement.

After a gap of nearly three years, RBI had last cut policy rate by 50 bps in annual monetary policy announced on April 17.

Meanwhile, the central bank raised the baseline projection of WPI based inflation to 7% for March, 2013 as against the earlier projection of 6.50%. This clearly suggests that RBI may not slash policy rates in a hurry unless the rate of inflation tapers down.

"The deficient and uneven monsoon performance so far will have an adverse impact on food inflation. Notwithstanding some moderation, international crude oil prices remain elevated. This, coupled with the pass-through of rupee depreciation to import prices, continues to put upward pressure on domestic fuel price inflation," RBI said in the first quarter review of the credit policy 2012-13.

The lower-than-expectated rainfall also led to a moderation of GDP growth outlook. RBI revised its growth projection to 6.5% from 7.3% as predicted in the April policy.

Interestingly, India is ranked lowest in rating among all BRIC countries. In its macroeconomic policy, RBI alerted the government of the need to revive investment climate. This can be done through policy actions like removal of bottlenecks in infrastructure sector, liberal foreign direct investment norms and so on.

"The primary focus of monetary policy remains inflation control in order
to secure a sustainable growth path over the medium-term. While monetary
actions over the past two years may have contributed to the growth slowdown an unavoidable consequence several other factors have played a significant role. In the current circumstances, lowering
policy rates will only aggravate inflationary impulses without necessarily
stimulating growth," the note policy said.

Multiple time frame analysis for trading Nifty future

Today I am writing about multiple time frame analysis for trading nifty future. Traders are always classified into 3 categories:

Intraday trader
Swing trader
Positional trader

Traders who prefer to trade on daily basis (intraday trade) must look for the trend on Hourly chart and take their entry positions on 15 minute time frame. Entries can be timed by using momentum indicators in the direction of trend.

For swing trading, traders must watch daily chart for trend and time their entries on 4 hour chart also 1 hour chart can be used to get a better entry point. Even I am a swing trader and I use slow stochastic indicator to taking entries.

Positional traders look for trend on weekly chart and then take your entries based on daily chart, also positional traders can move to 4hour for much better bargain entry. Trader can use free realtime datafeeder for getting live nifty and stocks data to amibroker. Look at the below cheat sheet:

A Beginner's Guide To Hedging

What Is Hedging?

The best way to understand hedging is to think of it as insurance. When people decide to hedge, they are insuring themselves against a negative event. This doesn't prevent a negative event from happening, but if it does happen and you're properly hedged, the impact of the event is reduced. So, hedging occurs almost everywhere, and we see it everyday. For example, if you buy house insurance, you are hedging yourself against fires, break-ins or other unforeseen disasters.

Portfolio managers, individual investors and corporations use hedging techniques to reduce their exposure to various risks. In financial markets, however, hedging becomes more complicated than simply paying an insurance company a fee every year. Hedging against investment risk means strategically using instruments in the market to offset the risk of any adverse price movements. In other words, investors hedge one investment by making another.

Technically, to hedge you would invest in two securities with negative correlations. Of course, nothing in this world is free, so you still have to pay for this type of insurance in one form or another.
Although some of us may fantasize about a world where profit potentials are limitless but also risk free, hedging can't help us escape the hard reality of the risk-return tr adeoff. A reduction in risk will always mean a reduction in potential profits. So, hedging, for the most part, is a technique not by which you will make money but by which you can reduce potential loss. If the investment you are hedging against makes money, you will have typically reduced the profit that you could have made, and if the investment loses money, your hedge, if successful, will reduce that loss.

How Do Investors Hedge?

Hedging techniques generally involve the use of complicated financial instruments known as derivat ives, the two most common of which are options and futures. We're not going to get into the nitty-gritty of describing how these instruments work, but for now just keep in mind that with these instruments you can develop trading strategies where a loss in one investment is offset by a gain in a derivative.

Let's see how this works with an example. Say you own shares of Educomp. Although you believe in this company for the long run, you are a little worried about some short-term losses in the education industry. To protect yourself from a fall in Educomp you can buy a put option on the company, which gives you the right to sell Educomp at a specific price (strike price). This strategy is known as a married put. If your stock price tumbles below the strike price, these losses will be offset by gains in the put option.

Keep in mind that because there are so many different types of options and futures contracts an investor can hedge against nearly anything, whether a stock, commodity price, interest rate and currency - investors can even hedge against the weather.

The Downside

Every hedge has a cost, so before you decide to use hedging, you must ask yourself if the benefits received from it justify the expense. Remember, the goal of hedging isn't to make money but to protect from losses. The cost of the hedge - whether it is the cost of an option or lost profits from being on the wrong side of a futures contract - cannot be avoided. This is the price you have to pay to avoid uncertainty.
We've been comparing hedging versus insurance, but we should emphasize that insurance is far more precise than hedging. With insurance, you are completely compensated for your loss (usually minus a deductible). Hedging a portfolio isn't a perfect science and things can go wrong. Although risk managers are always aiming for the perfect hedge, it is difficult to achieve in practice.

What Hedging Means to You

The majority of investors will never trade a derivative contract in their life. In fact most buy-and-hold investors ignore short-term fluctuation altogether. For these investors there is little point in engaging in hedging because they let their investments grow with the overall market.

So why learn about hedging?

Even if you never hedge for your own portfolio you should understand how it works because many big companies and investment funds will hedge in some form. Oil companies, for example, might hedge against the price of oil while an international mutual fund might hedge against fluctuations in foreign exchange rates. An understanding of hedging will help you to comprehend and analyze these investments.

Conclusion

Risk is an essential yet precarious element of investing. Regardless of what kind of investor one aims to be, having a basic knowledge of hedging strategies will lead to better awareness of how investors and companies work to protect themselves. Whether or not you decide to start practicing the intricate uses of derivatives, learning about how hedging works will help advance your understanding the market, which will always help you be a better investor.


NOTE: I found it somewhere written and thought it would be useful for all of us.

what is happening in the Eurozone or the Greece ???

Imagine a typical Indian joint family. The grandparents, 5 brothers, their respective wives, grand children etc etc. Typically every member in the family earns and contributes towards the house hold expenses.

Consider a situation wherein, the eldest brother is the highest earner in the family and the youngest is the worst spender. The youngest brother lets says earns Rs.10,000/- but mismanages his finances to a large extent maybe because of his lifestyle…lets say his monthly expenses are at Rs.25,000/-. This means he is spending 150% of what he actually earns. In such a situation, what would happen to the younger brother over a period of time? It is obvious that the younger brother would borrow more and more to support his lifestyle and eventually the rate of interest on his borrowed amount bec...omes enormous.

One fine day, creditors will be at the door step asking for their money back. Now once creditors come knocking at the door, the problem is no longer the younger brothers anymore. It’s the problem of the entire family. What would the family do?
There are few solutions for this problem….

Solution 1) Ask the younger brother to pay up.
Problem with this is that he does not have any money…he will probably borrow fresh money to repay his current debt. But the new creditors will know his lousy past hence would expect a much higher interest rate to lend to this risky person.

Solution 2) The family together comes to a consensus and bails out the younger brother.
Problem with this is that the eldest brother and his family will get the biggest hit as they are the major economic contributors to the family. Even if the elder brother’s family agrees to bail out the younger brother, then they would expect the younger brother to change his lifestyle and lead a more controlled lifestyle. In other words they would expect the younger brother to adopt austerity measures.

Solution 3) They can simply ask the younger brother to leave the family and deal for himself. This solution has a social issue. The family will no longer be respected in the society and they may also set a bad example to other joint families.

Tricky situation isn’t it? Each solution poses a new problem. How do you deal with it?

Well, this is exactly what is happening in the Eurozone. Let me reveal the characters to you..

Joint family: European Union.
Elder brother: Germany.
Youngest brother: Greece.
Long term rate of Interest if one wants to lend fresh money to Greece: 22%.

Greece is at very alarming state, their debt to GDP stands at a very scary rate of 143%! It is very similar to the younger brother’s situation. Unemployment rate is at 24% (as of March 2012)…what’s more disturbing is to know that their unemployment rate was at 14% just 1.5 years back. This only means to say that the catastrophic economic situation is spreading, and it’s spreading really fast! Long term interest rate i.e the rate at which one would lend money to Greece is now at about 22%! This only shows the kind of fear creditors have when it comes to lending to Greece!

So what are the possible ways Greece can come out of this situation?

Solution 1) They can borrow more money.
Problem is that no one is willing to leand them the required money, even if they do, Greece will find it very difficult to service their debt since the interest rate is at 22%. This is as good as buying more cancer cells to your already malignant body!

Solution 2) They get a bail out from EU.
Germany, the major economic powerhouse of the EU will have issues with this. Why would the German taxpayers help the Greek’s and encourage their financial mismanagement? Even if there is a bailout, then they would expect a lot of austerity measures, which means the Greek Govt will have to curb its public spending by a great degree. As such, the Greek economic situation is in a bad shape with high unemployment rates and a sluggish business environment. Imagine a major austerity drive in this situation? Not good at all, this means to say there wont be major public projects hence this would fuel the unemployment situation.

Solution 3) The EU or Greece itself decides to leave the Eurozone.

This can be extremely scary. The first thing, Greece will do if they branch out is to have their own currency. Obviously this currency will be devalued against the Euro. This means that the entire bank savings (denominated in Euro) the Greek’s have will suddenly be worth much lesser. Greek citizens may not desire this; hence they can start pulling out their funds from banks. This can potentially lead to bank failures, business failures and other catastrophic event, all of which can culminate to hyper inflation.

When civil society reaches the brink of frustration, when you start doubting if there will be food to feed your kids society can lose its sanity. Situations like this can have a contagious effect. Remember, its not just Greece, there is Portugal, Italy, Spain etc! If Greece gets disowned, Portugal may fear they may get disowned as well, Italy may fear the same. This paves way to radical thoughts. Hyper inflation, radial thoughts were some of the major drivers to the World War!

Conclusion
Either of the solution Greece adapts the eventual outcome can be very scary to the Greeks. Factors that matter are far too many. Disowning Greece from EU can be really dangerous. There has to be political will to bail them out in a structured manner. EU should stick together and deal with the mess; this means a tighter integration in European Union could be just around the corner.