Ashika Monthly Insight Flip July 2016

FDI - WINDOW OF OPPORTUNITY
off on raising interest rates this month, other than dismal
job report the fear of UK vote to leave the European
Union the process called ‘Brexit’ hurting the investors
sentiment and in this process witnessed a wide sell-off in
stocks and commodities as investor sentiment got hurt
from the upcoming uncertainty and economic downside.
Nymex Crude: Crude oil prices presently at a very crucial
level of $50 which coincides with the previous swing
high followed by the previously broken uptrendline.
Breach of $50 mark and sustaining above it proves
positivity in the commodity however both RSI and ADX
showing emergence of negativity in crude oil prices. A
negative divergence can be seen in crude oil prices in
daily chart which impels trader to wait for confirmation of
a trend or rather wait till $48 is breached for bearishness
to return. One of the biggest factors driving the recent
rally was due to an unexpected supply outage, which
pushed around 2.5-3 million barrels per day (bpd) of
crude oil out of the global market. Adding to that, the
slowdown in US oil output and a weaker dollar
exacerbated the price strength. Further in the event of a
Brexit, a risk-off sentiment dented oil prices further.
demand. Relatively higher bond yield is also due to higher
fiscal deficit for the current year than what the market had
expected and gross market borrowing by the government
is almost unchanged. On the technical front bond yield
had been in a severe downtrend since March 2016 onward
however the recent pullback has lead the yield to scale
higher towards its previous swing high, now at the breach
of which would witness a change in trend.
Indian Rupee: Prices had been moving precisely within a
rising channel formation with its higher high formation
over the past two years and now it has taken support from
the lower panel of the trendline and might be heading
higher towards its upper panel at around 68-69 in medium
term perspective. Elliot Wave study reveals that prices
might be moving in a complex correction pattern (w-x-y-xz)
over the past two years and possibility arises that wave
z where the currency is presently trading at is an
extracting triangle. However on the short term perspective
volatility is likely to prop in and failure to breach the
support level of 66.50 would continue to maintain its
uptrend. India’s rupee has been the worst-performing
major Asian currency this year, and, the government is due
to repay more than $20 billion in foreign-currency
deposits to nonresident Indians in coming months. The
large outflow, to happen over a short time and is expected
to cause volatility in the rupee market
10 Year Bond Yield India: RBI will sell up to Rs.10,000
crore worth of government bonds on Monday to drain
excess liquidity from the banking system—the first socalled
open market operation (OMO) this fiscal year. The
liquidity in the system is in surplus but banks are not in a
mood to cut loan rates further. Many fear that the OMO
will lead to a rise in bond yields as supply will outstrip
Positives:
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Six month old trendline support exists at 7900.
Mid-band of Bollinger band exists at 7780-7800
‘Golden Crossover’ in daily chart.
According to Retracement principle Nifty need to
sustain above 8000 to maintain uptrend.
According to Elliot wave Nifty formed 7-legged
Diametric pattern and heading higher till 8500-8650.
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