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- There are times when you carry a perfect view on market but carry out a completely opposite action and that is what we call lack of conviction. I think at 22800 on nifty I’d been carrying a firm view that we are going to see the market fall, though not a crash and this is what I’ve articulated clearly as well
- Then what happened – have I gone long or failed to go short. Let the secret remain and I will only say – मुझ को इस रात की तन्हाई में आवाज़ ना दो…जिसकी आवाज़ रुला दे मुझे वो साज़ ना दो – before I start to get calls let me clarify why this emotional pitch
- Basic principle of trading are – don’t give up discipline and avoid greed. Furthermore learn to accept you’ve gone wrong and apply stop loss, don’t add another wrong to your wrong because two wrongs don’t make a right – it’s not a mathematical equation, read my mind if you can – maybe I tried to fix the wrong trade
- What wrong in this – is the FOMC not trying to do this – fix it’s error by committing another mistake of delaying the rate cut. In a way Fed is in a fix on whether to cut or not and the Israel Iran tension has somewhere given legitimacy to deferment of rate cut
- By not imposing sanctions and cutting supply, in a way US has decided to go a bit soft on Iran and that has provided some stability to the oil prices. One reason for that is the cross connections as US is not very keen to annoy China an important oil supplier to them
- Yellen though on her part has blamed China for over production of clean energy goods, especially the EV batteries, chips and solar panels that in a way has resulted in an uneven playing field putting US business at risk and called for mitigation of same
- USD / JPY exchange rate is at 1990 levels as JPY hits 155 to a dollar and this takes the dollar index above 106, the highest level in year 2024. US treasuries are once again staring at 4.75% as the next milestone as there is absolute clarity that there is no clarity on markets that Fed is offering as the 2y is almost in range of 5.0% @ 4.96%
- Gold registered a decisive gain to trade above USD 2400 as silver for the time being is subdued at USD 28.40 and a debate is going on – what is a better commodity to invest in. Gold considered an inflation hedge is Central Bankers’ favorite while silver has industrial utility. In case the Chinese economy revives, off shoots of which are emanating Silver will have better bets
- While it may sound relative the coming days are for sure good for both the metals and no harm if one builds up a position in same; one submission – if I’ve made a perceived wrong call as explained, I may have also taken a right call by having built up positions in metals – so once a trader always a trader and a trader always goes by the funda – a bird in hand and one in bush as well
- The data releases in US are still coming strong and y’day not only the manufacturing number for March have come in stronger even the February numbers have been revised upwards. Looks like Fed needs to take cues from Dr. Subba Rao’s book that you just can’t have one dimensional focus on inflation targeting as far as monetary policy setting is concerned
- There is a pressure on wall street and while the indices open in green somewhere the data pulls it back and this is exactly what happened overnight as well. Dow had a gap up opening of 250 pts but by the time we are in process of finalizing this write up we are left with a gain of 95 pts and the undertone is a bit weaker
- Going by the trend it seems like the fall in market is going to come to an end very soon and relief rally in global equities is on the cards. It may not be run of the mill rally but enough to provide some respite to the market that is reeling from some shocks off late
- And this brings us to India that has its own set of challenges. The first worry is the crude and inflation as a fall out of Israel tension flaring up and this is what is pushing the yields higher. I don’t think there is any surprise as the yields at 7.14% are still within the expected range
- And this is on new 10y, even the old paper that is commanding major volumes we are still at 7.19%, not very obscene in current scenario and in a way it’s coming out clearly from US actions that crude may not have a big flare. If that is the case I think India doesn’t have too much to worry about. Even otherwise that is less of a worry given the Russian supply to India
- On nifty I’m not very sure if the correction is over or will that go further. From 22800 my take was that in run up to election it may cool off a bit but then the pull factor has come only from global geo polity. If that’s the case there are chances that it may still go down further but then a relief pullback is on cards before the election play sets in fully. Expect the nifty to pullback around 100 – 150 pts before a fresh view emerges
- Nifty ended lower by 125 pts y’day but one could take the heart out of the fact that it recovered 50 points from day’s low and the a/d ratio was positively skewed at 2:1 and now the market just needs to carry the momentum to next day, provided something unexpected doesn’t happen on this day
Stay safe, stay healthy, God bless you all, have a great day and a profitable year ahead of you all!!
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Vikas Miglani writes 