Indian stock market is on a falling spree and has been volatile with a downward bias post Diwali last year when markets have hit a high of Nifty 6350 near the all time high. Since then markets have traded in a range, but past few days on the back of concerns shown by FIIs have taken the markets to a new lower range on the back of High inflation, political tensions, loads of scams, political drama’s, news of weak IIP growth figures, fear of RBI rates hike etc have caused great volatility in Indian Stock Market while the Global peers looks stable.
So why is the market falling and why are FIIs selling stocks in India?
Foreign Institutional Investors (FIIs) have poured in lot of money whole 2010, approximately $28 billions of money came to India from the global investors. Whole 2010 rally came on the back and support of FIIs who kept pumping money on all rises and prices.
Indian Mutual Funds have rather seen withdrawal’s than new investment and they have been on the sidelines. Now those FIIs who were regularly buying are shaken by internal issues and affairs our country, India is currently facing.
Indian Government in a Catch 22 Situation
High Inflation remains the major challenge for the Government. It’s a Catch 22 situation for our Government, since they have the responsibility of taming down prices and inflation without hurting the economical industrial growth.
Lower IIP no.s came as a double whammy for our market, already a market which was surviving many financial scams, corruption issues, political tensions and opposition drama’s, lower IIP no.s was not expected by our market and it sent the market on a knee jerk reaction.
All these issues along political stability have worried the FIIs and they have been selling and withdrawing funds from riskier assets to safe havens. The Global scenario looks much more stable for now and that also tells you that money is moving out from here and going to places where there are less internal issues for the time being.
It’s Not Exit India for FIIs – Just Temporary Weakish Sentiments
Its the sentiments and human psychology which makes investors Buy – Sell or Exit a stock or a country overall. With the FIIs selling these days, lots and loads of people are worried and asking if the FIIs are exiting India?
Lets talk logic. They invested over $28 Billions last year in Indian equities, markets have gone up a lot since then, its not a crime that FIIs are booking profits and taking some of it to home. They may be selling now and they will again buy at lower levels when prices reaches there desired zone.
When Will Nifty – Market Stop Falling To Rise And Go Up Again?
When Fundamentals don’t speak much for telling the story, its the skills of technical analysis which helps understanding the market and its future. Fundamentals cannot predict peaks, neither can they predict market bottoms, its the technical patterns and studies which delivers something which looks so unpredictable.
Our analysis on Indian stock Market suggests that markets are headed further down in the days ahead. For now Nifty’s future (5654) don’t look bright and I maintain that it could see 5400 levels on the downside, precisely 5370-78 is the target I am looking at. But it will not go there straight, it shall require some more pain and reaction which will take place in a process.
My understanding of market tells me that, Nifty will show a temporary bounce back from 5550 levels on Nifty Future, which is 100 points below from the current market price. We are very likely to see at least a 120-130 points bounce back on Nifty off 5550 levels which is the next immediate support level for market likely to act as a cushion.
Nifty Lower End Target and Bottom Price
The dead cat bounce will be short-lived and is likely to happen quickly off lower levels. On the higher side while bouncing back Nifty Futures will face strong resistance at 5705 and 5750 levels which shall take something to cross failing of which will again cause a major sell off taking it towards the panic zone of 5370-5400 on Nifty.
For now it looks like that the bottom for markets to be near 5400 levels. By the time it happens almost everything will be discounted and then markets will be looking at a favorable financial budget, speculation of which will take the markets up bringing in the much required stability.