Friday, May 31, 2013

Storm It Was - A Terrifying One At That!

It was not Nifty or Sensex falling today, but the manner in which they fell. Simply wiped out the species called bulls from the market. It was terrifying to say the least. It was a super storm. In my last blog-post I had a premonition that a storm was in the making. Check out this post here.

I was wondering why an expiry day was so dull. It was as I was contemplating - a lull before the storm. Bulls were being made to climb up the gum tree. It was a perfect setting for a Bull Trap. Well done Bears!.

That said, I am not fully convinced that the gruesome sell off had anything to do with GDP numbers as is being publicized. GDP numbers were in fact a tad better than market expectations. And if expected GDP numbers did not rattle the markets yesterday, then why the sell off today. It doesn't stand to reason. The combination of following can be the reason for such determined sell off:-
  1. RBI Governor hinted that rate cut is not likely. And since this rally was June rate cut driven, hence the sell off today.
  2. PM hints at cabinet reshuffle, so an air of uncertainty hangs in air. And markets loathe uncertainty.
  3. The relentless slide in Rupee against Dollar, indicating that tapering of QE-3 in US is on the cards. This will result in tightening of liquidity in markets for all asset classes. 
That said we had Chamblfert June Futures hitting its stop loss at 58. Hence we had to book loss of Rs 8000/- .Sadly there seems to be Policy Paralysis for Fertilizer Companies, even when the monsoons are approaching and clarity on subsidy is awaited from Govt. With non-Urea fertilizer prices being so high, farmers will adopt Urea as their preferred fertilizer. Let us see what Govt decides to do in an agrarian economy - further snuff out agri-based industries or give incentive to boost them. Time will tell!

I am planning to run a series through this blog on all profitable Indian industries that Govt has succeeded in butchering through its quaint policies. God knows what sadistic pleasure is being derived by the GovtOthrough such policies. We shall evaluate later, so keep checking out this space.