Tech Musings

Indian ten year treasury rates moved up 8.265 to 8.895 in just two weeks.  I have mentioned in my post on 4th August 2013 that interest rates in India are all set to move up.  Once interest rates break above 9% mark there is nothing to stop interest rates form going up to 10% – 10.5%.  I think it is only a matter of time before banks will be forced to hike deposit rates.

In the second chart we can see INR facing minor resistance at 62 levels. I expect it to break and INR should move to 64 levels in next few weeks. I think RBI will be forced to hike rates to defend INR and once INR reaches 64 levels it should see some correction.

 

Next chart is of Indian VIX. We can see that Indian VIX is breaking out of a 5 years downtrend which indicates further weakness in stock markets. 

The last chart is monthly chart of Sensex.  In my post on 22^nd June 2013 I wrote, “This chart shows the long term trend line which is supporting the market since 2003. If this trend line breaks Nifty is in for a big correction.  Market has pulled back from this trend line almost thrice. I am expecting this trend line to break sooner or later. If market gives a monthly closing below 5650 for two consecutive months I think Indian markets are up for some very serious corrections. In the second chart we can see the retracement levels for nifty. If the trend line breaks the target will be 4950 and 4200.”

I think now conditions are forming which will enable market to crack to these levels. India is seeing one of worst government since independence and the policy of entitlements have brought the country to the brink of fiscal disaster. Once Sensex falls below 18000 on monthly closing basis it will see some sharp cuts and will ultimately correct to 13000 levels.

I think now FII selling will rock the boat and the strongest sector in the markets will see some sharp cut in prices. Charts of FMCG, Pharma and IT sector should see some cuts. Although, IT and Pharma to some extent will be protected due to depreciating rupee and export demand.