Another week of a higher inflation this Friday.The drama on the inflation front is only increasing with each passing day.The inflationfigure at 11.63 on this friday was surprising as the inflation was on a higher base.Since the time inflation technically broke out from its
resistance level of 8-8.5 .The numbers were reported on a lower year
on year base.The number this Friday was reported on a higher base.The
steel price reduction announced by the steel companies will have an
effect from the last week of July.
Going ahead its better to focus the discussion on political blockade
faced by the country on the nuke deal.I will place two permutations
thats seems possible as of now.I cant guarantee the whether my
conclusion is correct but it has been formed after referring to some
of the best experts in the political science field.
The Samajwadi party the known opportunists in the Indian political
history is trying to protect the Upa government which will be deserted
by left once it goes ahead with the Nuke deal.What i personally expect
from here on is that after the left withdraws support.Either the SP
will give issue based support to the government and will support it in
confidence motion or the SP will be a part of the UPA and will take
political berths in the cabinet formation.Seeing the burden of
Inflation and the anti incumbency that the congress led Upa suffers as
of now.I expect SP to follow the former path.Do remember markets dont
like unstable governments.With left in past three years there was
stability without any economic reforms.If the SP joins the UPA
immediately we might see some surprise on the reforms front also.Do
remember S.P has no idealogical problems with the progress of the
nation (Which accidentally or incidentally the left suffers
from).Moreover there has been no divestments and no economic reforms
on the pension front.As of now its all probabilities but the best
outcome for the markets will be as of now either a general election or
a S.P included UPA govt in Center.Do remember a stable government is
an important criterion for FIIs.Also do remember as of now the SP has
not declared its support to the government,I can only say as of now
that the Indian political drama is getting a better TRP rating then a
stock market fall or a KKK serial.
Coming back to the Nifty.In a 5 days Eod chart Nifty is showing a
converging triangle formation.
The breakout and the breakdown zone for this pattern is at 4160 and
3810.These levels can well be the resistance and support zone for the
week but any sustained breakout or breakdown from these levels should
give flat 200 points move.The best strategy will be to use a 30 points
sl whenever it happens on a sustainable basis.
Weekly Nifty supports :- 3895,3810
(source: Internet)
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