Monday, June 20, 2016

Nifty managed to move higher ignoring RBI Governor - Mr. Rajan resignation!

RBI Governor - Mr. Raghuram Rajan had created a huge following during his tenor as RBI governor over past few years and has been known in the industry to be unpredictable but prudent and visionary to do what is best for the economy as a whole. On personal front he had managed to curb down volatility on Indian Rupee thereby making it a challenging environment for a trader  L but nevertheless it was much needed to help major importers and exporters who can mitigate forex risk. Overall even though monetary policy outcome had been more unpredictable during his tenure but we personally think he has done what is in best interest for the economy at large in future! Hope the next RBI governor lives upto his expectations….

Now let us see the impact of event or news on Equity markets. Below is the chart of Nifty that with highlights on the areas driven by events.

Many were expecting serious selloff if Mr. Rajan does not continue and now when the news is out Nifty just had a Gap down opening which did not even last for an hour and prices quickly recovered back and entered into green territory.

Nifty 60 minutes chart:

Above chart of Nifty reflects movement of market during the news flow of “BREXIT” and “Mr. Rajan’s resignation” as highlighted by points 1 and 2 respectively.

On 13th June, Nifty had a Gap down opening after the Global selloff on fear of BREXIT i.e Britain exiting from European Union for which voting is going to be held on 23rd June. However, prices made a low of 8060 and protected this low throughout last week thereby exhibiting inherent strength.
Later over the weekend after Mr. Rajan resignation many expected a serious selloff but again Nifty just had a Gap down which lasted only few minutes and prices are moving independent to the event.

Case in point: These events are important and there is no second thought about it but it is foolish to anticipate the direction of market move post the outcome of news. In fact a positive close on negative news shows inherent strength and this is what we use to determine the overall strength or weakness.
Channeling techniques: This is a basic technique in technical analysis but one of the most effective method that help a trader in making trading decision. Nifty has continued to move within this channel  

We use Elliott wave, Neo wave and Time cycles to understand the trend of market itself. These techniques have helped us stay objective amidst all the news and events.

Learn the important techniques like Elliott wave, Neo wave and Time cycles and how can all be combined together with basic technicals like Channels, Fibonacci retracement and projections, Bar techniques to derive ideal trade setups for entering, exiting a trade and using momentum technique for stock selection by subscribing to the daily research report “The Financial Waves short term update” that shows application of above methods on Nifty and stocks. Visit Pricing page for subscription options.

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