Stability Depth of current Global equity markets rally


At glance, its looks stability and sustainability across all global equities market since start of year 2012. despite of Europe sovereign issue and Euro zone crisis, the major European markets has risen CAC 17%, DAX 20% & FTSE 10% from their Dec 2011 lows while USA markets DOW 10% & S&P-500 has moved nearly 14% from their DEC 2011 lows. Indian Sensex & Nifty gained almost 23%. After making High of 81.78, US Dollar index has corrected almost 4% with all currencies. Technically the global financial environment looks upward. At first sight its looks absolutely leverage and liquidity based rally which is inspired majorly by 'Time Factor'. as it is heritage proverb that "time heals everything", looks implied with majority strength in current global financial system. There is several reasons to criticize this rally, but still it looks more optimistic than previously. After several rounds of meetings on European sovereign issue and defaulting of Greek, it has indicated that European leaders are very seriously keen on finding a concrete solution. However the clear vision is still invisible, but the act says the Greek will sustain its Euro zone membership. Amid signs of improvement in the global economy, Focus has still on Greece as the threat of economic collapse and exit from the euro. Now we talk on absolutely technical.

S&P-500 - called the mother of all indices, has recently moved decently over 13% from its dec 2011 low & it has retested the previous significant peak level of 1360-70. on correction, its is on Buy on dip kind of indices on every resting of its uptrend line support, connected with lows of OCT & NOV 2011. The major global markets are running in cue with this indices movement. Correction is due, and it could be a smaller fall shall end around 1300-1285 level before it starts a fresh upward steamed journey.

NIFTY - India nifty was the outperforming market compared to USA & European markets. It has the more powerful & strong reason behind its current rally of 23% compared with other markets. Despite of deferment political environment and lack of strong visible economical decision, the current FII investment has increased drastically in first two month of this year. Technically, in the month of Feb, nifty passed and moved beyond breakout from the medium term down trend, connecting the tops of Nov 2010, Jan, Apr, Jul & Oct 2011's . If we includes the three lows of Feb, Aug & Dec 2012, it will be prompted as a downtrend channel breakout above 5225 level, recently. However, there are several resistance levels are intact after this breakout, but a decent correction along with a stable economical data and current RBI policies, keeping GDP target with 7%  along with sustaining currency rate are major key supporting indicator for upcoming movement. The correction might occur up to support level of 5300, 5180 and in case of drastic FII selling it could test 5000 level after budget session.

In conclusion, current rally is apparently liquidity driven. If global economical data and European Union comes with an impressive outcome, then achieving new high on nifty will be merely a formality on technical chart. In case of disappointing Indian budget presentation, the profit booking or panic selling shall occur & will set the nifty around or below 5000 level.

Regard
Cj Bhargava

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