Excellent area to exit longs and build shorts from a trading perspective

The weekly averages continue to be negatively phased despite the sharp rise indicating that one should exit long positions at current levels as well as any further rise


S&P Nifty close: 5,278


Market Trend
Short Term: Up               Medium Term: Down                    Long Term: Down

As we had envisaged last week, 25th and 29th June turned out to be extremely volatile days. The Nifty crossed the 5,190-point mark which saw the shorts getting squeezed as the Nifty gained for the fourth week in a row from the lows made during the week ended 8 June 2012. The benchmark finally ended a smart 132 points (+2.58%) in the green in a week of volatile trade. Volumes were however marginally higher than last week implying that the rise is of corrective nature even though it has survived for four weeks (we had mentioned 5-6 weeks) now.

The sectoral indices which outperformed were CNX Media (+6.06%), CNX Metal (+4.15%), CNX Commodities (+3.65%), CNX Finance (+3.07%), CNX Energy (+3.06%), CNX PSE (+2.93%) and CNX Infra (+2.92%) while the gross underperformers were CNX Auto (+1.16%) and CNX PSU Bank (+1.16%). The histogram MACD has moved marginally above the median line but the short term oscillators are overbought. This implies that the possibility of a higher bottom in the ensuing decline has increased.

Here are some key levels to watch out for this week

■ As long as the S&P Nifty stays above 5,220 points (pivot) the bulls need not worry. They should use this as a stop loss on longs.

■ Support levels in declines are pegged at 5,154 and 5,029 points.

■ Resistance levels on the upside are pegged at 5,344 and 5,411 points.

Some Observations

1. The Nifty has completed the targets of 5,098 (38.2%) and 5,200 (50%) and has come very close to 5,301 (61.8%) points retracement of the decline from 5,629-4,770 points.

2. Surprisingly it crossed the 5,260 points with consummate ease which creates the possibility that the ensuing decline might make a higher bottom above the recent low of 4,770 points.

3. We have completed 18 weeks from the recent high of 5,629 points.


The weekly averages continue to be negatively phased despite the sharp rise indicating that one should exit long positions at current levels as well as any further rise. The short term oscillators are also overbought and the rally is now four weeks old (the time frame we were expecting since the low was 5-6 weeks). The volumes have also not been very encouraging in the rise as the Nifty has almost hit the 61.8% retracement level of the decline from 5,629-4,770 points. The resistance line (in black) is pegged just above the 5,400 points mark (a remote possibility of hitting that level) in the current rise. From the decline of 6,338 points (November 2010) the tops have been on an average 16-18 weeks apart and we have now completed 18 weeks from the top of 5,629 points. Looking at all the above it would be prudent to book profits at current levels as well as in any further rise. Those enterprising (high risk players) can even build shorts with an appropriate stop loss (depending on the selling price) as there is a possibility that we might begin a decline which goes sub 5k if not more, in the weeks ahead.

(Vidur Pendharkar works as a consultant technical analyst & chief strategist at


RBI lowers merchant commission rate on payments via debit card

The move will encourage the use of debit cards, especially at small merchants or service providers and location by way of lower merchant discount rate

Mumbai: The Reserve Bank of India (RBI) on Thursday lowered the rate of commission that customers pay to merchants at the point of sale for payments made through debit cards to between 0.75% and 1%, reports PTI.

As per the new RBI directive, the commission known as merchant discount rate (MDR), will not be more than 0.75% of transactions of up to Rs2,000. For transactions above Rs2,000, MDR has been capped at 1%, as per the new rules that will be applicable from 1st July.

In a statement, RBI said the MDR for debit and credit cards has been similar in India. While a debit card is used as per the availability of funds, credit card usage is linked to the credit limit sanctioned by the issuer.

"Thus given the different nature of the two products, there is no rationale for having a similar MDR for debit and credit cards. Further, it is observed that debit cards are mostly being used for withdrawal of cash at ATMs," RBI said.

According to a public sector senior bank official, at present both debit and credit cards have the same MDR ranging between 2% and 3%.

RBI further said it was necessary to encourage the use of debit cards, especially at small merchants or service providers and location by way of lower MDR.

"This move would encourage all categories and types of merchants to deploy the card acceptance infrastructure and also facilitate acceptance of small value transactions," it said.

The MDR paid by customers for making payment through credit or debit card is shared between the merchant and the bank, the official said.

"The lowering of MDR for debit cards will encourage customers towards making most of their payments via debit card as they will now have to pay less commission", the bank official said.




5 years ago

Its a very arbitrary move by RBI, and in continuation with what we have seen with other regulators in the insurance and MF industry. The regulations in those industries resulted in sales going down. While there were malpractices in the distribution setup, the regulations banning entry load have essentially thrown the baby with the bath water. India needs more people to invest in capital markets for deepening the market and saving for their retirement. Now noone sells them MFs and they dont invest on their own because they are not yet financially savvy.
Similarly people dont use their debit cards in the normal course and have to be incentivised to use electronic medium of payment instead of cash. Also many a times merchants also discourage customers because of high taxation. They like to keep the sales in the black economy to save direct and indirect taxes which can be as high as 20-40 percent of profits.
Since RBI cannot control tax related measures, they are trying to push electronic payments by reducing the cost to merchant. But this is only going to benefit large merchants already accepting cards at the cost of customers. Banks would withdraw or scale down the incentives like reward points, cashback, and promotions to debit cardholders as that cost will now wipe out any income they were earning from the use od debit cards to purchase goods and services.
There would be many who will argue otherwise, but we will see the results and measure it against the deliverables RBI sets for itself.
It would have been better for RBI to mandate the merchants including government to accept payments by electronic modes an persuade government to provide some tax relief to them as an incentive.
The examples quoted by RBI of other countries which have enacted similar regulations are faulty as those economies are at a much more advanced stage of development as far as acceptance and usage of cards is concerned.
Also, majority of the cards issued in the coutry are by government owned banks while majority of the usage is by other banks because they have promoted usage by customers. It would have been better if RBI would have persuaded banks to promote such usage.
I must also say that the government doesnt seem serious at all in its efforts to take out cash from the economy. Why should the passport offices be accepting only cash as mode of payment, the cashiers even go to the extent of noting the bank note numbers (God or the home ministry only knows why they do it)!! Why cant citizens pay for services like getting certificates or college admission forms online using internet banking or cards?
I can go on and on about why the approach taken by RBI is faulty but it will probably not change anything in the short run as the RBI officers know that no banks will ever protest about such decisions as they have bigger stakes in hand. Many bankers are miffed at such insensitive decision making. Someone said its as if RBI is supposed to be thinking about the benefits of the merchant lobby rather than about banks!!
Also RBI thinks that payments as well as consumer banking is a social good. They fail to understand that if banks dont make enough money from consumer banking they will not focus on increasing penetration to smaller centers. As commercial entities, they cannot be forced to increase size without earning suitable returns for their shareholders. We have aeen socialism and communism fail in this country. With such high handed regulations in all sectors including telecom, capital markets and banking, we will ensure that een capitalism fails!! Result more than 60 percent population would continue to strugggle to make both ends meet!! We need some adroit leadership in this country!!

DSP BlackRock launches m-Invest

‘m-Invest’ enables investors who have a registered folio and mobile number with DSP BlackRock Mutual Fund to invest conveniently, using their mobile phone

Mumbai: DSP BlackRock Investment Managers Pvt Ltd has launched 'm-Invest', a facility through which investors can simply send an SMS or make a phone call to purchase or redeem their investments.

'm-Invest' enables investors who have a registered folio and mobile number with DSP BlackRock Mutual Fund to invest conveniently, using their mobile phone.

All they need to do is to register for m-Invest using the Registration-cum-Debit Mandate Form.

After receiving the m-Invest registration confirmation from the AMC, investors can send an SMS to 567672855 or call on 1800 200 4499 (toll-free number) and specify the amount of purchase/redemption.

This amount will be directly transferred from/ into the registered bank account into/from the specified scheme.

The facility will become available from 1 July 2012 for individuals within the country. The AMC plans to extend this facility to other categories of investors such as sole proprietors, NRIs, non-individuals, among others at a later stage.


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