Friday, June 19, 2009

Mr Obama - Game Changer ?

Major changes are taking place in the USA and Europe. They are likely to affect our markets significantly. I do not know if Indian business media is paying attention to these changes.
In the USA, President Obama has called for greater regulation over the hedge fund business. The funds will have to deleverage. They will be required to maintain higher capital for derivatives. The funds will come under the control of an existing or newly created regulator.
In Europe, the European Parliament is debating much stiffer control over hedge funds. Current leverage is likely to become history. More 'real' capital will be required to maintain a derivatives position.

What this means for us is the fact the FII's will be required to arrange more capital to invest the same amount of money. This will affect emerging markets more mainly becuse these markets are volatile and respond quickly, either way - up and down.

In India, the growth of local insuance companies and domestic financial institutions will replace at least some of the hot money inflows that may not come. But, all of this so called liquidity may be affected by the new regulations.

My Notes: This is all for the good. In the long term, unregulated financial institutions should be unacceptable. Just see how these greedy, immoral people brought the entire world on the brink of disaster. If the froth and bubble goes out of the market, so much the better.


gurvi said...

Hello Sudarshan ji...
I completely agree with you. These hedge fund manger out of their sheer greed brought us to such a disastrous level.
I feel market is taking this thing positive in US...Today Mr Geithner has spelled out the details about overhauling of the financial system and Market was in green.

The other big overhaul Obama is talking -HEALTH CARE. So will see how it goes.

Now Nifty at 4200 level..Do you think it's a buying opportunity now?


Useful insights.Even Longterm investors need to be cautious.

Thank u sir,

A Student for Life, of Life (and of Markets) said...


I agree with you that it is all for the good. We have already seen the impact of leveraged liquidity flow. Too much and too little of anything is usually disruptive in a bad way - I hope our friends on the right and left both recognize this.

As long as money does not dry up either through a natural calamity or through a policy calamity, we should do alright.

Student of Market

sonixe said...

hello sudarshanji...

can u giv us a strategy on how to trade from a budget point of view and which are the stocks that we need to concentrate on?

just like the one which u gave before elections as 'EASY MONEY' from 3200 to 3800... that trade gave us nice returns... thank you sir.....

Bikramjeet Singh said...

I too agree with you, while lauding you not merely as a technical analyst but a source of complete financial knowledge, which is necessary so as to survive in this fierce financial jungle. But these actions may give short term pains as seen in these days in form of FII offloading, but all for good. I hope we ever get a young dynamic PM like Obama, or at least a FM ( Rahul Gandhi ????????????????)

snipertrader said...

the reason the US mkts got to where it is..was not coz of lack of regulation but due to poor implementation of the same. Just by putting in more regulation and pay czars wont solve the issue. The US govt is trying to get its hand into everything using the crisis to good effect. We ll see how this all pans out. Anything that has gotten the govt involved, always is inefficient.

Bhupesh said...

Sir I have Suzlon @130 , and you have suggested it will go to 200 without any significance resistance. But now it is showing a correction. I am a trader , will my rate come in near 1- 2 weeks

men said...

Mr. Sudharshan, can you give us an idea of how to take positions before the budget, similar to the one before elections.
You have said a correction was due, was it the recent one or more down?

Anuj said...

hello Sudarshan ji and readers

i have been following fib nos for some time now but i don't find them particularly useful to trade just using them for either trade direction or even targets...though they are good in buying on pullback s(but the pullback may never come!!)

For example the below chart of nifty

4537-4412 have been used as Fib reference points and we get levels based on that...but why only these levels why not 4693-4523 or 4600-4411 or 4693-4411?

we can choose infinite points to draw fib numbers which will give infinite fib levels....more over we can further draw level on different time frames like 1,5,15,30,60 mins,1day,1week ,1 month...that will virtually give every number a fib level !!!

Sudarshan ji if you can explain the basis of selecting points of reference on different time frames that will be great...and how much relevance or importance do you give to Fib numbers in your trading?

keep up the good work...thanks and best wishes

Bramesh said...

Hi Sir,

I have a question Regarding the Down trend and uptrend in Nifty.

Nifty closed at 4313 and previous week close was 4380 which make me believe we are in downtrend.

My Question:
1.Just a close below previous week close is sufficient to say that we are in downtrend.

2.If nifty closes about 5 EMA can we say that we are again back in uptrend.


Nifty Trader said...

imho the policies that may affect the investment behaviour of fii/hedgefunds may not affect the fund flow into our capital markets as long as we have entities onshore who control a virtual economy (larger than the real one) through the swiss bank accounts...there may be hiccups but they cannot let that money idle....