Posted By : Kishore B.S
Today was the beginning of a new financial year. Nifty was above 5300 for most of the day but it could not break the 20 day sma of 5320 on the closing basis. The surprise positive data from China couldn’t lift the mood of Asian markets. Now one should pay attention that this data is a bit illusive. This data shows the PMI of only the big industries in China. If we see the small and medium scale industries the PMI as actually contracted.
If we turn our attention towards Europe, the situation is becoming grimmer. The short rally because of increasing the bailout fund has fizzled out. Today PMI data of Europe was 47. It was below the important level of 50 which shows that the European economy is contracting. The unemployment rate in Europe was at its all time high in February with about 17 million people being unemployed. Now, all eye is upon the US manufacturing data. Market is expecting it to be better than last month. So, that is already discounted. For a rally the PMI data has to be more than 53.
Indian’s PMI decreased in February. I won’t recommend to go long here. There can be a correction anytime soon. Exit your long positions and stay high on cash.
(inputs: Mr. Shubham Deva, A Stock Market Institute Associate, IIT Kanpur)