How will be tomorrow for the Indian stock market?

As I speak US markets are down by 1.8%. 1.8% down on US is very huge. This slide comes mainly due to the fears of Greece defaulting on its international loans. The news on greece and the worst condition of global economy has been coming in since many days now but Indian markets are not moving in accordance with global markets. This is possibly because of India's own worries of inflation and rising fiscal deficit of the government. Indian markets are waiting with its fingers crossed for the RBI's decision tomorrow. Nifty is oscillating between 5450 and 5550 for over 2 weeks now. Market is uncertain where to go from this range. Today Nifty closed at 5447 which is almost a False closing. Markets might take decisive direction only after RBI's meeting tomorrow.

Tomorrow the whole nation's Industrial and financial establishment will be staring at the News channel to get what the RBI has decided. Expectation is that RBI will increase only 25bps on the rate. Last months RBI meeting surprised everyone when RBI raised rates by 50bps against the expectation of 25bps and markets sold off heavily. Tomorrow traders on the dalal street might be hoping nothing as such happens. 

What if RBI raises rates more than what is expected?

There will be a big sell-off in the magnitute of 2% down on Nifty and sensex. Over the next coming days also the markets will keep going down as Indian markets are due for correction in relation with Global stock markets which have fallen a lot. 

What if RBI doesn't raise rates?

 This will be a sweet surprise and market will go up heavily and it could be in the magnitude of 2% on both Nifty and Sensex. But the chance of this is very very low as the latest inflation data suggests that inflation is still high and uncontrollable.

What if RBI raises rates in line with expectations?

Markets will be satisfied as its expectation is met and markets will go up a bit say at max 1%. But soon traders will look at other important data coming from Europe and US which is negative and market will resume down turn. This sell off will be huge as Indian market were holding up well since 2 weeks whereas all around the world markets were falling.

I predict a level of 5300 on nifty by this month end if RBI raises rates.

Buying Nifty puts tomorrow is the best possible trade for tomorrow.

Reliance Industries - Emperor has no clothes - Short sell target 800 in One month time frame

Since last few months we are reading articles about Reliance Industries not able raise its output of oil and gas from KG basin. Reliance is giving an excuse of "Technical Problems" but as any intelligent person can guess Reliance doesn't want to sell gas at such low prices decided by Government which applies till 2014. So Reliance has reduced production and coming out with lower then expected projections for future gas output from KG basin. Government is also coming to its senses and continuously coming out of many warnings and investigations on this matter but Reliance is escaping from this act probably by throwing some money and keeping some mouths shut and hands tied in the government dodging investigations. This uncertainity about the future of KG basin has caused a numbness and considerably falling of volumes in the Reliance Industries stock. 


Monday say one more report coming on malpractice of Reliance Industries Ltd(RIL) in operation of KG basin.This time it is the draft prepared by the Comptroller Auditor General (CAG).The CAG in its report said that the government had favoured Mukesh Ambani's RIL and two other oil exploring companies.The CAG report also mentioned that the oil ministry and its regulatory arm - the Directorate General of Hydrocarbons (DGH) - allegedly favoured at least three explorers.The report alleged that the government allowed Ambani's RIL to violate terms of its contract with the government for exploration in the Krishna-Godavari basin.This was the first ever audit of private sector participation in the oil sector.The CAG report also stated that the Directorate General of Hydrocarbons had allowed RIL to violate norms.The violation of terms, in turn, helped RIL increase its capital expenditure plan to start production from the Krisha-Godavari basin thereby decreasing the share of profit for government and causing huge loses for the taxpayers. 


After the CAG, it was the turn of the CBI.


The CBI on Tuesday stepped in to investigate the alleged flouting of policy by Mukesh Ambani led Reliance Industries Limited(RIL). Irregularities in the policy were highlighted in the draft in the Comptroller Auditor General (CAG) Report leaked to the media on Monday.The CBI has, now, asked for files relating to approvals to RIL for increasing its capital expenditure from $ 2.4 billion to $ 8.8 billion.The CBI is also looking at files relating to the vigilance inquiry against former DG Hydrocarbons, V K Sibal.The investigative agency is probing why the exploration period was extended beyond original schedule for both RIL and ONGC.


How bad can it effect RIL? Can it escape again this time?
History is evident how big companies have escaped even biggest of allegations by throwing loads of money. But this time its different. India is going through a time in which no one spared for corruption and malpractice no matter how big he is. Though he is A.Raja(Telecom Minister) or DMK MP Kanimozhi.
Now, even if Mukesh Ambani wants to come out and say "We are clean" it will be a nearly impossible task to prove so many investigations and reports wrong. Do you think Anil Ambani would not have tried bribing few ministers and escaping? Ofcourse he did and escaped CBI enquiry but Reliance communication was not spared and many investors suffered because of it. Anil Ambani must have accepted his allegiance with Congress and escaped the bars of prison. But in matter of Mukesh its different. It is a well known fact of Mukesh's association with Narendra Modi and the BJP. Congress Govt. will not take this thing lightly and will do everything possible to make Mukesh accept Congress party's allegiance. But Mukesh will not give up so easily. Mukesh will try to threaten the Govt. in some way or the other. This fight between Mukesh Ambani and Congress is going to go for long but now that CBI has got involved in this, its going to be more ugly. CBI well known for its unbiased investigation is not going to leave any stones unturned. It is going to be a very ugly period for crores of share holders of RIL.


I predict tomorrows day will see a minimum fall of 3% on RIL stock and a max fall of 5%. The stock will keep falling slowly over the time till everything is clear on the scam side. I predict a price of 800 on the stock by the mid of july and even further down in time to come. Though RIL stock might give good bounces up once in a while because of Mukesh Ambani paid stock market operators of RIL stock. But even these operators cannot keep the stock up for long time as the ownership of RIL stock is huge(crores of share holders majority of them middle class families who at the smell of smoke will cry fire and will sell the stock to run for cover to save their precious life savings). Next few months remain negative for the stock. If somehow Govt. brings Mukesh to his knees and make him increase the output of KG basin then the stock will start rising heavily. Till then the stock is absolutely No Buy. 


There has been huge short selling in the RIL stock since last two days suggesting 850 a perfectly possible value on the stock in coming 2 weeks.


I suggest Short selling of RIL tomorrow in futures or buying Put options of RIL of Rs.900 stock price(Put options - Derivatives contract of underlying shares. These contracts increase in value when the stock price falls).