First an updated Order Flow chart of the Nifty.
OrderFlow loves volatility and we picked some good coin from NF/ BN and even LT post earnings announcement.
We got a sell for the earlier buy and the day closes in the middle with no new short positions created today in the futures space.
In my perspective note on 15th July, I had made a point that these rating agencies need not be taken seriously by market participants.
My reasons again :
1) There are three of them and it’s today a game of 1 against the other 2 ( Moody and Fitch) which still maintain the same rating. Are we speaking about the same economy here?
2) Back in 2007 this same agency made all mortgage backed securities AAA. Post Lehman, the world saw how good a job they do when they actually rate!
3) Ben runs a printing press and hands out money to the markets which go by names of QE1/ QE2 etc. Even if the entire world sends all the debt back to the US, they will pay them back in their own currency, printed in their own backyard !
4) The downgrade reasons are based on ” political wranglings”. It amazes me how political reasoning can be given when drawing economic agenda especially by an economic agency.
All in all, we will get a big rally out of this, not just in our markets, but in global equities.
There are technical reasons for the same also, but we will discuss in another report.
