Nse 20 share Index is at 3280s level which was our target from previous posts. At 3280s wave (c) is fibonacci 100% of wave (a). Also notice that the index is scraping the bottom of the parallel trend channel formed by drawing a line connecting the start of wave (a) and the end of wave (b) then drawing a parallel to pass through the end of wave (a). I expect that there may be one more slight dip below 3275 to fully complete wave (c). From that low expect the index to quickly retrace this fall and move up to beyond the previous high of 4100s.

That would make for an interesting market if it indeed does shoot above the previous 4114 high. Waiting to see how the market handles the 3000 level. I still favour the bears but a recharge of the downslide is needed to break below 3000.

How about this for the macros:

1. A 3T budget is proposed with nearly 1T composed of debt repayment(I think it will exceed that number and then some). Budget deficits, fiscal consolidation and development be damned.

2. Debt ceiling fudging - apparently local debt is no longer considered - to increase borrowing appetite of GoK at the expense of the private sector.

3. Moving from manageable debt levels to a basket case is mostly hinged on interest rate levels not necessarily the accumulation of debt. The former changes drastically and impacts the debt service ratio drastically as opposed to the latter impacting on debt to GDP ratio which is a less telling metric on debt sustainability. This has put Italy in a tricky spot in a matter of weeks.

4. Inflation finance creates a false bull market kinda like stock splits and bonus issues.

5. Not accounting for wastage, embezzlement etc returns on GoK spending has been low and already in the diminishing marginal returns zone. So as the debt service ratio is increasing the corresponding returns are shrinking.

6. IMF driven reform/structural adjustments are a messy affair and involve alot of pain both the political elite(as the Jordanian PM and some Arabic countries are finding out) and the general population - via increased taxation which is already in motion for KE. Spending power and liquidity are the lifeblood of the stock market.

@Lochaz:
1) Agreed
2) That's very risky. And silly. How did they manage to get that passed?
3) Agreed. This is the argument I try to make to folks who keep on saying the Debt:GDP is manageable without understanding the "cost" of debt. The repayment structure of the Term Debt is also important if it cannot be rolled over at a "low rate" but try telling that to nincompoops.
4) Agreed. We saw that in the 90s. Many became much wealthier on paper but not in real terms.
5) GoK should not be in the business of Business. Look at KQ, Uchumi, NBK, Mumias, etc
6) Agreed. I recall the "The West Wing" clip when Arnold Vinick is explaining why Tax Cuts are the way to go to improve the lot of 3rd World Countries and why we have high taxes.