29 February 2016


“BUY NIFTY ABOVE 7015 TGT 7045/7100 SL 6860”
Markets ended lower on Monday amid a volatile trading session after weak global cues offset a Budget that maintained the path to fiscal prudence and growth while higher allocations to the rural sector sought to boost incomes of the poor and the underprivileged.  Union Budget 2016 failed to cheer the market, as BSE Sensex and NSE Nifty skid 0.50% on Monday in a volatile trade. What evoked optimism was the government's proposal to retain fiscal deficit target at 3.5% of GDP for 2016-17. The Sensex closes 0.66 %, or 152 points, lower at 23002, while the Nifty 50 closes 0.61 %, or 42 points, lower at 6987 after finance minister Arun Jaitley’s Union Budget announcements. The Sensex fell as much as 660 points on Monday afternoon but recovered later as market participants assessed finance minister Arun Jaitley’s Union Budget announcements, particularly with respect to taxing of dividend income in the hands of high net-worth individuals (HNIs). The government’s pledge to retain fiscal deficit target at 3.5 % of GDP for 2016-17 spurred optimism that the Reserve Bank of India (RBI) may lower interest rates.
Union Budget 2016 has struck a fine balance between fiscal prudence and providing growth boosters to the economy. The Budget is leaning more towards rural consumption, which in light of consecutive bad monsoons steps will bolster the India consumption story which is reliant on rural consumption. As expected, the Budget has laid emphasis on infrastructure especially roads, it is also about higher taxation for the elite class and effective utilization of the same proceeds towards the growth and development story of India.
Markets can lead to a big short covering rally in March. The two key important ranges--placed so close by, one between 7037 and 7126, and the other between 7020 and 6900--would determine the probable course of price movement during the trading session. If were to see the upper range being taken out firmly, we can also expect even the canonized level of 7200 getting taken out as well while the lower range, if taken out decisively, would see more weakness coming in, we could well be bracing for a retest of 7237 - 7255 strong support area. If we were to see the Nifty taking out 7250-level as well, on any intraday up move, we could well see the index testing 7280 through 7300 strong supply zone. Our take is to sell any rally for we tend to think this corrective rally has run its course; however, if it were to take out even 7350-mark then we would have to go for a rethink.
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Resistances: 7000, 7050, 7100
Supports: 6950, 6900, 6850

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