14 March 2016


Markets have risen in eight out of ten sessions in March, boosted by foreign flows. We have been gaining on rate cut hopes since the budget day. Markets have already priced in a 25 basis points rate cut. Noting such a scenario would likely lead to a retreat in shares. The headline indices cut gains after data showed wholesale price inflation had fallen a bigger-than-expected 0.91% in February, easing for a 16th consecutive month.  The Sensex surged over 232 points to 24950 in early trade on Monday, as investors widened their bets amid a firming trend in other Asian markets. However, caution prevailed in view of muted factory output data, which was released on Friday and inflation data, slated for later in the day. The Sensex, which gained 94 points on Friday, added 232 points to 24950 with banking, realty and auto sector indices leading the rally. On similar lines, the Nifty climbed 68 points, at 7579. The Sensex opened at 24802 touched an intra-day high of 24961 and low of 24734. The Nifty closed with a gain of 28 points at 7539. The Nifty opened at 7543 hitting a high of 7584 and low of 7515.
The Nifty 50 futures contract is trading volatile. The contract failed to sustain the break above 7600. It has reversed sharply lower below 7550 from the intraday high of 7584. The next important support is at 7500 which can be tested. A reversal from there can take the contract lower to 7480 and 7450 once again.
Wait for dips and go long on a reversal from 7495. Stop-loss can be kept at 7480 for the target of 7600. On the other hand, a strong break below 7430 can drag the contract lower to 7420. Such a break will also increase the danger of the contract falling below 7400 to 7350 or even lower levels thereafter.
Strategy: Go long on a reversal from 7515 with a stop-loss at 7460.
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Supports: 7500, 7450
Resistances: 7,580, 7,640

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