NIFTY REVIEW & FORECAST (15/3/2013)

Previous day’s call & Actual positions:-

Call for the day:-

Following cues from Asian peers, Nifty should be either flat or down at the opening.

WPI data will dictate movement either ways, at least for tomorrow and till March 19^th policy. Since market is completely focused on Inflation related news, it is better to see the news off the table before entering in to any trade.

But there are some possibilities, which can be taped according to the risk appetite.

If WPI surprises negatively, shorts can be initiated at 5790 with targets of 5760 levels with stop at 5805 levels.

If WPI is numbers meets street expectations, and Nifty takes out 5880 levels , then long can be initiated at 5895 levels for a target of 5940 levels , with stop at 5880 levels.

EOD Position:-

Date	Prev-Day Close	Open	High	Low	Close
14/3/2013	5851	5846	5920	5792	5909

Review of Previous day:-

Market witnessed a high swing day, where it moved between 5792-5920.

Technical Analysis:-

Volumes & FII Inflow: – Volumes have increased along with increase in net FII inflows. This will support upward momentum.

Pivot Point (Major support/resistance): 5874

Pivot Resistance & Support

Levels	1	2	3
Pivot Resistance	5955	6001	6083
Pivot Support	5827	5746	5699

Line & Candle Stick chart interpretation:-

Short-term:-

In the short-term, Nifty’s range is between 5850-5945.

Both RSI and MACD, points to upward momentum.

Medium-term:-

Range is between, 5720-5945. Once 5955 is taken out convincingly Nifty’s next target will be 6010. Immediate support is at 5905 and further down at 5945.

MACD is showing positive trend, RSI may need one more session in the upward direction to confirm the positive trend.

Fundamental Analysis:-

Domestic Factors:-

Nifty had a volatile session, where beginning of the day saw, huge cut backs and Nifty falling to the lows of 5792, as the cobra story on money laundering hit the financial counters hard.

But with the Feb inflation data coming at 6.84% from 6.62 % in the previous month, although, the recent figure is higher than analyst estimates, softening core inflation (Excluding fuel & food), has raised hopes of a rate cut in the Reserve Bank of India’s upcoming monetary policy review on March 19.

Markets were further cheered by statement from Mr. C Rangarajan (PM’s Economic Advisor), that February WPI inflation data gives Reserve Bank of India (RBI) room to ease monetary policy when it meets next week.

Reserve Bank of India (RBI) opened the door on Thursday to foreign institutional investors (FIIs) using investments in corporate and government bonds as collateral in the futures and options segment of stock exchanges.

The move announced by the RBI is expected to improve liquidity in the derivatives market, one foreign bank dealer said.

The RBI also said it was permitting FIIs to use their investments in corporate bonds as collateral in the cash segment of the stock market.

Seeking to dispel fears over the state of economy, Finance Minister P Chidambaram today said the country will return to high growth of 7 per cent in two years and promised adequate public spending to stimulate it.

Replying to a debate on the Budget 2013-14 in the Lok Sabha, he said the government was committed to ensuring reduction of fiscal deficit from 5.2 per cent to 3 per cent by 2016-17 as the current level is “very high” and not sustainable.

Nifty (March) Futures edged higher at 5940.

Views: – Easing of core inflation has helped Nifty to arrest slide and play upward. FM’s assurance on economic growth and RBI’s decision on collaterals for FII’s adds to the list of encouraging news, which should help Nifty to hit big today.

Global Factors:-

US:-

Dow jones industrial average extended its recent winning streak to 10 days on Thursday, a string of gains last seen in late 1996, and ended at another record high as investors were encouraged by data showing the labor market’s recovery was improving.

The S&P 500 took a late-day run at its record closing high of 1,565.15, but ended just 2 points away. The 30-stock Dow Jones industrial average has been setting record highs since March 5.

US equities have accelerated their rise without a major consolidation since the start of the year, driven by improvement in the economy and the Federal Reserve’s continuation of its easy monetary policy.

The price data left scope for the US Federal Reserve to keep in place the very accommodative monetary policy that has helped support asset prices around the world.

View: – Technically, there should be a correction and issues like Sequester is still alive and improving US economic data might prompt further discussion on continuation of stimulus. These risks can bite US markets any time.

Europe:-

European shares surged to fresh 4-1/2 year peaks on Thursday on upbeat corporate updates, lower-than-expected weekly US jobless claims, and a lack of price pressure.

Industrial production for January fell 0.4 percent MoM. Capital goods output dropped 1.2 percent MoM while consumer goods slipped 1.4 percent MoM.

French non-farm payrolls decreased 0.3 percent QoQ in the December quarter. Meanwhile, Italy managed to raise targeted euro 7 billion. Italian yields rose by 18 basis points since last auction.

View: –

Europe is following US markets; hence any correction in US will prompt similar action in Europe. Italian parliament will convene for the first time since elections. The events will be watched closely by Europe.

Asian markets & SGX Nifty today:-

Asian shares shrugged off three days of losses on Friday as global risk sentiment was buoyed by new US data overnight suggesting a steady recovery in the world’s largest economy.

The MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.3 percent after falling in the past three sessions as investors took profits from regional rallies that took some of the national indexes to record peaks or multi-year highs.

Barring Kospi, all other indices are trading in green.

SGX Nifty is flat with .06 % gain.

View: – Asian markets , like Europe is following US markets trend. Nothing significant happening on either direction.

Call for the day:-

Taking cue from Asian and other global peers, Nifty should open in green. Except Cobra news, makes some front line banking stocks to bleed.

Longs initiated at 5895 should be squared at 5940 levels or use trailing stop losses (keeping 15 points gap) from the beginning.

Once Nifty takes out 5955, long can be initiated at 5960 with a target of 6000 and stop at 5940, if not already in long.

Shorting not advised considering the March 19^th policy expectations.

EOD Position:-

Date	Prev-Day Close	Open	High	Low	Close
15/3/2013	5909	5915	5946	5861	5873

Review of the day:-

Market again witnessed a high swing day, where Banking stocks did struggle due to cobra post expose on alleged money laundering, which was discussed in the morning. And as per the morning call, long positions initiated yesterday and squared by 5940-45 levels would have made good money today.