Nifty to remain under pressure in near term

By Vikrant Shah

MUMBAI: Key benchmark indices declined marginally this week on weak global cues amid dimming hopes that US politicians will reach a debt deal before the end of the year.

Technically, a mix movement on stock was seen during the week. The Sensex largely moved in the range of 600-700 points while the Nifty moved in a range of 150-200 points.

We saw Nifty futures taking psychological resistance at 6,000 and a sell-off or profit booking was seen in the range of 5,950-6,000 with open interest increasing to 5,800 options.

We could expect the Nifty to remain under pressure as negative crossover on moving average convergence divergence is visible on charts. A fall below 5,800 cannot be ruled out looking at the current scenario.

Our long term perception remains bullish with a target of 6,100. Weekly close for the Sensex is at 60 EMA on 240 mins chart which could act as a major support. The strong support lies at 19,100 on daily chart.

The market may remain volatile as traders roll over positions in the F&O segment from the near month December 2012 series to January 2013 series. Next week is a truncated trading week as the stock market remains closed on 25 December 2012, on account of Christmas.

Stocks fell across the globe after US House Republican leaders on 20 Dec’012 abruptly cancelled a vote on a tax-cut bill, sparking fears that the parties remain far apart on a compromise budget deal.

On the domestic front, FIIs have purchased shares worth Rs 18,380 crore in December 2012 so far (till 20 December 2012). Earlier this week, the RBI kept its key policy rate viz. the repo rate, unchanged at 8 per cent after mid-quarter monetary policy review on 18 December 12.

The central bank said that in view of inflation pressures easing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards.

RBI also said it is closely monitoring the evolving growth-inflation dynamic and will update the formal numerical assessment of its growth and inflation projections for 2012-13 as part of the third quarter review in January 2013.

Then we had the Banking Laws (Amendment) Bill, 2011 which was passed in the Lok Sabha early last week. The passage of the Banking Laws (Amendment) Bill is expected to pave the way for issuance of the new bank licenses by the RBI.

(The author is CEO of Latin Manharlal Securities)