Momentum may sustain…200-DMA eyed

Nearly everything you do is of no importance, but it is important that you do it. - Mohandas Gandhi.

We are entering an important trading week after the previous week’s spirited rally. Today’s start looks to be a positive one. The main Indian stock indices registered their best weekly gains of 2011. The breakout above 5500 has brought the Nifty within striking distance of its 200 DMA (~5680-5690). We might see accentuated buying in the near term if the Nifty is able to sustain above this critical level.



FII inflows have been quite supportive over the past few sessions. It remains to be seen if this trend persists. If it does, the market could head further up. Some more short-covering cannot be ruled out ahead of the F&O expiry on Thursday. At the same time, we could see some consolidation before the ascent resumes.

The market could be choppy amid a slew of global problems (Japan crisis, MENA turmoil, the Eurozone debt troubles and high crude prices). The end of fiscal year might lead to last minute portfolio realignments. Wednesday’s trading will be interesting to watch in view of the Indo-Pak semi-final. Stick to Large-Caps as the non-index counters may take a while to recover.

Equities did really well across the globe last week. But given the series of negative factors one should remain vigilant for any negative surprises from the offshore destinations.

In terms of local data points, market participants will keenly follow statistics on the latest current account deficit, fiscal deficit, auto sales, trade figures and PMIs. Globally, investors will keep an eye on developments in Japan, the MENA region and the eurozone. Important economic statistics to watch out for will include the PMI data apart from the US jobs report.

FIIs were net buyers of Rs 14.46bn in the cash segment on Friday, according to the provisional NSE data. The domestic institutional investors (DIIs) were net sellers at Rs 3.14bn on the same day. FIIs were net buyers at Rs 32.92bn in the F&O segment. The foreign funds were net buyers at Rs 3.45bn in the cash segment on Thursday, as per final SEBI data.