Indecisive ahead of the expiry

Learning to live in the present moment is part of the path of joy - Sarah Breathnach.

A meaningful correction may have eluded us so far this year but could hit us anytime given that the market has entered the so-called overbought zone. The question troubling many participants is: how long can this liquidity-driven ‘risk on’ rally last? The Nifty has surpassed 5600, while the Sensex is near 18,500. Both the indices have rallied 18% YTD on the back of heavy FII inflows. Last year they lost ~25% each.

The Dow pierced 13,000 but closed below it yesterday. The ongoing buoyancy in equities has its roots in the ECB’s LTRO and loose monetary policies of other central banks. The ECB is scheduled to unveil another LTRO later this month.



The start today is likely to be sedate. Asian markets are indecisive and mixed. European indices fell despite Greece getting another rescue package. US benchmarks finished flat.

Back home, retail level inflation is still elevated. Crude prices too remain uncomfortable. Liquidity continues to be tight, stoking speculation of another CRR cut in March. A rate cut may take a while to materialise. The Union Budget is another domestic event to look forward to in the coming days apart from the outcome of UP elections.

The earlier resistance of 5550 has now turned into a strong support for the Nifty. The current rally has the potential to stretch till 5700 in the coming days. Hence, we recommend adding long positions on every dip with a stop loss placed at 5550 on a closing basis.

The MCX IPO launches today and will be open for three days. The issue is likely to receive very good response from all categories of investors. Whether the MCX IPO will revive the comatose primary market remains to be seen.

Sterlite Industries and Sesa Goa could be in the spotlight amid reports of Vedanta Group Plc mulling a merger of the two companies. Kingfisher Airlines has received a lifeline from SBI and thus could recover. RIL has announced a JV with Russia’s Sibur for butyl rubber.

Gujarat Pipavav and KSB Pumps will declare their results today.

Trend in FII flows: The FIIs were net buyers of Rs 14bn in the cash segment on Tuesday while the domestic institutional investors (DIIs) were net sellers at Rs 12.44bn, as per the provisional figures released by the NSE.

The FIIs were net sellers of Rs 7.07bn in the F&O segment on Tuesday, according to the provisional NSE data.

The foreign funds were net buyers of Rs 5.94bn in the cash segment on Friday (Feb. 17), as per SEBI web site. The Mutual Funds were net sellers of Rs 141mn in the cash segment on the same day.

Global Data Watch: Conference Board Australia Leading Index (Dec), HSBC's China flash manufacturing PMI (Feb) (49.7 vs 48.8), Germany's flash manufacturing and services PMIs, Eurozone flash manufacturing and services PMIs, Bank of England minutes, Eurozone industrial orders and US existing home sales.

HSBC said today that the initial "flash" estimate for its February survey of Chinese manufacturing rose from January's level but remained slightly in contractionary territory. The provisional reading of the manufacturing PMI rose to 49.7 from a final reading of 48.8 in the previous month.