Relief rally may sustain…but pressure stays

However long the night, the dawn will break. - African Proverb.

After a scary fall of last week, the Indian market has bounced back, and how! In just two trading sessions, the Nifty has rallied a whopping 250 points. We expect another positive start but there may be some softening later, as global markets seem to be taking a pause.



Immediate projection of a ‘falling wedge’ is placed at 5650 in the near term and 5350 will act as a strong support for the Nifty. The 200-DMA is placed at 5630.

Some moderation in inflation has offset another bad set of IIP data. End to the civil unrest in Egypt coupled with a drop in oil prices and the continuous strength in the US market have also aided the sentiment.

On the political front there seems to be some relief as well. The Government is likely to announce a JPC probe into the mega 2G scam shortly. As a result, the Budget session may not suffer the same fate as the winter one did.

Curtains will come down on yet another earnings season. Tata Steel will declare its Q3 results today.

Globally, China's consumer price inflation has increased less than expected. China's CPI rose a less-than-forecast 4.9%, as the government says it has re-weighted components in the CPI. But wholesale prices rise faster than expected. The Euro is under some pressure on lingering debt issues. US president Barack Obama has unveiled a plan to undertake deep cuts in the budget deficit. G20 finance ministers will meet this week.

FIIs were net buyers of Rs 1.47bn in the cash segment on Monday, according to the provisional NSE data. The domestic institutional institutions were net buyers at Rs 1.09bn. FIIs were net buyers of Rs 25.79bn in the F&O segment. Foreign funds were net sellers of Rs 4.34bn in the cash segment on Friday, according to the SEBI web site. Mutual Funds were net buyers of Rs 2.54bn on the same day, as per the SEBI figures.