"Sensex opened with a gap and touched another new high at 14963.26 where selling emerged, we said 14950 is a strong resistance in our weekly forecast, and profit booking brought both the indices in to negative territory for most part of the day. Nifty made a lower top and lower bottom yesterday, giving first signal of tiredness, fresh longs are absent as the event is nearing, Infosys results and guidance on 11th instant. However, inidices have closed marginally negative to flat at the end of the day. Nifty futures traded at a discount of 10 points during the day most of the time, and short covering, as Nifty could not breach 4300 level, made it to recover and close flat, at the end of the trading.
Bank of England has increased the interest rate by 25 basis points, where as ECB left the rate unchanged. Crude is firm above US$ 71 on supply concerns. Inflation data shall be released at 12 noon which might show signs of bottoming out around 4.25%. Inflation was down from 6.7% to 4.03% last week, for seven straight weeks in a row. The fall in inflation is not on account of fall in prices, and is due to base effect, as it is being viewed by some economists. Rupee is strong against US $ on account of flows and RBI seems to be protecting it from not breaking 40 level, as it would further hurt exporters. Rupee might trade in a band of 40 to 41.50 during the month.
Technology sector is forsaken baby for the moment, in view of the above situation, and underperformer in the entire rally of indices. Markets will have clear direction on the out look to be released on 11th by Infosys management. Markets will be volatile and will consolidate sideways a head of the results season unfolding next week.
Important levels to watch on Nifty 4318.30 and Sensex 14640.86 which are previous week and month closings. Any weakness in the markets below these levels will be the first sign of markets going into deeper correction next week. One can go long on Nifty futures on weakness around 4300 to 4310 band, with a stop loss at 4280 intra day for profit. Strong resistance area is 4360 to 4375 on Nifty futures.
The day's range for Nifty shall be 4280 (Support) and 4380 (Resistance); Sensex shall be 14650 (Support) and 14950 (Resistance)
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