Nifty closed above 200DSMA while Sensex missed by 100 points!

After almost 2 months of bearishness, finally Nifty has closed firmly above 200DSMA yesterday, due to heavy short covering in banking, real estate and tech stocks, where short positions were built a head of RBI's credit policy meeting, since rate hike was mostly expected. RBI's hawkish stance, to target the monetary and liquidity management, by icreasing another 25 basis points CRR w.e.f.24.05.2008, and leaving rates unchanged, coupled with few announcements made by FM on the floor of parliament, while replying on budget proposals, reducing customs duty on steel imports, introduction of export duty on steel, cement and basmathi rice etc., for ensuring increase in supply of these commodities, which are chief components contributing to raise in inflation beyond the tolerable levels of 5.5% for this fiscal, helped the indices to close firmly with strong gains.

US consumer confidence index was down to 62.3%(yoy); which made investors nervous and US indices have traded in negative terriotory and finally closed marginally negative. Crucial FOMC meeting is on and the decision on the rates will be known during US market hours, which will be 11.00 p.m. IST, and if the FED futures indication is to come true, 25 basis points rate cut is expected and being priced already in the stock prices. Any disappointment on this front, would create havoc on the US markets overnight and tomorrow too. Since crude is trading above US $115/- continuously, mainly on account of weakness in dollar, the firmness in global commodities prices also is because of this which is raising the inflation worldover, including US, where even growth started slowing down, threatening "Recession" and some analysts even predict 'Depression'...FOMC should pull up their socks to handle the larger problems of their economy and currency rather than looking at protecting stock prices, in our view. This realisation has to come sooner, then it is better for even world economic stability too since, US economy is the largest and its currency is 'defacto' internationally accepted currency for trade and transactions between nations.

Whatever decisions are taken by FOMC to night, can be effective with our markets only on 02.05.2008, since tomorrow is a trading holiday for us. Thus, investors should protect their portfolios with proper hedge like buying 5200 put options, during the day should not be a bad idea. VIX stood at 26.16 being the lowest level, indicates lower volatility and tight range for the market today. Today being the last day for April'2008, and since nifty firmly crossed 5137.45(January Closing) and whether it will clear 5223.50(February Closing) also today and close above it, will be watched by technical analysts, for monthly charts to improve the structure. Singapore Nifty futures are trading with 12 points premium currently, but profit booking can be expected in the later half of trading owing to a holiday tomorrow.

Range for the Day: Nifty might trade in the range of 5110 to 5250 today