Inflation flat at 12.14% but rupee weakens against US dollar as FIIs continue to exit Indian Equities!

Derivatives settlement of September series is behind now, where Nifty has closed 114 points down from august settlement closing. Nifty futures of October series have closed at 48 points hefty premium is positive for markets today, which might add from today till month end. US markets have closed with gains overnight, on the assurance from Govt quarters of getting the bail out package passed by congress smoothly. Asian markets are trading flat to negative and Singapore Nifty futures are also flat right now. Nifty closed well below 5DSMA yesteday, amidst volatility, however, the price adjustment on settlement day cannot be considered for technical analysis, as funds will try to ensure the closing price to suit their outstanding positions of the series. The first hurdle for the markets today shall be 5DSMA placed at 5173.40, and then previous week's closing 4245.25, once the psychological mark of 4200 is cleared with volumes. It will be interesting to see how and where nifty closes today at the end of the session.

 

Inflation figures came flat at 12.14% suggests that the head line inflation might be stabilizing and in the coming weeks it might come down, is comforting news for RBI, which need not take any further measures on monetary tightening. Q-2 performance and results season commence from first week of October which will be priced into by market players from today. Some fund buying to prop up NAVs in index heavy weights cannot be ruled out till 30th Sept'2008. Though US dollar is weak against Euro and other currencies, rupee instead of strengthening is becoming weak is a cause of concern for our economy. This is mainly because FIIs are continuing to exit equities and are pressing for sales at every raise in prices, as Participatory Notes unwinding continues. As indicated earlier All outstanding PNs which are not registered with SEBI need to be wound up or register with SEBI by 31.03.2009. Thus, the bearishness shall invariably continues till such time in our markets. Another irony of rupee weakning is hurting soft ware exporters too, as they have not forecast this much of depreciation, almost 15% over previous quarter, and have taken hedge around 40 to 41 against dollar, are loosing an opportunity of profit. The fear that they might post huge forex losses also putting pressure on tech stocks, which are under performing.

 

Range for the day: Nifty might move in the range of 4040 to 4240 today.