RBI cuts another 100 basis points of CRR yesterday after market hours to infuse liquidity!

After touching 3648 on Nifty, selling emerged, supported by weak global cues, markets had a down tick day due to huge cut in Larsen & Toubro shares. Nifty closed below 3500 yesterday, indicating that the relief rally might be over; bear grip has tightened and bulls are totally absent, in these extreme pessimistic situation all around the world on all parameters. Now, it appears that Nifty would settle in 3000 to 3500 band from now on. 3178.55 is the 50% retracement level, once gone, then the next level of support can come at 3000 psychological level, or at 2630 level where the first raising gap left unfilled since 14.06.2006. VIX has closed at 46.07 indicating higher volatility, Singapore Nifty futures are currently quoting at 225 points discount suggests gap down opening, as US markets tanked last night on Bernarke testimony that there shall be 'no quick recovery' possible inspite of US government coming forward to major banks by infusing capital directly. Asian markets are in dumps and trading with huge losses. Crude cooled to 75$ is no relief since the fall in price is being attributed to demand slowdown (destruction) as global recession fears strengthening.

RBI has reduced another 100 basis points of CRR yesterday after market hours, thus finally bringing CRR to 6.5% to provide liquidity with banks in India, may not have any positive effect in immediate short term on the sentiment for our markets. Markets ignore positive news in bear markets and over react for any negative news and vice versa in bull markets. 5DSMA of Nifty is currently placed at 3428.31 itself could not be held even yesterday, suggest further weakness.

Range for the Nifty: Nifty might trade in the range of 3180 to 3520 today.

Strategy for the Day: Buy Nifty futures at the opening with a stoploss of 50 points below the purhcase price for intra day gains, if one is a very high risk trader.