Behaviour of Indian Market during few hours on Tuesday has surprised most of us, infact it was FM influenced rally:-) So, one must not read too much into this pullback and take this opportunity to book profit rather than fresh investment. You will get better time to invest during next 6 months.
Equities surged to close sharply higher on Tuesday as aggressive buying emerged in realty, banking and power stocks in the last hour of trade. In a meeting with the finance minister P Chidambaram, PSU bankers reached a consensus to cut interest rates on advances by 75 basis points, while on deposits by 50 bps, say reports.
Bombay Stock Exchange’s Sensex closed at 10,668.45, up 330.77 points or 3.20 per cent.
National Stock Exchange’s Nifty ended at 3151 up 3.52 per cent.
“The statement by finance minister brought a very positive sentiment in the market. Such measures strengthen the medium- to long-term growth momentum of India”. The Nifty has strong resistance at 3180-3200 levels. If these levels are crossed only then the upsurge would continue. Else the bounce back may get punctured.
There was short covering seen in some bank stocks, but positive momentum built up in the afternoon after the finance minister P Chidambaram said that state-run banks would pass on easy liquidity and rate cuts to their small and medium business sector customers.
The Reserve Bank of India on Saturday announced a cut in its main short-term lending rate by 50 basis points, and in cash and bond reserve requirements, to shore up the economy against a global recession.
Interest-rate sensitive stocks such as banking and real estate added a huge open interest today, while fresh shorts were seen in the software. The markets may have a negative bias for the next couple of sessions until the results of the U.S. presidential election are known.
-JK, Equity Research Analyst.
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