Nifty now has support placed at 5850 - 5800 range - GEPL Capital

Biggest positive of the day was that inflation for January, 2013 came in at 6.62% versus 7.18% in December, 2012 and against Bloomberg estimates of 6.98%. However, this failed to boost markets spirits and NIFTY kept trending lower throughout today's trading session. Despite the lower inflation, it is not certain that RBI would cut rates since Current Account Deficit is threatening to spiral out of control. Also, the FM, RBI and other quarters of the Government are divided over steps to address the growth versus inflation riddle. BSE CAPITAL GOODS and BSE OIL & GAS suffered the most with cuts of 2.27% and 1.59% respectively. A spate of bad quarterly earnings led the BSE MIDCAP and BSE SMALLCAP indices to drop 1.43% and 1.86% respectively versus 0.61% and 0.57% cuts for NIFTY and SENSEX respectively.

Asian stocks ended in the positive today despite a GDP contraction for Japan in Q4CY12 by 0.4% in line with street estimates. The contraction led to speculation that Bank of Japan would take concrete steps to boost flagging growth taking NIKKEI up by 0.50%. HANG SENG gained 0.85% as ramped pepped up due to tourist rush during the lunar new year holiday season. Sentiment in Europe was tempered after German GDP fell 0.6% QoQ in Q4CY12 versus expectations of a 0.5% contraction. Consequently, DAX was lower by 0.08% and FTSE was lower by 0.20%.

Despite opening positive Nifty was unable to sustain at higher levels and it finally concluded the day with a loss of 36 points at 5896. We had indicated the range of 5980 to 6000 would be difficult to surpass for Nifty. Nifty made a high of 5969 yesterday and succumbed to selling pressure today. It continues to appear weak on the chart and may now slide down till at least 5850, our long standing bearish target for the index.

There is now a possibility of a counter trend bounce back which may materialize if Nifty manages to sustain above the level of 5800. We recommend profit taking in short selling positions near the level of 5850.

Source : Equity Bulls

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