Nifty has been largely rangebound - IIFL

The main indices have fallen again. A rise in the prices of vegetable and cereals pushed retail inflation to 10.91% in February. However, IIP data surprised positively with 2.4% growth in January, but it failed to cheer the indices as Nifty closed 1% lower for the week.

While the headline inflation print came higher than expectations at 6.8%, the continued moderation in core inflation kept the market expectation alive that RBI would cut the repo rate by 25bps coming Tuesday. The central bank is likely to take heart from the fact that increase in WPI month-on-month was essentially driven by de-regulation of fuel prices. Further moderation in core inflation during March would enhance possibility of a rate cut on May 3rd also.

Broadly speaking, the market remains in a trading range and may continue to be so in the run up to the March 19 policy meeting of the RBI. Global cues in the coming week will provide some near term direction.

Nifty has been largely range bound this week after recording ~4% rally last week. Index is facing unwinding pressure as it approaches the 5,950 mark, coinciding with 50-DMA which is acting as a steady supply point. Coming week, we expect markets to take cues from monetary policy and clear positive trend is likely to emerge on move past 5,950-5,970 zone. A 50% retracement for entire up move beginning from 5,664 to 5,971, projects near term support at 5,818, below which the view turns cautious.

The VWAP for Nifty is at 5850, while for the Bank Nifty is at 11900. FIIs remained net buyers in cash segment as well as in Index options. Huge buying was seen in Nifty O-T-M put options like 5700, 5600, 5500 which added approx 20mn plus shares in open interest, while some call buying was visible at 6000 strike in last two trading session. Nifty for the next week might trade in the range of 5780-6020.

Source : Equity Bulls

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