A Week That Left Markets Amazed - Karvy

RBI Governor Raghuram Rajan has the knack of surprising markets. So when no market maven had an iota of doubt over an imminent repo rate hike announcement by Rajan on December 18, the RBI did the unthinkable - keeping the rates on hold. The markets were pleasantly surprised and stocks, especially from banking segment, surged. As if it was not enough, the outgoing Federal Reserve chairman, Ben Bernanke, soothed investors' nerves by announcing a moderate taper of QE - $10 billion reduction in its monthly bond buying programme. The taper, which Bernanke announced in his last meeting as head of the Federal Reserve, was welcomed by the US markets with Dow and S&P 500 closing at record highs. Indian markets, though responding gingerly the next day, joined the rally on Friday as they discounted fear of tapering. Many feel the taper, a sign of recovery in US economy, is actually good for emerging markets like India as the global liquidity would continue to pour in since the Fed has kept interest rates low.

The Nifty started the week on a fl at note around the 6175 mark and thereafter witnessed high volatility through the week. The index remained range bound between 6150 and 6300 levels. RBI's decision not to hike rates failed to cheer the markets which saw selling pressure mid-week before bouncing back in Friday's trade to close the week at the highs. Technology and Healthcare sectors saw healthy participation and outperformed benchmark indices. On the other hand, Banking and FMCG sectorial Indices underperformed the benchmark indices. Long positions can be assumed in Technology and Healthcare stocks if the Nifty sustains above 6200 levels in the coming week. Short positions can be accumulated in Banking and FMCG stocks if the Nifty slips below 6200 levels. Short positions can also be initiated in them if the Nifty bounces towards 6350 levels. Overall, we expect the Nifty to trade in the range of 6150-6350 levels for the next week. The range is likely to prevail till the next quarterly number provide fresh triggers for the markets.

Source : Equity Bulls

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