Nifty to take support at 5157 - Alex Mathews

The markets had opened on a negative note tracking global markets and recovered making minor gains in the initial part of the day. But the recovery lacked health and it came down in the second part of the day and closed for the day in the red near to the day's low. The slide in the market was on the back of the unexpected hike in the Repo and reverse Repo rate by the Central Bank on Friday after the trading hours. We saw rate sensitives like the banking, auto and real estate sector under pressure.

Metal stocks like Hindalco, Sail, Tata Steel, Sterlite etc were down as the metal prices were down on LME. Auto Stocks like Tata Motors, Maruti, M&M etc lost its steam after the recent rally. Healthcare was the only sector which managed to close in green.

On Friday, RBI announced hike in Repo rate from 4.75% to 5% and Reverse Repo from 3.25% to 3.5%. India is the second major economy to raise the interest rates after Australia as green shoots of economic recovery was seen. During the day the Trade Minister had said that the government hopes to raise the share of manufacturing to 22% of GDP.

In the second part of the day the European markets to were in red with pharma stocks declining as the House of Representatives approved an overhaul of the US healthcare system. Asian space too remained weak on renewed concerns over debt worries in Greece. Also the US index futures were indicating a weak opening for DOW and finally our markets came to a close with Sensex down 0.95% and Nifty down 1.09%.

On the sectoral front, the only gainer was Healthcare while the major losers were Realty, Metal, Consumer Durable, Auto etc. Individual gainers were BSEL Infra, Excel Industries, Kalyani forgings etc while losers were Jayshree Tea, Neocure, JP Associate, DLF, Suzlon etc.

As expected, Nifty has started its downward journey. It was extremely overbought with five day RSI above 90 on Friday but has come down towards 58 today. But we may see some more weakness tomorrow with Nifty having support at around 5157 levels and if it moves below this level we may see further downtrend.

Source : Equity Bulls

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