Markets trade in narrow range of 35 points - Alex Mathews

The markets were sideways today with Nifty moving many times in and out of the negative region. It remained in a narrow range of just 35 points. The market breadth, indicating the health of the market, was negative. On BSE, 1340 shares declined while 1313 shares advanced. A total of 168 shares remained unchanged. The widely awaited diesel price decision meet didn't happen today which released some pressure off the rate sensitive sector. During the day we saw the food inflation number coming in which was at 9.01% for the week ended May 28 on the back of costlier fruits, onions and protein based items against 8.06% in the previous week. Banking stocks felt the heat as it is now most likely that the RBI will hike the interest rates by another 25 to 50 bps in its upcoming mid quarter review on June 16th. Tomorrow we are expecting the IIP numbers for the month of April. According to reports we may see new base year series (2004-2005) from tomorrow even though CSO may retain the old series data for another three months. Also there will be 45% addition of new items and we have to see how the new base series will impact the IIP numbers.

Nifty today moved in a small range and closed with minor losses. Nifty is having resistance at 5579 and 5616 while the support is there at 5483 and 5450 levels. Overall trend still remains sideways. One major concern regarding the global markets is the fact that DOW Jones has moved below its 100 DMA and is likely to move towards its 200 DMA which is around 11950 levels. Low level hiccups may be seen in between and Asian as well as the European markets which track US markets will feel the heat as well. Japanese markets, which had fallen recent past after the catastrophe, are cheaper on valuation side and so major downside may not be seen there as funds are moving to make an early entry into the Japanese markets which are having more growth prospects.

Consumer durable, capital goods, power and realty gained while auto, IT, healthcare and banking saw minor profit taking. PSU oil marketing companies slipped as there were no EGoM held today on diesel price hike and also due to the fact that the crude price moved above $102 tracking fall in US crude inventories. In the consumer durable segment, Hitachi, IFB Industries, Crompton Greaves etc moved up and is expected to continue its upside in coming days as well.

Japanese stocks drops for the first time in the last three days after fed chairman's statement that US economic recovery is weakening in some regions and also as the Japanese GDP fell to -0.9% against an expected -0.8%. Us crude inventories declined to -4.8 million from 2.9 million previously which triggered spurt in crude price which climbed to $101. In the second part of the day we saw the French business survey results at 103 against 106 previously while the French non-farm payrolls remained unchanged at 0.4% which made European markets trade mixed with a positive bias. Later in the day we are expecting the US jobless claim data and the US wholesale inventory data.

Source : Equity Bulls

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