Market breadth turns negative - Alex Mathews

The markets had opened on a positive note tracking positive cues from the US and Asian markets and thereafter moved in a volatile way going down and moving up twice during the day to finally close for the day in red. The loss registered today was minor when compared to the gains made in the previous sessions. FIIs remained net buyers till yesterday buying shares worth Rs 955.6 crore which only constitutes 31.55% of what they sold last week. The market breadth, indicating the overall health of the market, turned negative from positive in late trade. The government today approved amendments to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest and debt recovery acts to enable banks to effectively deal with bad loans and make loans more reachable. We also saw cabinet approving the digitalization of cable network in top metro cities by 2012 and cover India by 2014. During the day we saw the inflation for the week ended October 1st at 9.32% against 9.41% previously. Tomorrow we are going to see the inflation for the month of September and the same is expected to climb a bit due to spiraling food price and fuel cost. If the inflation remains on the higher side, we may see RBI recalculating the whole strategy whether to increase the interest rates or not. The RBI Governor had hinted that interest rates will remain high till inflation shows signs of easing.

Nifty today closed slightly lower on minor profit taking ahead of the monthly inflation data which is expected to move up further. Nifty is having support at 5049 and 5024 while the resistance is there at 5120 and 5163 levels.

On the sectoral front, we saw buying in bankex, IT, realty and technology while selling was seen in auto, capital goods and healthcare. Media shares along with cable provider gained on cabinet approval of cable digitalization. Rice stock like KRBL, Kohinoor and Daawat gained considerably today as floods damaged rice crops in the largest exporter Thailand.

Asian markets were trading in green on renewed hopes from European leaders that debt crisis will be dealt with all efforts and also Federal Reserve's plans to purchase more assets to boost growth. Also the sentiment remained positive as Australian unemployment rate fell to 5.2% from 5.3% previously. US markets had gained yesterday after congress cleared legislation for US free trade agreements with South Korea, Columbia and Panama which is now believed to open the gates of trade for American companies in almost two decades. In the European front, market slipped as US futures remained in red ahead of the trade deficit data which is expected to widen. Later in the day we are expecting the US trade balance, initial jobless claims and the federal budget balance.

Source : Equity Bulls

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