Markets regain ground in second half - Alex Mathews

The markets had opened on a negative note tracking weakness in the global arena and slipped further in the morning session itself touching the lowest point of the day by noon. Later in second part of the day we saw markets making a comeback recovering most of the lost gains. However the overall trend of the day was negative and the markets closed in red. The FIIs remained sellers as per yesterday's data. The volatility remained high with Nifty VIX up around 6%. The market breadth, indicating the overall health of the market, was negative. On BSE, 1,685 shares fell and 1,080 rose. A total of 128 shares were unchanged. There was mews from Housing Finance regulator saying that from now on Housing Finance companies will not levy any fee on floating rate loans for pre-payment of loans if the payment is made from own sources like savings or loans from relatives. Also we had the inflation number for the week ended October 8th at 10.6% from 9.32% in the previous week. Given the uncomfortable inflation level, the RBI's stance at its half review will be crucial for the rate sensitives.

Nifty today made a decent recovery by the end of the day. Now Nifty is having support at 5050 and 5010 while the resistance is there at 5116 and 5140 levels. We have just two days before the October expiry and we may see some more lower level pull back ahead of the expiry.

On the sectoral front, we saw selling in realty, auto, power, capital goods and consumer durables while gains were seen in IT and technology. As inflation moved into double digits, the RBI is expected to raise the interest rates further as they maintain their stance that bringing down inflation is their main objective. This caused selling in rate sensitives. Falling rupee against dollar helped the IT and technology stocks give some support at lower levels.

Asian markets were all trading in red tracking US markets which had given into the bears later in the trade. Base metals along with precious metals fell yesterday on signs of slowing economy and growing concerns in the euro regions. Chinese stocks lead the decline in the Asian space falling to a 31 month low. In the European front, the French-Germans are split over Europe's rescue strategy emerged as finance ministers prepare to meet in Brussels tomorrow under pressure to craft a solution to the region's debt crisis which kept the markets down. Also we saw Slovenia's credit ratings being cut by S&P to AA-/AA-1+ from AA/A-1+. However the US futures are trading green as earnings from Eli Lilly & Co to Philip Morris beat estimates.

Source : Equity Bulls

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