Nifty recovers on short covering - Alex Mathews

The markets had opened on a positive note tracking recovery in the Asian space and positive cues from the US futures segment and thereafter saw a volatile trade keeping the mood positive for the whole day. In the second part of the day we saw some profit taking but again it moved up and closed for the day in green away from the low of the day and above 4800. Asian markets remained sideways to positive while European markets gained today.

We had seen short covering ahead of the November futures expiry which helped the Nifty to stay above 4800, and oversold situation of the market also helped the Nifty's recovery to a greater extent.

The other day gold and crude came of low with Gold price moving below $1700 and even if it recovered from the lower levels, it is still below $1700. Rupee on the other hand has fallen to its lowest level ever and is expected to fall further. RBI had made it clear that its intervention in the currency market will be limited which also caused tension to build up. Rising oil import bill, wide spread equity selloff etc are actually causing the present selling. Importers are finding it really stressed and one another thing to see is that the NRIs are taking this opportunity to send money home as they are getting higher price. Shares in the IT segment gained considerably on two counts one is that drastic fall in rupee against dollar and second being value buying after the recent slide.

Nifty today closed above 4800 and is having resistance at 4850 and 4887 while the support is there at 4778 and 4744 levels. On the sectoral front, selling pressure was seen in consumer durable and FMCG while IT metal, auto and technology stock gained today. A fall in crude price below $99 helped the oil marketing companies to gain today in which BPCL and HPCL showed extreme strength.

Asian markets were trading slightly negative and have recovered a long way from the morning lows tracking recovery in the US futures. Asian stocks recovered after S&P's and Moody's investors service said they won't lower credit ratings on the US after the congressional committee charged with finding $1.5 trillion of deficit cuts failed to reach an agreement. In China, a survey has shown that the car sales forecast may rise by 10% in 2012 faster than the current pace of deliveries. Given the debt crisis situation in Europe, the companies in the region show no signs of slowing with earnings growth almost near to their US rivals. Crude and gold have fallen with gold below $1700 and is looking weak. Later in the day we expect the US GDP data.

Source : Equity Bulls

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