Good Buying Banking Stock lift markets - Alex Mathews

The markets had opened on a lower note tracking weakness in the Asian front and thereafter witnessed a sideways trend till the first part of the afternoon session. In the last hour of trade, we saw some good buying happening in the banking space and it can also be taken as the balance of yesterday's short covering and closed for the day at the high of the day. The main event that happened today was the food inflation which fell to a 4 year low of 1.81% for the week ended December 10th as prices of essential items like vegetables, onion, potato and wheat declined. Onion became cheaper by 49.38 per cent year-on-year during the week under review, while potato prices were down by 34.39 per cent. Prices of wheat also fell by 4.21 per cent. However, other food products grew more expensive on an annual basis, led by protein-based items. The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,586 shares advanced and 1,192 shares declined. Also the Reserve Bank of India has allowed banks to avail themselves of funds from RBI on overnight basis, under Marginal Standing Facility (MSF), against their additional SLR holdings.

Nifty today had witnessed a strong recovery in the second part of the day and managed to close well above the previous close of 4693 and above 4700. We may see some more upside to the market till tomorrow noon and profit taking in the second part of the day. Nifty is having resistance at 4771 and 4800 while the support is there at 4686 and 4664 levels.

On the sectoral front, we saw gains made in realty, banking, power, consumer durable and PSU while IT and technology remained weak. Falling inflation rejuvenated the rate sensitive sector pulling up hopes that RBI will reduce the interest rates very soon. IT and technology stock came down after Oracle posted earning which fell short of Wall Street's forecast igniting fears that the global recession is still alive. Another fear for the IT sector is the proposed US call centre bill which will make companies that move call centers overseas, ineligible for grants or guaranteed loans from the federal government, a move aimed at stemming the tide of jobs to countries like ours.

Source : Equity Bulls

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