Revising DTAA treaty weighs on Indian Markets - Alex Mathews

Markets had opened on a negative note tracking peers in Asia and thereafter moved sideways till the early part of the afternoon session on the day of expiry. In the final hours of trade, we saw selling pressure and Nifty came to a close for the day and the series at the low of the day. The Italian bond sale which is yet to start was one factor which caused European markets to erase the early gains.

The rollovers were just above 60% but the late selloff is indicating that the rollovers are probably on the short side. Clinical examination of rollover data shows that IT, auto, bank and telecom saw good rollovers indicating that investors are hoping good time for these sectors while FMCG and capital goods sector showed muted reaction. The reports that Indian and Mauritius officials have started talks of revising the DTAA treaty also weighed in on the markets today.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,587 shares fell and 1,082 shares rose. A total of 131 shares were unchanged. FIIs have remained muted throughout the week being end of the year.

Late sell-off in Nifty made it to close below 4650 levels. Resistance for Nifty is at 4685 and 4725 while the support is there at 4622 and 4599 levels. Being the first day of January 2012 expiry, we may see minor value buying in selected counters tomorrow and one should keep in mind that the outlook for the markets still remains weak. On the sectoral front, oil, capital goods, realty, power and consumer durable fell while metal and healthcare gained in a minor way. Banking shares were under pressure as most of them had raised the interest rates on NRE deposits to boost foreign currency inflow.

Source : Equity Bulls

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