Stock Markets in Consolidation!

Last week recorded third consistent range-bound week for the stock markets. We still maintain our view that the range of 5730-5635 levels has to be broken for any impulsive action on the either sides of the market. The stock market opened on a positive note and was pulled upwards by the Banking sector & Infra sector specifically JPAssociates & NTPC, to close higher by 0.58%. Second day traded with a negative bias to close lower by half a percent. All NSE India & BSE India sectors ended on a flat note. Jindal Steel was at the forefront to drag the market downwards. After a festive gap of one day the market opened on a positive note traded positively for the initial trading session was later dragged down by the Realty sector. M&M played the best while Dr Reddy played the worst. On the last day too Nifty fell badly to close lower by 0.72%. Only Auto sector specifically M&M, Heromotors and Bajajauto could easily beat nifty.

RBI is not keen on bringing down the interest rates but surely will look into reducing SLR limits so as to boost higher liquidity in the market. By this the banks would be eligible for more investments in Government securities and other liquid assets. But banks already have 23% SLR holding limit. Currently SLR would be used as Basel III requirements to safeguard banks against crisis issues. Moreover, RBI might cut CRR (cash Reserve ratio) i.e. the amount of deposits to be held by the banks in the form of cash.

Rupee gained in the initial session of the week due to dollar selling for FDIs and FIIs to invest in Government bonds. However, immediately in the next trading session rupee fell due to dollar buying by oil importers. Moreover, to hike the commission to the oil dealers, the Government increased petrol & diesel prices. As a solution Government needs to speed-up the oil exploration program within the country.Bullion market too gained momentum due to fresh buying by the retailers and investors on account of Dashera and for upcoming Diwali season.

What Next..

Nifty is still moving in the range of 5730-5635 levels. Nifty moving sideways due to mixed quarterly results from the large-cap stocks. The oscillators and indicators too are not indicating the direction of the markets. On the weekly charts Penant pattern might be in the making for another upward move. Currently we maintain our view of 5500 levels downside and 5800 upside. However, the trend is still bullish. Lets wait-n-watch.