NIFTY TODAY : EPISODE 86

NIFTY TREND FOR 18-04-2012

Major Resistance Levels : 5341-5375-5431.
Major Support Levels : 5216-5156-5123

Nifty is bullish above 5246. Short ( selling ) positions are advisable only after giving instruction.

Nifty ( Closing ) : 5289.70

Nifty gained remarkable gain with 1.22% increase today. Market showed high volatility today. But, it was not good for intraday trade due to sideways movements.

The main issue of the day was repo rate cut by RBI as a remedy for increased inflation. RBI decreased repo rates by 50 basis points. Thus, it is fixed from 8.5% to 8% now. As a result, reverse repo is determined at 7% and marginal standing facility at 9%. Usually, reverse repo is set 100 basis points below the repo rates and marginal standing facility 100 points above the repo rate. Nevertheless, CRR remains at 4.75% without any change.

Naturally, inflation should be solved by this decision. But, it is not a panacea for the crisis. Government also should take some hard decisions for the improvement of the financial status. But, it is doubtful that government can take necessary steps, since it faces much more political pressure ( especially from their alliance by Thrinamul Congress Party).

In this context, it will be very hard to tackle the inflation, if it remains even after the rate cut. Consequently, RBI stopped the opportunity by 50 basis points rate cut. They could keep some allocation for the future by decreasing only 25 basis points.

Another noticeable special feature of the day was the less responses from bank stocks. AXIS BANK, SBIN & PNB were included in the list of NSE top 5 gainers yesterday. No single bank stock could make the same today. It justifies our assumption. Anyway, we have to wait some more period to realize the fact.

GOOD LUCK.....