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The Budget, by all reckoning, is a balanced
budget and is likely to be greeted by the market
participants as such. It is likely to spur
consumption and also promote growth of
infrastructure. However, increase in excise duty
by 2% in a number of cases and the increase in
MAT from 15% to 18% would be considered
negative. In any case, at least a partial
roll-back of the stimulus package was surely
well anticipated.
The increase in petroleum product prices, though
inflationary in nature, is definitely a bold
step towards containing the fiscal deficit. The
road map given for it also shows the
government’s making an effort to tackle it.
Overall, we view the Budget as positive for the
market.
With Asia surging ahead yesterday when we were
celebrating the festival of colors and the Dow
along with the Nasdaq moving up strongly last
night promise to push our market up right at the
opening. The SGX March Nifty trades at 4986.50
as we write this Market Outlook. However,
nothing much to be read from this since it has
established itself as a very erratic indicator
to base your judgment on it.
Today, we expect the Nifty to once again scale
up above 5000-mark first time after Jan 27. If
it manages to stay above 5002 and close above it
that would really augur well for the bulls since
it would then be above its 89-day Simple Moving
Average. The all-important 89-day EMA is at
4929, which is expected to be cleared without
much ado today if other indications are anything
to go by.
The Nifty Put-Call Ratio (PCR) has jumped to
1.19, a level never seen during the February
series. This is another strong bullish
indication that the so called smart money is,
once again, willing to write puts. If the PCR
climbs above 1.30 bulls would clearly have an
edge. Another positive sign is the fall in the
NSE VIX to 24% from the earlier level of 43%.
This implies that there could be a trending move
on the upside if VIX continues to remain on the
lower side of 28 – 30%.
Coming to talk about levels, we expect the Nifty
to at least move up and test 5022; if it moves
up further then it may move up to 5056. On the
way down, initially we should watch 4973 and
below that 4943. Unless the Nifty falls below
4943 and stays below that bulls would retain the
full initiative. Any breakdown below 4880 now
would mean a complete surrender to the bears
again. In all likelihood, it now appears to be a
low probability event even though chronic bears
(not so rare breed in our market, in any case;
even we have one amongst us) would continue to
nurture the hope.
But for now, play long.
Rajat K. Bose |
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All prices relate to the NSE, unless otherwise mentioned. |
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Stop-loss levels are given so that there is a level below/above, which the market will tell us that the call has gone wrong. Stop-loss is an essential risk control mechanism; it should always be there. |
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Book, at least, part profits when the prices reach their targets; if you continue to hold on to positions then use trailing stops to lock in your profits. |
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Don't chase a stock, if you are unable to buy a stock because it hits circuit levels on successive days, don't buy that. |
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The analyst and his clients may or may not have positions in the securities mentioned above. |
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Trading involves considerable risk. Trade at your own risk to the extent you are comfortable. The analyst shall not be responsible for any losses incurred for acting on these
recommendations. |
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