Indian equity markets started FY13 on a strong note due to lower crude oil prices, some positive news on Russia-Ukraine front, some buying by FIIs, continued support by DIIs, and pick-up in industrial activity. Global markets are stable although there is still no clarity on the geopolitical situation, while there are concerns of both high inflation and slowdown as China battles Covid.
This week, RBI credit policy will be a key factor in the direction of Indian markets as it seems that RBI is behind the curve as most of the central banks have already hiked interest rates while RBI maintains status quo. It will be interesting to see how RBI manages the inflation and growth business where commentary will be important.
Historically, April has been one of the best months for equity markets where midcaps and little hat Stocks perform better. It will be important to see how FIIs behave in FY13 after relentless sales in the second half of FY12, though they have changed their gears in the last week with decent buy-in of Rs 5600 crore.
If we look at the derivatives data, the April series starts on a strong note as FIIs have long exposure of 71 per cent and put call ratio at a comfortable level of 1.31. The Fear Index or Volatility Index India Vicks has also fallen below 19 points, although it has support near the 200-DMA around 17.5. If we look at the OI distribution chart, the authors are looking confident at 17500 levels while 18000 is seen as immediate resistance.
Technically, Nifty is continuing its strong uptrend after breakout of 17350 levels where 17800 is immediate resistance while 18000-18100 is an important resistance area. On the downside, the 17500-17450 area will act as an immediate support zone while the 17100 is crucial support on any sharp return.
Finally, Banknifty managed to break out the crucial resistance area of 36700-37000 and it is showing strong momentum where 38000 looks like an immediate target although 37400 is an intermediate hurdle. On the downside, the 36700 level should now act as support while 36000 is the next important support level.
Mr. Santosh Meena, Head of Research, Swastika Investmart Ltd.
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