Posted By : Kishore B.S
The Indian Indices remained negative yesterday and tanked post the IIP numbers that were released, which though were above and almost double than the expectation of the 1.2% coming in at the 2% levels.
The main reason for the dip in the markets were the IIP numbers that came in higher, since they dampened the hopes of the RBI rate cut on the 19th of the current month, where the street is expecting atleast a 25 bps cut in the rates, to stabilise and aid the Economic growth. But the better numbers dampened these hopes since now they fear that the cut might not be effective.
Also the fact that as stated the Indices failed to crossover the pivotal 5990 levels due to which they witnessed the profit booking but the important point to note was that the indices held on to the 5880 levels yesterday and as clearly pointed out technically if the markets hold the 5850-5880 levels then the bulls can cheer, since the Indices have the ability to bounce back further to the 6000 levels again.
At this juncture the charts are indicating that the 5850-5880 levels need to hold for the bulls to rule again and probably tomorrow’s inflation numbers might decide the fate of the bulls or bears depending on which the further course of the Indices would be clear till then it would be worthwhile to follow the strategy of buy on dips and sell on rallies……
(Inputs: Basket option Research bureau – Bangalore)