Posted By : Kishore B.S
The markets opened flat and instantaneously there was a 30 point cut. The market never recovered and slipped 90 points down to close at 5380. The stance by RBI to keep the rates unchanged was the primary reason of this downfall. The banking stocks rallied on Wednesday expecting a rate cut from RBI but the high inflation numbers and rising crude price forced RBI to keep rates unchanged. The more important thing is that from RBI’s statement it seemed that even in April the rate cut is a bit unlikely.
Dow futures are showing a positive opening of 60 points. Weekly jobless claims data is expected today which is expected to be good. The European markets are also trading flat. So, the global scene is a bit stable now. Asian markets were a bit negative because the negative outlook of China. But that is now discounted in the price.
Tomorrow the budget is going to be presented. The markets are not having a huge expectation from this budget. So, even small positive news can create a rally. The biggest reform would be removal of STT(Security Transaction Tax). If this happens it will be a huge boost for the market.
So, the strategy here should be to go long. Downside is capped at 5340. One can go long with a target of 5500. There can be a gap up opening of 20-30 points tomorrow. Still the call here would be to go long and exit your positions around 5500.
(Contribution: Mr. Shubham Deva, An Stock Market Institute Associate, IIT Kanpur)