Posted By : Kishore B.S
RBI surprised everyone by cutting the repo rate by 50 basis points. Now, this is a very tricky situation. As most of the people were expecting a cut of maximum 25 basis points this was not discounted in the market. Nifty gained 60 points as the news came out but washed of all the gains in the next couple of hours again gaining some 60 odd points and closing at 5289. Inspite of the rate cuts bank nifty traded in the negative region for quite a long time. There was no run away rally as there should have been on such a huge positive trigger. This is one of the biggest positive trigger that could be provided to the market. Still Nifty could not break the upper band of 5300-5350. It could not even touch the upper band. It had support from Europe also still it could not break the upper end of the range.
Nifty has been in this trading range for a very long time. Initiating shorts at this point would be the right strategy with a stoploss of 5350-5380. Nifty does not have enough firepower to break through 5400. RBI’s cautious note that there might not be any further cuts in 2012 was a negative news for the market. In US Apple is trading low from a few days. Today also we are having earnings of quite a few big names. The futures are pointing to a positive start but whether we would be able to sustain it or not that is the question. Meanwhile Spain had a successful bond auction today but the woes of Spain remain as it is, without any solution.
(Inputs Mr. Shubham Deva, A Stock Market Institute Associate. IIT Kanpur)