Short-Term Market Trend Is Still Positive

Mumbai, Apr 2: Markets are likely to retreat in early trades after yesterday's record high levels amid weakness in the Gift Nifty index despite buoyancy in other Asian indices.

“Profit-taking may come into play due to excessive optimism, subdued US market close in overnight trades, and FIIs turning net sellers in Monday's positive session” says Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

The 10-year US benchmark yield hitting 4.323% could weigh on sentiment and prompt overseas investors to offload shares in emerging equities, including India.

Local investors could exercise caution ahead of RBI policy later this week although it is more likely that interest rate may remain steady due to inflation above the comfort level.

A distinct feature of a bull market is its ability to set new highs. This was evident yesterday when the Nifty set a new intraday high. In this bullish scenario characterised by strong momentum and supported by sustained gush of capital flows into the market, every dip will be bought, imparting resilience to the market.

“Since the global construct is slightly negative as evidenced by the rising dollar and rising US bond yields the FPIs may be tempted to sell ,” says Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services

But FPI selling is not having any major impact on the market since DIIs, HNIs and retail investors are calling the shots now.

On Tuesday, the benchmark indices saw range-bound movement. Nifty closed 135 points higher, while Sensex was up 363 points.

Almost all major sectoral indices traded in positive territory. However, the Realty and Media indices outperformed and gained over 4 per cent.

“Technically, the market saw intraday profit booking at higher levels after a strong opening. However, the short-term market trend is still positive” says Shrikant Chouhan, Head Equity Research, Kotak Securities.

Our view is that the broader market structure is bullish, but a fresh uptrend rally is possible only after the rejection of 74250.

If the market goes above that, it may jump to 74500-74800. On the other hand, below 73900-73850, we may see a quick intra-day correction till 73600-73400.

The Bank-Nifty has support at 47400 and resistance at 48000. If it falls below 47400, it could gradually fall to 47100 levels. Traders can take profit between 47750-47850 levels.