Banking Stocks Make Hay As Nifty Consolidates

Markets opened on a flat note and after a small decline of 40 odd points in Nifty in the first two hours it bounced back smartly to cross the crucial resistance level of 5500 in the second half. However, it witnessed profit booking around 5500 levels and finally managed to close at a respectable 5481 levels. From the low of  5177 made on 11^th Feb, Nifty has rallied to an intraday high of 5506.50 ( recovery of 329 points). Since the recovery has been too swift and sharp, Nifty might consolidate between 5400 and 5550 levels for some time before takes any fresh directional move. Banking Stocks especially the likes of SBI, ICICI Bank, HDFC Bank and Bank of Baroda were the ones which appreciated the most during this rally. Reliance showed a lot of strength in today’s trading and now if it is able to trade above Rs.950, then it will help the recovery to gain further steam as it has the highest weightage in the Nifty. ADAG stocks were in limelight as Reliance Capital and Reliance Infra saw huge volumes. Capital good sector stocks like BHEL and L&T saw selling right from the morning and both of them lost around 2% each.

We expect Nifty to trade in the 5400-5550 band for some time and stock specific action will be more pronounced during this period. One should be prepared to trade both sides of the market for the next 1-2 trading sessions but till budget we are of the view that the market is likely to have a positive bias.