Banking Leads The Way On A Positive Day For Nifty

Market began the day on a positive note and remained positive through out the day as Nifty closed above 5500. Banking stocks led the rally ahead of the RBI policy meet as Bankex rallied over 2% on all round buying in banking stocks. SBI was up over 3% while smart buying was seen in other banking stocks like Central Bank, Canara Bank, ICICI, Axis Bank, Yes bank, Andhra Bank and Union bank. Buoyancy was also there in Auto counters like TVS, Bajaj Auto and Tata Motors. ADA pack remained upbeat as after strong rally in Reliance Cap it was the turn of Reliance Infra to attract strong buying. Even RPower and RCom too moved higher. Some of the other significant gainers were Orchid, Welcorp, Voltas, 3i infotech, REC, Hexaware, Escorts, Exide, Bharat Forge, Opto circuits and GMDC. Mphasis slipped further to almost 18 months’ low. Jain Irrigations, Glaxo, Cummins, Indian Hotels, HUL and Apollo Tyres were some of the other losers.

Nifty continues to trade in a broad range of 5400 and 5550. Despite huge intra day volatility Nifty has neither closed above 5550 nor below 5440 for past 15 days. Trend remains sideways with positive bias and the kind of strength and resilience that our markets have shown in past 2-3 weeks does improve the chances of a positive breakout. Intra day trades above 5570 would be the first indication of a breakout while a firm close above 5550 would further confirm that. Banking stocks have rallied ahead of RBI policy and absence of any negative surprises could propel the Bankex higher. Bank Nifty is on the verge of a sharp breakout and sustained trades above 11100 on Bank Nifty could take it higher to around 11550-11600. Central bank rallied sharply ion strong volumes and has given a breakout above 165. Other banks that look good are Can bank, OBC, Yes Bank and Indusind bank. REC has seen strong volume action over past 3 sessions and may be bottoming out. Sustained trades above 232 could trigger a buy with short term targets of around 255-260 with stop loss placed below 220. Some other counters that look positive are Orchid, Ranbaxy( above 472), Auro Pharma( above 198), Bhushan Steel, LIC Hsg, Havells( above 360) and GMDC.

Nifty has immediate support around 5465-75 and then around 5415-25.