Infosys Leads As Nifty Plunges

Infosys numbers came as a disappointment and the technical rebound that showed some promise yesterday just fizzled out. Nifty opened in red and turned deeper into red as the day progressed. The inflation figures did not look good and the banking stocks that were also beginning to look good for at least some technical rebound met with heavy selling pressure. In fact Bank Nifty was down more than 3.5% as stocks like ICICI, SBI and HDFC bank moved lower. Infosys lost more than 5% and hurt the sentiments towards the whole IT sector. Some of the biggest losers for the day were Infosys, Praj, HPCL, OBC, PNB, Pantaloon, IOB, Titan and LIC hsg. Realty stocks surprisingly did well as most of them closed in the green. Some others that bucked the trend were Adani, Ambuja, Ultratech, GE Shipping, Havells, Grasim and Exide. On the whole it was a disappointing day as Nifty had yet another triple digit fall.

All the hopes for a tradable rebound were dashed early in the session as Infosys disappointed. More disappointing was the fact that banking heavyweights just failed to develop any followup momentum and on the contrary were amongst the top losing counters. Bank Nifty is back to its recent lows giving up all its gains of past two sessions in a single day. Market continues to witness volatile sessions and is basically trading violently between 5700 and 5850. Stocks are having alternative bouts of buying and selling and it is increasingly becoming difficult to find even marginally high probability trades. Break below 5700 could trigger fresh selling and might take Nifty lower to around 5575-5600. Considering the choppiness and volatility it would be better to wait for somewhat clear signals before taking any fresh trades.

Nifty finds immediate and crucial support around 5690-5710 while resistance is likely around 5835-5850.

NIFTY at 6000

Nifty opened and traded above 6000 during the early part of session. But again higher levels attracted profit taking as Nifty failed to make any significant progress beyond 6020. Profit taking gained momentum towards the later half as stocks like RIL, Tata Steel and some banking heavyweights pushed Nifty towards 5950. Some metal and auto stocks recovered towards end to pare Nifty losses to only about 16 points. Banking stocks failed to build on yesterday’s momentum as HDFC Bank, SBI and other banks attracted selling at higher levels. Some of the prominent losers for the day were Sintex, Hexaware, Onmobile, Auro Pharma, Bajaj Hind, Patni, EKC, Maruti, Reliance Infra, Bharat Forge and Wipro. Ispat however attracted buying and emerged as the biggest gainer amongst the F&O counters. Bhart was significant index gainer. Some other gainers were Syndicate Bank, Patel Engg, LIC Hsg, Yes Bank, Vijaya Bank, Core Projects, IFCI and Ranbaxy.

Nifty is at crucial levels as it trades around 6000. Despite today’s hiccup Nifty remains in an uptrend and we believe that it is likely to move higher after a brief consolidation. The immediate support is around 5930-40 while stronger and significant support levels are 5870- 80. Banks could play a significant role in deciding how far Nifty moves as short covering in banking heavyweights might create strong momentum for Nifty. On the other hand, if the short covering fails to materialize in next couple of sessions, it might force longs liquidation and that could put pressure on indices. Clear uptrend is still seen in some Auto counters, metals and  IT heavyweights. As mentioned yesterday clear breakout above 11700 in bank nifty would be critical for Nifty’s momentum. Bharti, Yes bank, Indusind Bank, Hindalco, Cipla and JSPL are looking positive.

Nifty has now immediate support around 5935-45 and then around 5880 while resistance is likely at 6030 and then around 6070-80.