With FIIs pumping in over US$1.8 billion in the March series, the Nifty has made a momentous run in the last eight trading sessions. It added over 570 points (February expiry at 5263 levels) and closed at 5833, which is significantly higher than the VWAP levels. The momentum was also seen in rollovers where Nifty clocked rollover of 70.54 (vs. 3M average of 67.35 and 6M average of 67.92) and market wide rollover of 85.13 (vs. 3M average of 83.85 and 6M average of 84.46). Going ahead, the momentum is expected to take a halt and the Nifty is likely to trade in a range of 5600-5950. We also expect the volatility to cool off from current 22 levels gradually to sub 20 levels.
However, caution should be exercised as the global environment is fragile due to crude oil prices and sovereign debt worries of PIIGS nations. On the domestic front, inflation is higher than acceptable levels. Also, with crude prices still up, bottomlines of most companies are likely to face the wrath of the above this quarter. However, early April series is expected to give a positive to range bound market pattern where the downsides should be limited to 5600.
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Research Desk |ICICIdirect.com|
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