Guest Column: Market trend is negative in the short term

Nifty opened the week on a negative note on back of negative global cues. Fresh Shorts and Long unwinding was seen in the market as Nifty started trading below the level of 5,320 and selling gained momentum on break of 5,250. Nifty tested the level of 5,170, which was 200 dma and closed the week on a flattish note.  In the week gone we have seen LTRO and Swap announcement from Europe, which was positive for markets.

Nifty has strong support at 5,150 levels. Current Trend of the market in the short term is negative. Immediate hurdle for the market is at 5,375 levels which correlate with the 23.6% retracement of the entire rally of 6,338-2,252. Sustaining above the levels of 5,375 will be positive for the markets, in that case will be exposed to higher levels of 5,480 and 5,600. Up move in the market will face stiff resistance at 5,480 levels. On the lower side breach of 5,150 will be viewed negatively for lower level targets of 5,000 and 4,900. Lot of data flow is expected in the coming week. FOMC, BOJ, RBI meeting are scheduled this week.

RBI meet will be crucial for markets to watch out for. Interest Rate sensitive stocks are expected to remain in action. CRR cut will fuel the momentum in the sector and overall broader market can move higher on the announcement.

European and US industrial numbers will also be announced this week. Positive expectations can bring optimism back in the economy and global markets can head higher.

Crude Oil Prices will be a reason of concern for the market. Sustained trading above the level of $102 will increase the fear of inflation and CRR cut will not be expected by markets.

INR has been trading range bound within the levels of 49-51. Either break of these can bring decisive action. We have seen break above 51 has brought in FII money flow. So trading above the 51 can bring in pullback rallies in the market.

Gold has been trading in negative territory, $1,730-1,750 to act as strict resistance zone for the commodity.

On the stock specific action, Axis bank and IndusInd Bank have been looking promising. One can look on the long side of the trade. In Oil & Gas pack, Cairn India is a good bet at support levels of Rs 355.

Reality has been witnessing pressure. Sectors such as Metal, Power, Capital Goods looks good on the long side at good support, one can take trading bets after RBI meet. Pharma & FMCG are the preferred bets on the long side in a volatile scenario. Long is recommended in Lupin, Sun Pharma and Colgate.

(Author is Head of Technical Research with Kotak Securities)