Market gaining strength

     It was the finance minister who extended the helping hand when share market was supposed to be in difficulty to find its direction.  At one occasion it was in the form of a sanction to foreign direct investment (FDI) in retail sector which helped the market to stay steady.  Now the Same FM and the central government once again came forward to rescue the market.

     The latest decision of FM and the central government in favour of the market is the postponement of General Anti Avoidance Rule (GAAR). GAAR is referred to the rule intended to prevent the tax evaders on the profit of foreign investments in Indian market.   GAAR, the other day, has been postponed to April 2016 which helped the market to stay steady.   The decision that allows the oil companies to determine the price of diesel time to time also might bring euphoria in the market in spite of the country-wide public protest against the move.  Meanwhile, the dangerous level of inflation rate still causes misgivings in the market.  Though the wholesale price based inflation got down slightly in December, the retail price based inflation is still on the mode of rising up.  Moreover, RBI recently has given the signs of its possible inability to bring down the interest rates since the inflation rate is its highest level.  This precisely means that RBI might once again disappoint us in its credit policy review  which is to be delivered on January 29.  

     But experts observed that even though the credit policy review of January 29 ended up disappointing one,  sooner or later, the interest rates will turn descending mode.  Therefore, the large scale investors are nowadays busy with increasing their investments step by step.  Foreign institutionalized investors (FII) by now invested as much as Rs 12,500 Cr since the new year began.  If this attitude continues, it will favour the market positively.   Reliance industries became the biggest beneficiary after the control over the diesel price has been lifted.   RIL, on Monday, will release the Q3 results of the current fiscal year which will impact the movements of share price indices significantly.

     Technically it is seen that the market is gaining strength.   Last week, the BSE Sensex and the NSE Nifty closed above 20,000 and 6,000 respectively.  Sensex closed at 20,039 last week and its first resistance is 20,400.  If it crosses this level the next resistance will be 21,200.  It was from that level the market turned into the correction mode in January 2008.  The market had reached near this level in November 2010 also and even then the market showed the correcting tendency.  Therefore it is better being cautious at this level next time as well.  If the market shows the sign of correction coming days,  it has strong support at 19,800, 19,600, 19,200 levels.

     NSE index Nifty closed at 6064.4 last week.  It has the resistance at 6150 level.  It has strong support at 5990, 5950 levels.  Selling pressure will take strength only when market moves below 5950 level.