Special to Firstpost
S&P CNX Nifty (4,928.90): In line with expectations, the Nifty index slipped to the first support level in the 4,850-4,900 band. The short-term trend remains bearish and the index has to move past the resistance level at 5,130 to indicate a reversal of the downtrend. (See chart)
From a broader perspective, the Nifty has to move past the significant resistance at 5,300 to rule out a downside risk. Traders may use any rally to initiate short positions with a stop-loss at 5,300 for a target of 4,800.
Those still keen to enhance exposure to the equity market may do so via the mutual fund route. A systematic-investment-plan would be a good choice as this would lower the average cost in a falling market.
CNX Bank Index (9,398.10): This index has been cascading lower in recent weeks and there are no signs of a reversal of the downtrend yet. The short-term outlook is bearish and a test of the immediate support at 8,900 appears likely.
Investors may avoid big-ticket bets in the banking sector until the index clears the resistance at the 10,000-level.
USD/INR (Rs 53.55): The depreciation in the value of the rupee in relation to the US dollar has affected equity market sentiment. A look at the technical picture suggests that this currency pair is at a crucial resistance level, as highlighted in the chart.
The middle red up-sloping line plays the role of a trend barrier. It is interesting to note that the price is consolidating in a tight trading range just underneath the red line. This is a sign that price is pausing before a next major move.
Once the US dollar moves above that line, the upward move would gain momentum (i.e., rupee depreciation would accelerate) and could rally to Rs 56.50-56.75. Unless the dollar falls below the Rs 51-mark, the path of least resistance would be on the way up for the dollar.
IDFC (Rs 120.90): The stock has seen a sharp downward correction off the high of Rs 160.80 recorded on 17 February. This correction has been arrested at a crucial support a few days ago. The price in the past couple of sessions indicates that a short-term uptrend may be in the offing.
Long positions may be considered on weakness, with a stop-loss at Rs 107, for a target of Rs 135. The stock could seek the major resistance at Rs 143 once it closes above Rs 135.
(The views and recommendations featured in this column are based on a technical analysis of historical price action. There is a risk of loss in trading. The author may have positions and trading interest in the instruments featured in the column.)