Nifty could remain range-bound in short term

Sensex and Nifty-50 indices closed flat on Tuesday after phenomenal gains of over 8 per cent in the previous two sessions stimulus announced for the corporates. Profit taking emerged in stocks that had seen sharp gains, especially financial and auto stocks while IT stocks were big gainers.

The major Asian market equity indices ended up with minor gains after US Treasury Secretary Steven Mnuchin said US-China trade talks will resume next month.

The Sensex closed at 39,097.14 up just 7.11 points or 0.02 per cent while the Nifty-50 closed at 11,588.20 down 12 points or 0.1 per cent. The broader markets were mixed with the BSE Mid-cap Index down 0.51 per cent while the BSE Small-cap was up 0.17 per cent.

Among the sectoral indices BSE IT gained the most at 2.31 per cent while all other sectoral indices either closed flat or in the red. The BSE Bankex lost 1.25 per cent.

The rupee ended lower at 71.00 compared to Mon-day's close of 70.93 per US dollar.

After two sessions of net buying the foreign portfolio investors (FPIs) turned net sellers by Rs 828.49 crore while the domestic institutions were net buyers by Rs 472.81 crore.

After a sharp jump volatility indicator India VIX index closed flat on Tuesday at 16.73 down by 0.36 per cent.

Technical View

ICICI Securities said, “We do not foresee any major shift in the current directional positive bias. Therefore, any correction towards 11,200-11,300 should be used as an incremental opportunity to construct a portfolio of quality stocks.”

“It is time to pick stocks bound for short covering, as expected, FPIs long/short ratio has formed bottom again and has started moving up indicating closure of short positions by FPIs. The net short positions of more than 1 lakh contracts are reduced to 42,000 contracts till the last session. We believe FIIs will turn net positive in the coming sessions. Also 11,200 was the average short price of FPIs short positions. Move above this level would lead to short covering,” ICICI Securities said.

Nagaraj Shetti, Techni-cal Research Analyst, HDFC Securities said, “The short term trend of Nifty is range bound. There is a possibility of some more such choppy trading movement with minor weakness in the Nifty for the next 1 or 2 sessions, before showing further upmove. Immed-iate supports to be watched at 11530 levels.”

Market View

Vinod Nair, Head of Research, Geojit Financial Services, said,” After a massive rally investors took some money out, which led the indices to trade range bound. Sentiment factor is largely positive after the stimulus measures.”