Commodity Trade Mantra

Equity Trading: Markets Up. Nifty may test 5401-5455, Support at 5140.

Nifty 50

Equity Trading: Markets Up. Nifty may test 5401-5455

U.S.manufacturing unexpectedly expanded and a Chinese factory index rose in April. Asian stocks rose, led by Taiwan and mainlandChina, while regional bond risk fell after data showed improved manufacturing in theU.S.andChina, the two biggest economies. The won rose to the highest in almost a month. In theU.S., the Institute for Supply Management’s index of manufacturing rose to 54.8 in April, the highest since June, from 53.4 a month earlier (a surprising jump). With stocks at multi-year highs, Wall Street bulls are looking for fresh fuel for the rally in economic reports after Tuesday’s surprisingly strong manufacturing data. Economists had expected the April number to show a decline, and the market was braced for weaker data after a string of negative surprises.

For NIFTY, the 200-day SMA (Simple Moving Average) and 20-day EMA (Exponential Moving Average) have now shifted to 5135 and 5250, respectively. The 20-Week EMA’ is placed at 5200 level. Upside strong resistance is seen at 5401 to 5455 range & Nifty can decline from rises to this range. If this level of 5455 is breached with reasonable support & momentum, only then a surge towards 5725 can be expected for a short time, though very difficult as it may seem as of now. But if Nifty holds to its resistance at 5401 to 5455 range, then sharp downside movements can be expected from rises to this range, a more likely scenario.

High volatility expected in Equity Trading in Indian Markets given the current political scenarios. Higher chances of more negative news are seen.  Better to be on “Sell at all sharp rises,” than to be a Buyer at dips, in the Equity markets currently. Nifty will remain relatively weak till keeps below 5401 to 5455 & may remain range bound with downside support at 5140. A break through below this 5140 to 5122 range may trigger heavy selling in Nifty & swift & large declines can be expected then. The previous Nifty low of 4600, seen in Dec 2011, may also be breached then. On an overwhelming concern regarding the fiscal deficit, Political uncertainty and GAAR, the Equity Markets have not reacted to the RBI policy action as it should have, though RBI has very decisively acted on signaling the reversal of the monetary policy by significant cuts, both in Repo as well as CRR.

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