A morning walk down Dalal Street | Use weakness to create short positions with stop loss above 12,040

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Bulls remained in control of D-Street from the word go and helped Nifty to climb 11900, and 11950 levels. It had a touch-and-go-moment with 12000. The S&P BSE Sensex rallied by over 160 points.

The final tally on D-Street – the S&P BSE Sensex rose 165 points to 39,950 while the Nifty50 closed 42 points higher at 11,965.

Positive momentum triggered by banking stocks and stable global cues helped the sentiment. The S&P BSE Sensex which reclaimed 40,000 for a brief period also witnessed selling pressure at higher levels.

Selling at higher levels suggests upside remains capped for Nifty in the short term. Traders are advised to remain neutral on the long side and use weakness in Nifty to create short positions with a stop loss above 12,040 on a closing basis, suggest experts.

The Indian rupee June 11 recuperated by 21 paise to 69.44 to the US dollar in line with strong Asian currencies and rally in domestic equities.

On the institutional front, FPIs were net buyers in Indian markets for Rs 95 cr while DIIs were net sellers to the tune of Rs 151 cr, provisional data showed.

Big News:

Macro data will be in focus and is all the more important post RBI policy review

On Wednesday, June 12 we have CPI (YoY) data for the month of May and WPI Inflation (YoY) for May would be on Friday, June 14, 2019.

India’s retail inflation likely accelerated to a seven-month high in May on rising food prices, but it is expected to remain well below the Reserve Bank of India’s target, giving it room to ease policy further, a Reuters poll found.

The RBI changed its stance to “accommodative” from “neutral” last week and cut interest rates for the third time in a row, bringing the borrowing rate to a nine-year low of 5.75%.

According to a June 4-7 Reuters poll of over 40 economists, the retail inflation rate rose to 3.01 percent in May from a year earlier, up from 2.92 percent in April. Forecasts ranged between 2.83-3.50%.

“If the consensus forecast is met, consumer prices will rise at their fastest pace since October, but would still be lower than the central bank’s medium-term target for a 4.0% increase for a tenth consecutive month,” said the report.

Technical View:

Nifty forms a Doji pattern for the 3rd consecutive day in a row

The index breached its 5-days exponential moving average on the downside at 11,935 but bounced back after touching an intraday low near 11,900.

The index moves in a narrow range of 11,770-12,000. A breakout above 12K or a break down below 20-day EMA placed around 11,810 could change the trend.

India VIX fell 3.52 percent to 14.44.

Three levels: 11904, 12000, 12103

Max Call OI: 12500, 12000

Max Put OI: 11500, 11700

Stocks in news:

Crisis-ridden DHFL said Tuesday it has paid Rs 962 crore towards interest payment on debt instruments which fell due on June 4, and met the seven-day “cure period” to pay off its obligation.

Oriental Bank of Commerce June 11 said it has cut marginal cost based lending rate for a one-year tenor loan by 5 basis points to 8.70 percent.

Tata Motors-owned Jaguar Land Rover (JLR) on June 11 reported a 12.2 percent decline in global sales at 42,370 units in May.

Technical Recommendations:

We spoke to SMC Global Securities and here’s what they have to recommend:

Container Corporation of India: Buy| Target: Rs 585| Stop Loss: Rs 500| Upside 10%

Bata India: Buy| Target: Rs 1520| Stop Loss: Rs 1330| Upside 8%

Infosys: Buy| Target: Rs 805| Stop Loss: Rs 720| Upside 7%

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