The broad-based Nifty on Wednesday closed with a gain of 73.8 points, or 1.66%, at 4,523.60, thereby ending its three-day loss, as investors felt the market entered into oversold zone.
Unexpected repo rate hike of 25 basis points by the Reserve Bank of India will have an impact on the market, opined Suresh Iyer, technical analyst at Asit C Mehta.
Banks may soon raise lending as well as deposit rates with the Reserve Bank of India increasing repo rate, or the rate at which it lends to banks, by 25 basis points to 8 per cent. While trying to rein in the runaway inflation, the central bank, however, left the reverse repo rate unchanged.
The interest-sensitive banking, realty and auto stocks have already witnessed huge pressure in the recent past, which is likely to continue now as there appears to be little possibility of interest rates coming down in the near future, said analysts
The nation`s central bank has hiked its key lending rate by 25 basis points to 8% to arrest inflation expectations. However, the RBI kept all other rates unchanged. Iyer termed Wednesday`s closing as comfortable. The market breadth was also good on Wednesday. Anyway the market was like cat on the wall, he added.
In the short term, the market will be news driven. ``As the market is news driven one, I will be on sidelines. Nifty has top short term resistance near 4,611-4,626. Once these levels get breach, I will be on a long side,`` Iyer said.
Next resistance levels are at 4,656, 4,746 and 4,825. The major support levels are placed at 4,370, 4,228 and 4,040, he added.
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