Morning Bell.......The Nifty has surpassed 5600, while the Sensex is near 18,500. Both the indices have rallied 18% YTD on the back of heavy FII inflows. Last year they lost 25% each.

Indian Market

The key Indian equity benchmarks have gained modestly in early minutes of trade, tracking a recovery in some Asian peers. The market breadth is favorable for the bulls as the broader indices too are up smartly. Most sectoral indices on the BSE are in the positive terrain.

A meaningful correction may have eluded us so far this year but could hit us anytime given that the market has entered the so-called overbought zone. The question troubling many participants is: how long can this liquidity-driven ‘risk on’ rally last? The Nifty has surpassed 5600, while the Sensex is near 18,500. Both the indices have rallied 18% YTD on the back of heavy FII inflows. Last year they lost ~25% each.

The MCX IPO launches today and will be open for three days. The issue is likely to receive very good response from all categories of investors. Whether the MCX IPO will revive the comatose primary market remains to be seen.

Sterlite Industries and Sesa Goa could be in the spotlight amid reports of Vedanta Group Plc mulling a merger of the two companies. Kingfisher Airlines has received a lifeline from SBI and thus could recover. RIL has announced a JV with Russia’s Sibur for butyl rubber.

Gujarat Pipavav and KSB Pumps will declare their results today.

Global Market

European indices fell despite Greece getting another rescue package. US benchmarks finished flat. Back home, retail level inflation is still elevated. Crude prices too remain uncomfortable. Liquidity continues to be tight, stoking speculation of another CRR cut in March. A rate cut may take a while to materialize. The Union Budget is another domestic event to look forward to in the coming days apart from the outcome of UP elections.

Technical Outlook

The earlier resistance of 5550 has now turned into a strong support for the Nifty. The current rally has the potential to stretch till 5700 in the coming days. Hence, we recommend adding long positions on every dip with a stop loss placed at 5550 on a closing basis.

Today’s Outlook

Today, the Indian Markets are likely to open marginally lower following negative Asian cues and than could remain range bound during the day. While the underlying trend is up profit booking during the day cannot be ruled out. The immediate support level to watch is 5550 while the immediate resistance levels to watch are 5660 and 5890. Among the sectoral indices, Realty and Consumer Durables appear strong and Health Care and IT appear weak.

Sources- hdfcsec,IIFL