Nifty struggles below 7450, Sensex weak; metals & banks drag

Moneycontrol Bureau11:30 am Market outlook: The market is good to dip into, is the word coming in from Ravi Sundar Muthukrishnan of ICICI Securities. Post Budget, the low quality stocks did very well, says Muthukrishnan adding that the good quality names should now start doing well. “So, we think that there is a good market to buy particularly the quality stocks because in this run-up, not many have actually run-up,” he says. Muthukrishnan says that the PSU stocks were rallying on back of budget news and low commodity prices, which has now run its course. He recommends staying away from the PSUs due to non-performing loan issues. However, he advises some private bank names, especially ones with large retail base.Don't miss: SC to hear plea by banks seeking to stop Mallya from leaving India

Selling pressure continues in the market as the Sensex is down 188.70 points or 0.8 percent at 24470.53. The Nifty is down 50.85 points or 0.7 percent at 7434.45. About 831 shares have advanced, 1177 shares declined, and 101 shares are unchanged.

GAIL, Maruti, HUL, M&M and ONGC are top gainers while Hindalco, HDFC, Tata Steel, SBI and ICICI Bank are losers in the Sensex.

Laurence Balanco of CLSA says the Nifty's recent break above 7,257 resistance triggers the short-term bullish implication of a minor 12/29 February double-bottom pattern.

This breakout supports an upside target of 7695, below major trend resistance at the 200-DMA and upper boundary of the March 2015-to-date downtrend channel at the 7,954-8,064 area, he adds.

According to him, this rebound is unlikely to break above the cited downtrend resistance with a retest and probable break of the February lows likely. Below the February lows, the next chart support is at the 6,300-6,350 area, Balanco says.