A morning walk down Dalal Street | Close above 10,930 can put bulls back in control

A weak day for Indian markets thanks to global cues but benchmark indices managed to pull back slightly towards the close of the session. The S&P BSE Sensex which was down over 300 points recouped some losses and closed 249 points down at 35,884.

The Nifty50 witnessed deep cuts as it slipped below its crucial support placed at 10800 levels. The index finally closed 86 points down at 10,782.

The outcome of the MPC committee was the driving factor behind the small recovery which we saw in the market. The RBI maintained the status quo on its crucial repo and reverse repo rates while the SLR is reduced to 18 percent compared to 19.5 percent.

Status quo on rates with no change in stance

- The inflation forecast for the second half 2019 and the first half of 2020 reduced

- First half of 2020 inflation number reduced from 4.8 percent to 3.8-4.2 percent

- OMO / Long Term Repo instrument to add liquidity would continue till March-19

- At the current juncture seems to be a long pause

- SLR was reduced 25 bps to 19.25 percent with an aim to bring it down to 18 percent in line with LCR.

- The key takeaway is that RBI has turned somewhat dovish….

- As the RBI believes that inflation for the next year is likely to be at their target levels, the stance needs to be neutral from current calibrated tightening.

- If crude oil prices remain at current levels and inflation remain as projected, we are in for a long pause or even a rate cut at a later stage.

Nifty formed a bearish candle on daily charts

Technically, Nifty50 bounced back after testing its 200-DMA placed at 10,749. A close above 10,930 could put bulls back on D-Street. However, for Thursday, 10750 will be an important support to watch.

Three levels: 10747, 10833, 10930

Max Call OI: 11000, 11500

Max Put OI: 10,000, 10500

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TCS: Buy| LTP: Rs. 2006.75 | Target: Rs 2170| Stop Loss Rs.1919| Return 8%

Dr Reddy's Laboratories Ltd: Sell| LTP: Rs 2671.65 | Target: Rs 2520 | Stop Loss Rs 2746| Return 5.60%

Grasim Industries Ltd: Sell| LTP: Rs. 826| Target Rs 760| Stop Loss: Rs.862| Return 8%