Today,disappointing results from Alcoa and China’s surprising hike in the CRR seems to have spooked the already sluggish global equity markets. The Indian market too eased off despite Infosys’ stellar results and strong IIP numbers. With inflation flaring up in recent times, the market fears a sharp reaction from the RBI at this month’s policy meeting. However, concerns on interest rates appear to be exaggerated. A small increase in CRR or even in policy rates should not be such a big issue for markets.Central banks around the globe are unlikely to reverse the monetary stimulus at the same pace as they unleashed them at the height of the financial crisis. The unwinding in the stimulus is going to be a gradual process unless economic recovery outpaces expectations.
The Nifty is all set to fall below 5,200 at the start given the weakness across global markets. Metals shares could take a hit following the China announcement. The Nifty could find some support at 5,180-5,150 levels. If it breaches this range it could head for 5,050. On the upside resistance remains at 5,250 and 5,310.
