BANKING ON BANKS!

Last week 2 sectors were top underperformers....BANKS AND REALTY!

There are expectations of a CRR hike largely due to spiralling inflation.Traders are anticipating a 50 basis points hike in CRR.

The CRR is the zero interest mandatory cash balance that banks are expected to maintain with the Reserve Bank of India against their net demand and time liabilities. A 50 basis points hike would remove at least Rs 20,000 crore of liquidity from the banking system.

Interest rate sensitive sectors like autos which have been performing quite well and real estate have also come under pressure.

However, the markets discounts the future and I have observed over the last few years that Price comes first, reasons come later!

So is it the end of the fall for Banks and Realty?! Well I wana say yes, but I cant. It would be anticipatory and premature.

The frontline stocks in both sectors are critically poised at very important support levels. They are as follows.

State Bank ........2050

ICICI Bank..........780

DLF.................350

Unitech............80.

If nothing is indeed wrong with these sectors going forward these levels should hold. 

With 2 very important sectors nearing their important supports the downside for the markets seems to be capped for now. Sensex 16600 and Nifty 4950 are very important for short term traders.Keep a watch on these levels.

Also remember that an intraday dip or teasing of the above levels does not necessary imply violation of those levels. Markets have a tendency to do that to shake out the weak hands. It is said that when a ship starts to sink... first the rats run for cover!

Markets if start sustaining below the aforementioned levels we may encounter short term pain. For now initiating any positions does not seem to be the right idea! 

RISKY TRADERS CAN START BUYING BANK NIFTY AT CURRENT LEVEL. BE READY TO ADD AT 8300 IF COMES.Due to technical reasons I am not able to attach the chart. I will try to do so during the market. 

Intra day calls will be posted during the market hours as some trade set ups take shape only during market hours. Interested people keep a watch!

Have a great day!