Nifty may correct only if it closes below 6,200

In Tuesday’s closing report we had mentioned Sensex and Nifty may be volatile and directionless for a day or two. Ignoring the weak data from the US, the Indian market opened Wednesday higher and managed to move further throughout the session before closing at the highest level since 24 January 2014. The bourses witnessed high volatility today on account of the February 2014 F&O contract expiry.

The BSE 30-share Sensex opened at 20,870 and hit a low at 20,860 while the NSE Nifty opened at 6,202. After hitting a low almost at same level, both Sensex and Nifty moved higher to hit a high at 21,005 and 6,246, respectively. The Sensex closed at 20,987 (up 135 points or 0.65%) while the Nifty closed at 6,239 (up 39 points or 0.62%). The NSE recorded a volume of 63.26 crore shares. The stock market remains closed Thursday on account of Mahashivratri. The government will unveil data on gross domestic product (GDP) for Q3 December 2013 on Friday.

The Securities and Exchange Board of India (SEBI) on Tuesday proposed in a discussion paper that appointment of an agency to monitor the utilization of funds raised through an initial public offering (IPO) should be made mandatory. Currently, such an appointment is compulsory only if the public issue size exceeds Rs500 crore. SEBI said the move is aimed at strengthening the monitoring of utilisation of all the equity capital raised by selling shares to the public. Among other points, SEBI proposed to make it mandatory for the monitoring agency to assign grades to the issuer so as to curb misuse of money raised through a public issue. SEBI has sought public comments on the proposals till 25 March 2014.

On the political front, eleven regional parties formed an alliance on Tuesday to contest general elections, presenting themselves as an alternative to the ruling Congress party and the opposition Bharatiya Janata Party. Prakash Karat, a leader of the Communist Party of India (Marxist), which is part of the new coalition, said the partnership was forged in an effort to keep the country's two major national parties out of power. A report by Moody's analytical arm says that though downside risks to the economy have receded in recent months, it is likely that the growth engine will continue to sputter until 2015 even if "business-friendly" Narendra Modi becomes prime minister.

US indices closed marginally lower on Tuesday. US home prices ticked down 0.1% in December, declining for a second month, with 11 of 20 tracked cities posting drops, according to S&P/Case-Shiller's composite index. After seasonal adjustments, home prices in December rose 0.8%, down a bit from 0.9% in November. The consumer confidence index fell to 78.1 in February from 79.4 in January, the Conference Board said Tuesday. Federal Reserve Chair Janet Yellen will testify for the US Senate on monetary policy on Thursday.

Among the Asian indices, five closed in the green while four closed in the red. Hang Seng (0.54%) was the top gainer while Jakarta Composite (0.97%) was the top loser. European indices were trading lower while US Futures were trading marginally higher.