Early in the morning the RBI governor announced a 25 basis points cut in the repo rate the rate at which banks borrow from the RBI. Interestingly the RBI policy announcement did not do much damage to the market as the political uncertainty took the center stage. When Mr. Karunanidhi, the DMK Chief decided to withdraw support to the Congress led UPA government at the Centre citing differences on the issue of atrocities on Tamils in Sri Lanka,  the market fell off like pack of cards.

However the Nifty got supported at 5730 as there was no immediate threat to the Government. Right now the market seems to have discounted all the negative factors and we will have to check if it could move up from now. In the absence of any bad news flow the market may move up. Technically as long as Nifty stays above 5675 it should be regarded as healthy correction; only when Nifty trends below 5675 a panic button has to be pressed. Gold has posted smart up move and one may shift the stop loss from $1600 to $1610. Gold is trading at 3 weeks high now. Let us check out the market and report to you tomorrow.