In line with expectations, the Nifty index slipped to the first support level in the 4,850-4,900 band. The short-term trend remains bearish and the index has to move past the resistance level at 5,130 to indicate a reversal of the downtrend. (See chart)

From a broader perspective, the Nifty has to move past the significant resistance at 5,300 to rule out a downside risk. Traders may use any rally to initiate short positions with a stop-loss at 5,300 for a target of 4,800.

Those still keen to enhance exposure to the equity market may do so via the mutual fund route. A systematic-investment-plan would be a good choice as this would lower the average cost in a falling market.

The depreciation in the value of the rupee in relation to the US dollar has affected equity market sentiment. Reuters

CNX Bank Index (9,398.10): This index has been cascading lower in recent weeks and there are no signs of a reversal of the downtrend yet. The short-term outlook is bearish and a test of the immediate support at 8,900 appears likely.

Investors may avoid big-ticket bets in the banking sector until the index clears the resistance at the 10,000-level.

USD/INR (Rs 53.55): 

The depreciation in the value of the rupee in relation to the US dollar has affected equity market sentiment. A look at the technical picture suggests that this currency pair is at a crucial resistance level, as highlighted in the chart.

The middle red up-sloping line plays the role of a trend barrier. It is interesting to note that the price is consolidating in a tight trading range just underneath the red line. This is a sign that price is pausing before a next major move.

Once the US dollar moves above that line, the upward move would gain momentum (i.e., rupee depreciation would accelerate) and could rally to Rs 56.50-56.75. Unless the dollar falls below the Rs 51-mark, the path of least resistance would be on the way up for the dollar.

IDFC (Rs 120.90): 

The stock has seen a sharp downward correction off the high of Rs 160.80 recorded on 17 February. This correction has been arrested at a crucial support a few days ago. The price in the past couple of sessions indicates that a short-term uptrend may be in the offing.

Long positions may be considered on weakness, with a stop-loss at Rs 107, for a target of Rs 135. The stock could seek the major resistance at Rs 143 once it closes above Rs 135.