Nifty: Caution at higher levels

Nifty: Caution at higher levels
Highlights

Nifty continued its northward journey for the third week and gained more than 5.5 per cent, during this...

Sastry1Nifty continued its northward journey for the third week and gained more than 5.5 per cent, during this period and appears due for a correction and extent of correction can be gauged based once the correction sets in. IIP numbers, inflation data, released after the market hours on Friday suggests weak macros and possible correction too. Nifty gained smartly on the last two days due to favourable comments from US Fed chief and better than expected performance from Infosys. In view of the results season, scrip specific volatility can be expected. Q1 results, FII flows, global cues, currency fluctuation would guide the market movement and high degree of volatility can be expected. IT, FMCG, Pharma stocks while PSU Bank, Metal, Auto stocks could come under pressure. Based on fundamentals, valuations any steep fall is an opportunity for Medium/Long term and quality stocks can be accumulated under SIP basis. Technically, Nifty is trading above 200 DMA and Golden Cross (50DMA above 200 DMA) is in operation, suggesting no immediate threat to long term bullishness. If Nifty is able sustain above 5750 even in the corrections, a new high could be in place during the year. Nifty is bullish in all time frames now and short term trend would get disturbed if Nifty closes below 5875. As Nifty has been oscillating in a narrow zone of 750 points (6240 to 5480) in the last six months, a clear direction can be expected sooner than later and the current calendar year range of 750 points would usually get widened to more than 1250 points before the end of the year. For the coming week, Nifty spot is expected to face resistance at 6085, 6165, 6245 and find support at 5930, 5855, 5780. Nifty, presently in short term bullishness, would get out of the same only on a close below 5875. Advice for Traders: Nifty though presently bullish appears to be in maturity stage and high degree of caution is advised around 6050- 6100. However, low risk traders are advised to consider short positions only after Nifty closes below 5875. Further, weekly open level is very important for the entire week. Short positions may be avoided as long as it maintains/closes above weekly open and vice versa.
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