Nifty : Strong resistance around 6200

Nifty gained further in fourth consecutive week and gained more than 2.5 per cent, reaching a two- year high. Retracement that has been expected from the market has been eluding and has been going up on the back of positive FII flows. However, Nifty is getting close to important resistance level of about 6200 and can be expected to face considerable resistance and a reasonable retracement can be expected from around those levels.

If it surpasses 6200 level, there is another hurdle at all time high level of about 6350. Considering the above, high degree of caution is advised at higher levels and reward may not be commensurate with the risk. Market is generally bullish and will turn bearish for short term on close below 6025.

However, the rise is mainly influenced by select stocks in FMCG and certain other stocks and most mid cap and small cap stocks are languishing at lower rates. Hence, better to follow scrip specific approach for investment which qualifies for 'value investing'. Short term traders need to be ever vigilant tracking short term movements and investors with medium and long term outlook can invest in quality stocks on SIP basis.

For the coming week, Nifty spot is expected to face resistance at 6190, 6270, 6350 and find support at 6035, 5955, 5880 levels. Nifty, presently in bullish phase, will get into short term bearishness only on a close below 6025 in first half of the week and below 6075 in second half of the week.

Advice for Traders In view of the decent run up, Nifty can be expected to retrace reasonable (about 40 per cent of recent rise of about 600 points). In view of the expected retracement, caution is advised. It is better to take short below around 6200 with a call option as a hedge or on a close below 85 points from the high of the week with high as Stop Loss. 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.