Nifty: RBI policy holds key

Nifty gained further about 1.75 per cent during the week. Market had gone up in the last two week on the hope of a bank rate cut from RBI because of fall in commodity and crude prices and fall in inflation. RBI policy on May 3rd holds the key for the current week. Since, market had already factored in a rate cut it may not go up even if RBI policy is on expected lines. On the other hand, if RBI disappoints, maket could give up most of the gains. However, FM's assurance on further reforms, improving macro situations may keep the market in bullish mode. However, political situation could turn the tables as this is a pre-election year and politics could influence economics. Hence, any decent fall would make the market attractive from fundamental point of view. Market is generally bullish and would turn bearish for short term on close below 5790 and turn bearish for Medium/Long term on a close below 5500. Market movement will be influenced by the scrip wise results. Current week too is a truncated one with a holiday on Wednesday. Better to follow scrip specific approach for investment which qualify 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. On the whole, coming week is crucial as RBI Policy could set the trend. For the coming week, Nifty spot is expected to face resistance at 5950, 6025, 6105 and find support at 5795, 5720, 5645. Nifty, presently in Bullish, would get into short term bearishness only on a close below 5790.

Advice for Traders Nifty pierced through the resistance zone with a gap up signaling further uptrend. Long positions may be maintained on decline with a stop and reverse on a close below 5790. 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.