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Nifty: This week crucial
Highlights
Nifty gained further for the 5th successive week and closed with a gain of about 1.25 per cent amid huge intraweek volatility. Nifty experienced...
Nifty gained further for the 5th successive week and closed with a gain of about 1.25 per cent amid huge intraweek volatility. Nifty experienced see-saw movements with a fall and rise of more than 100 points on 2 days of the week. With the massive fall on last Monday and the huge recovery on Wednesday, it has regained strength to go up further. Main driver for the smart rise has been the correction in commodity prices and the huge global liquidity. However, market has ignored depreciating Rupee which is now at 55 against dollar. 
With Nifty at 30 month high and the upbeat mood, stage seems all set for a new life time high sooner than later. It is a case of "Buy on Decline" with 5800 as stop loss for Medium/Long term. However, the rally is not broad based and only a few select stocks/sectors are driving the market. Among Banks, only private sector is performing while PSU Banks are saddled with high NPAs. Infrastructure stocks are still underperforming. S&P continues to maintain its negative outlook. In view of all these, improved earnings on account of inflation alone cannot prop up the market in the event of not so great fundamentals and inadequate growth. However, a reversal of interest rate cycle can revive the trade cycle and stock market discounts future in advance. Technically, in case 6200 is convincingly cleared, it would attempt to cross all time high. However, after rising for the last 5 weeks, a reasonable retracement cannot be ruled. Hence, better to be cautious at high levels. For this week, Nifty spot is expected to face resistance at 6265, 6345, 6425 and find support at 6110, 6030, 5955. Nifty, presently in bullish, would get into short term bearishness only on a close below 6100. Advice for Traders Current week can be a crucial week for the market as any further rise could take it up to 6300+ levels and an attempt to cross all time high would be made. On the other hand, if the correction sets in and Nifty closes below 6100, a slow and steady fall can set in for a reasonable retracement of about 300 points. Hence, traders need to devise their strategy according to the market movements based on the above.
With Nifty at 30 month high and the upbeat mood, stage seems all set for a new life time high sooner than later. It is a case of "Buy on Decline" with 5800 as stop loss for Medium/Long term. However, the rally is not broad based and only a few select stocks/sectors are driving the market. Among Banks, only private sector is performing while PSU Banks are saddled with high NPAs. Infrastructure stocks are still underperforming. S&P continues to maintain its negative outlook. In view of all these, improved earnings on account of inflation alone cannot prop up the market in the event of not so great fundamentals and inadequate growth. However, a reversal of interest rate cycle can revive the trade cycle and stock market discounts future in advance. Technically, in case 6200 is convincingly cleared, it would attempt to cross all time high. However, after rising for the last 5 weeks, a reasonable retracement cannot be ruled. Hence, better to be cautious at high levels. For this week, Nifty spot is expected to face resistance at 6265, 6345, 6425 and find support at 6110, 6030, 5955. Nifty, presently in bullish, would get into short term bearishness only on a close below 6100. Advice for Traders Current week can be a crucial week for the market as any further rise could take it up to 6300+ levels and an attempt to cross all time high would be made. On the other hand, if the correction sets in and Nifty closes below 6100, a slow and steady fall can set in for a reasonable retracement of about 300 points. Hence, traders need to devise their strategy according to the market movements based on the above.
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