Nifty: Close to resistance

Nifty gained smartly by more than 4.5 per cent with the help of bank stocks which had gone up smartly on rate cut hope. As mentioned in the last week's column, though Nifty had closed below 200 DMA last week, 50 DMA was above 200 DMA (Golden Cross) and there was a possibility of Nifty bouncing back, which had happened. However, Nifty had gone up swiftly in the last 4 days by about 250 points. Further, as quarterly results season has commenced, market movement will be influenced by the scrip wise results. Current week too is a truncated one with a holiday on Wednesday and with F&O closing on Thursday, scrip specific action can be expected. Nifty with strong up move pierced most of the short term resistances but close to a major resistance of 5830- 5850. Technically, Nifty is at the upper end of the monthly range and with derivative expiry, further rise too cannot be ruled out. But scrip specific action can be expected in view of derivative expiry. If Nifty is to become further bullish, it has to sustain above 5850 level. On the whole, coming weeks is crucial as RBI policy would come out and market is expecting rate cut and fall in commodity prices and inflation will brighten the chances. If Nifty closes above 5900, its chances of making a new 52 week high would brighten. For the coming week, Nifty spot is expected to face resistance at 5850, 5930, 6005 and find support at 5700, 5625, 5550 Nifty, presently in Bullish, would get into short term bearishness only on a close below 5650.

Advice for Traders Nifty has turned Bullish but close to strong resistance zone 5830 � 5850. Hence, if Nifty reaches the resistance zone in the first Two days of the week, risky traders can consider buying put options of April or even May with strict stop loss of a close above 5875. The above is a contrarian approach in view of the strong resistance and however, Nifty would get out of bullishness only on a close below 5650.