Nifty: Sell on the rise

Nifty: Sell on the rise
Highlights

Nifty traded in a narrow range for the week and closed with a loss of about 100 points and below 5900 mark....

ShastryNifty traded in a narrow range for the week and closed with a loss of about 100 points and below 5900 mark. Short term trend appears down as long as it maintains below 6000 mark with a strong support at 5850 below. However, medium term and short term continues to remain strong as Nifty maintains above 200 DMA. Main cause for concern from fundamental point of view is the depreciating rupee which could widen current account deficit which in turn would affect the macro position of the economy. Further, great reform measures or policy decisions too can't be expected in the pre-election year and politics would prevail over economics which would not be liked by major market participants. Further, depreciating rupee would dissuade FII inflows too. However, based on the present fundamentals, there is not much scope for downside and any reasonable downside would make our market fundamentally attractive as it would get into a zone with reasonable margin of safety. While short term trend is presently bearish (below 6000), bullish medium and long term trend is intact and would get disturbed only if Nifty closes below 5750. Further, based on the chart pattern, Nifty is bullish and would attempt a new high as long as it maintains above 5750. Hence, investors with medium and long term outlook can buy on decline while short term traders may wait for Nifty to cross 6000. Investors / traders should devise their strategies keeping the above levels in mind. Investors may follow SIP route in respect of quality stocks or 'value investing' principle with higher margin of safety and traders should be ever vigilant tracking short term movements. For the coming week, Nifty spot is expected to face resistance at 5960, 6035, 6115 and find support at 5805, 5730, 5650. Nifty, presently in bearish phase, would get out of short term bearishness only on a close above 6005. Advice for Traders While Nifty is bearish for the short term, there is strong support in the region of 5850 and it will get into bullishness once again if it closes above 6000 mark. Hence, sell on rise with 6000 as stop loss and cover at lower level and reopen shorts on a convincing close below 5850. 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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