Nifty Rebounds Amidst Fragile Sentiments

Market recovered smartly over the week as Nifty gained over 4%. The rebound was across the board with the worst impacted sectors like Realty and Metals gaining the most. But, despite a stronger looking rebound the sentiments remained fragile as rumors continued to impact trading. It was particularly so on Friday as mid and small caps reacted adversely to the SEBI’s decision to ban promoters of four companies. However, despite the fragile sentiments it was a strong recovery that too Nifty to 6000 levels again and it was only the strong resistance around 6030-50 that stopped Nifty from going further. Incidentally both Sensex and Nifty found resistance round the psychologically important levels of 20K and 6K respectively.

Technically, the levels of 5020-40 and then 5850 are important supports on daily and weekly charts, while sustained move above 6050 could pave the path for another smooth move to around 6180-6220. Banking stocks made a strong comeback but it’s the IT stocks that look to be the best bet to take Nifty higher. BSE IT index closed on a weekly all time high as did BSE Healthcare index. Followup buying and support in Infosys, TCS, Wipro and HCL Tech on Monday or Tuesday could open up higher targets for these stocks. Tata Motors, M&M and Bajaj Auto are also looking good. L&T, Cummins and Crompton are also showing positive bias and here again followup in next couple of sessions could mean higher levels. Bharti is finding some resistance around Rs360 but it has strong support around Rs330 and any dips towards this could be utilized to take fresh positions. Infra and Realty did see some rebound last week but still are not out of the woods completely. So as a trader it would be better to stay away from long positions in these two sectors. Metals are looking better than Realty. JSPL has bounced back significantly from the low of around Rs 575 a few sessions ago and sustained trades above Rs 690 could take it further to around Rs 735-750. Tata Steel is moving sideways between 585 and 625. Positional trades could be taken on the long side in Tata Steel with a 6-8 weeks view.