Nifty Fails To Sustain Above 5500

Market remained in a sideways mode throughout the last week, with bears gaining a slight upper hand towards the end. Nifty failed to sustain above 5550 as global cues turned negative. Crude continued to trade at uncomfortable levels even as the news flow from Euro zone deteriorated. To cap it all there was natural calamity in the form of Earthquake and Tsunami that hit North Japan. Against such backdrop one might be tempted to believe that Indian markets showed some resilience as Nifty managed to stay around 5450. But there were signs of fatigue on various heavyweights’ chart patterns even as the volumes dipped on lack of participation. Most of the sector indices registered weekly losses and only Oil and Gas and Realty index managing to show some gains. Metals and the Capital Goods were the worst hit, both losing around 3% for the week. Heavyweight stocks that are showing weakness are SBI, Bhel, L&T and the three biggies from Tata stable, TCS, Tata Steel and Tata Motors.  Tata Steel close on Friday was the lowest in around 6 months both on daily and weekly basis. It has some support now around 545-550 but clearly it has become a ‘sell on rise’ stock. TCS has some support around 1050-55 but technical the stock has turned weak and could see even lower levels in coming sessions. Banks had led the rebound post budget but now the smaller banks in particular are looking vulnerable. The list includes Andhra Bank, Vijaya Bank, DCB, Allahabad Bank and Uco bank. Some positively inclined chart patterns are that of HDFC, HDFC bank, RIL and Ranbaxy amongst the heavyweights. RIL could see a clear breakout once it settles above Rs 1000 while Ranbaxy could target Rs 485-490 above 465. Amongst others Bhushan Steel has target of around Rs 480-485 once it stabilizes above Rs 440. Areva( above 260), Divis( above 630), Exide( above 141), Tech Mahindra, Aban and OBC( above Rs 360) are some others with positive bias.

Nifty has immediate support around 5385-5410 while resistance is likely around 5510-5525.

At Last! Nifty Moves Up

Finally, we witnessed a rally that was able to sustain for a whole session. Nifty opened on a slightly positive note and kept on building momentum as the day progressed. It was a mix of buying in some stronger counters like Hindalco and short covering in highly oversold counters like DLF and others. Heavyweights like SBI, L&T, RIL and Tata Motors witnessed some interest at lower levels and for a change this interest persisted for the whole day. Bharti was the biggest gainer amongst the index heavyweights as it gained over 5%. Some of the other big gainers were Polaris, DLF, HDIL, JP Associates, Syndicate bank, Renuka, REC, Bata, IVRCL Infra, Hindalco, Sintex, HCC, Adani and Exide. But , there were a few that remained on the selling list. The list includes Sobha, Cummins, Voltas, OFSS, Ashok Leyland, IOC and HCL Tech. Nifty managed to close above 5500.

Nifty faces immediate resistance at around 5540-50 but as stated earlier also we believe that the rebound has some more legs to it and Nifty could inch up towards 5650-5680. The efforts to break below 5400 have been unsuccessful despite strong negative sentiments. It seems that combination of short covering and value buying could sustain Nifty and should it take it higher. Even the weaker stocks/ sectors like realty and infra could also move higher on short covering. The stronger stocks are Hindalco, Bharti, Sterlite, TCS and Tata Steel. Banks have seen consolidation for past 7-10 sessions and could now move higher. The better looking charts in the short term are SBI, ICICI, Syndicate bank, Indusind Bank and Union bank. Bank Nifty might move above 11000 in coming sessions. Hindalco has given a break out above 240 and one can accumulate it for next technical target of around Rs 265.

Nifty has immediate support around 5465-70 while above 5550 it could move to around 5620-30.