The street enjoyed the bullish momentum with INFY declaring
better than expected results. During the week NIFTY made a high of 6019 and
closed at 6009. IIP number surprisingly turned out to
be negative 1.6%. CPI inflation rose almost to double digits. Oil prices have
gone past the $100 mark, putting pressure on the current account deficit. Gold
imports have dropped a bit justifying the deficit somewhat.
The
weekly chart of Nifty projects the intact upside direction of the stock market.
Index has crossed the hurdle at 5970 and now seems to cross
the last hurdle at 6070 level. The bullish
momentum looks like unstoppable but market is now in overbought zone and can
give unexpected correction before the rally continues. Looking
at the Derivative data a change and drop in 6000 Call Options Open Interest due
to unwinding of positions suggests that the upper limit for NIFTY index now seems
at 6100. Hence the next target for NIFTY Index above 6020 is at 6052-6130.
Conclusion: Chart patterns of
Sensex and Nifty are preparing to rise to new highs. However, fundamentals seem
to be worsening, so some caution should be implemented. Nifty is in overbought zone so it is expected to enter into a
correction mode as soon as it approaches 6050-6130 range or if breaks the
crucial support of 5950 on lower side. The target for this correction would be
around 5800/5775.
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