This week, Nifty was trading in a band of 4100 to 4200.The week started with continuation of last week’s fall, but onTuesday, it took support at 4100 and bounced back sharply, it finally closed at 4171 with a gain of 0.63% w-o-w basis. All
the sectoral indices closed in green except BSE Auto index. The BSE metal and BSE CG indices outperformed the markets and gained more than 2% each. However, the BSE Auto index closed with 0.55% loss.
Sectoral Speak
After correcting the whole rally from 9740 to 11349, the BSE CG index took support near to 38.20% retracement level and made a low of 10700, after that, it bounced back sharply and closed strong at 11156 with a gain of 2.91%. Now it can test
its recent high of 11349. However, we maintain our medium term target of 12107.
We witnessed some correction in BSE Metal index last week, but this week, after taking support at upper band of the one year old "Channel", it bounced back sharply and closed strong at 10495 with a gain of 2.47%. We maintain our short- term target of 10893 for this index. However, in long term, it can test 11958.
The BSE PSU index took support at almost one-year-old trend line and bounced back sharply, it finally closed at 6500 with a gain of 0.81%. Now the recent low of 6359 will play as a strong support for this index. However, up side it can test
6599 and above that 6655, which are 50% and 61.80% retracement levels of the recent fall from 6839 to 6359. The Long- term outlook is still very bullish for this index.
The BSE Auto index underperformed the broader markets this week and closed at 4674 with a loss of 0.55%. We maintain bearish view with the target of 4535 for this
Outlook for next week
This week, Nifty took support at lower band of the two month old "Channel" and made a low of 4100 on Tuesday. After that, it bounced back sharply. On Friday, it tested 38.20% retracement level of the recent fall from 4362 to 4100 and made
a high of 4209. It finally closed at 4171 with a gain of 0.63% w-o-w basis. Now, It can test 4230 and 4262, which are 50% and 61.80% retracement levels of the above-mentioned fall. However, the low of 4100 will play as an important support. The trend for medium and long term is still positive for Nifty and we believe that this correction is a good buying opportunity. For Monday, Nifty has strong support in the range of 4140 to 4150. The resistance levels are 4193 and above that 4209 for Monday.
Strategy
One should keep close watch on select CG and Metal stocks.
Very short-term traders can keep a stop loss below 4100 for the Nifty on the closing basis.
