Bulls may encounter resistance at 6075 levels

The last week saw a tumultuous trade as the markets rolled over and slid precariously on the back of absence of buying support.

The decline on Friday was the steepest single-day loss after 15 months and that underscores the present selling bias.

The combined exchange weekly market breadth was negative as the figures were 8,628 : 13,051.

The capitalisation of the breadth on a commensurate basis was also negative as the figures were Rs27,707 crore : Rs57,149 crore.

The NSE lost `245,509 crore in market capitalisation over the prior week.

In terms of sectoral performance, the fall was led by the banking sector, followed by mid-caps and the technology sector.

The overseas investors were net buyers to the extent of Rs900.6 crore during the week that saw the rupee close at the 45.38 levels against the US dollar (previous week 44.70 levels).

The US markets saw the Dow Jones Industrial Average log the highest weekly close after week ended August 8, 2008, which is a sign of optimism.

The technology heavy Nasdaq ended the week at its highest close after week ended December 7, 2007. The UK FTSE100 made an attempt at clearing the 2010 year top but failed to close above the same, but did manage a positive close.

The US market was clearly in the limelight as the equities and currency gained vis-a-vis the global basket. In the Asian region, the markets rallied led by Japan, Hong Kong, Singapore and China in that order.

The overseas cues are clearly enthusiastic and the market needs to catch up with its overseas peers but the internal triggers should turn positive.
Technically, the domestic markets are witnessing some unwinding due to the lower top made on the weekly charts at the 6181 swing high.

The rising channel top will be the de facto support to watch out for in case of declines and the same is poised at the 5750 levels.
While this level may not be tested without some pullback rallies, traders may anticipate some short covering near the 5825 levels in case the 5900 levels do not hold.

The range advocated for the Nifty last week between 6250 and 5875 levels has held.

This week will see the Nifty encounter resistance at the 6075 levels, above which the 6365 may be seen.

To achieve this, the bulls will have to keep the Nifty above the bullish pivot at the 6050 levels. In case of declines, the Nifty can slide to the 5700 levels as long as the bears keep the benchmark below the 6000 levels.

The outlook is that of caution and bulls must avoid adventurous leveraged buying in the near term.