Nifty needs to break through 6225 to keep climbing

The week saw a profit-taking bias emerge at higher levels as the headline indices surrendered some ground on a week-on-week basis.

The mid-cap indices outperformed the banking and technology indices as retail players preferred to buy small/ mid-cap scrips.

The weekly combined exchange advance decline ratio was negative as the figures were 10434:11450.

The capitalisation of the same on a commensurate basis was also negative at Rs62,060 crore: Rs62,852 crore. The NSE stocks gained Rs28,532 crore in market capitalisation on a week-on-week basis.

FIIs were net buyers in equities to the extent of Rs6,875.3 crore during the week. That saw the rupee close the week at 44.42 levels (against the previous week’s at 44.47 levels). The US markets saw the indices close at six monthly highs and that spells optimism in the undertone.

The UK FTSE 100 also logged a similar performance. The Dow Jones index showed higher relative strength as compared to the Nasdaq composite, which shows a preference for old economy stocks as compared to technology scrips.

The Asian segment saw the Straits Times Index log a new 2010 high and the Hang Seng Index record strong gains, whereas the Japanese Nikkei 225 index underperformed its eers. The Shanghai Composite index also logged strong gains, thereby ensuring positive overseas cues for the domestic markets this week.

Technically, the domestic markets have seen bar reversals on the weekly charts as the closing levels of the headline indices have been lower than the opening levels and the intra-week highs were the significant highs of the ongoing rally, thereby creating significant inflection points for the bulls, as resistance hurdles on the upsides.

Unless the 6225 level is overcome forcefully on the Nifty this week, the outlook will remain that of consolidation or profit-taking.

The weekly range advocated for the Nifty between the 6275/ 5850 levels has held as the Nifty trended within these parameters.

This week is likely to witness a range of 6325 on advances and the 5975 levels on declines. The bullish pivot will be at the 6175 levels and the bearish pivot at the 6125 levels.

The week may witness some profit sales on account of de-leveraging in the near term. Traders should initiate fresh trades in curtailed quantities.