Markets shrugged of a weak opening as well as relatively negative global cues to zoom up sharply. The move that came as a pleasant surprise gained momentum as the day progressed. As mentioned in previous newsletter it was indeed Banks and IT heavyweights that led the sharp rally. L&T too was a big contributor as were Auto heavyweights like Hero Honda that gained over 7%. Nifty opened below 5750 but then crossed psychological and technical levels to finally close above 5900. It was highest recent close for Nifty as well as Bank Nifty. Both are now at the cusp of a breakout that could catapult both to sharply higher levels. Nifty faces some resistance immediately at around 5925-5940 and sustained trades above 5940 could open up potential targets of 6080 and 6220. Similarly Bank Nifty could move up strongly once it moves past 11900(cash) and 11960(Bank Nifty futures). Infosys kicks off Q4 results season on Friday and the kind of move we saw on Wednesday in Infosys as well as TCS suggests that results would be on the positive side.
Expected or better than results as well as guidance could further improve the overall sentiments. Infosys faces immediate resistance around 3325-3340 and beyond that we could potentially see target of around Rs 3480-3500. The other two heavyweights that are looking good are ICICI Bank and L&T. L&T was the surprise package on Wednesday and sustained trades above 1710-20 could take it to around Rs 1790-1800 and 1845-1860. Banking counters that are looking good are Indusind Bank, Yes Bank, IOB, Axis Bank( above 1460), Kotak ( above465) and Vijaya Bank( above 91). A word of caution though, as we are very close to the resistances it would be advisable to wait for the Nifty to settle above 5940 before initiating fresh long positions. Nifty now has support around 5860-65 and then around 5815-25.
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