Mon 11th: Nifty resistance 5750

Finally, after a long run up, Indian equity markets took some breather. Indices on the last day of the trading week, collapsed. Nifty tanked almost 70 points while Sensex ended with a loss of 220 points, but markets still closed up a bit from the last weeks close.

Nifty traded in a broad range of 5600-5750 levels. Nifty took support at 5600 levels and bounced back to make a high of 5737 odd. FII’s inflow kept the markets afloat. On the other hand DII’s were Net sellers for the week ended 07^th July 2011.

Next week, trade is expected to be choppy and action stock-specific as investors will keenly eye companies' Apr-Jun earnings. Sectors such as IT services, financials and materials have led the downward revision in Nifty earnings during the quarter (Apr-Jun). Although market participants expect the Nifty to trade in the broad range of 5600 and 5800, any strong disappointments on the earnings front could further drag the index to sub-5600 levels. Players believe that for the Nifty to see another rally, it must trade firmly above its 200-day moving average of 5750. Investors will eye the Apr-Jun results of index heavyweights Infosys and Tata Consultancy Services due on Tuesday and Thursday, respectively. Markets men expect Infosys to post a fall in consolidated net profit due to higher wage bill.

Metals stocks seems to be in focus and might be the target to some short covering or fresh buying in some select counters in the coming week, as they have slumped on Friday as the group ministers have approved the draft of the mining bill, which proposes that coal miners share 26% of their profits with displaced locals, and miners, other than coal companies, share 100% royalty.

Markets rallied from the low of 5200 to 5700 levels within a very short time. RSI at 5200 levels was at its over sold zone, which currently touched its over bought zone within 14 days of its trading session. Nifty setback it’s ever rising streak and relaxed after facing resistance at its 200DMA.

Nifty will continue to resistance at 5700-5750 levels. Nifty has good support levels at 5600, but the close below the same can take the nifty further down. Since the markets have rallied a bit too fast, we may see some side ways movement.