6050 level in Nifty turns out as stumbling block - Consortium

The level 6050 has turned out as a bit of a stumbling block for the market in the past, over the last four weeks. Yesterday it seems to be negotiating it quite well despite fairly sideways and edgy global market performance around us. Part of it is because of good earnings from companies likeTCS and Axis Bank . It is also due to rate cut expectations which have picked up after the inflation numbers.

Yesterday, star sector was telecom. Bharti had a big rally, despite the fact that its CEO Sanjay Kapoor stepped down. However, that did not deter the stock. Idea and Reliance Communications were also on fire.Cement was another space which did well pretty much across the board led by Ambuja and Ultratech Cement. ITC too gained yesterday. Axis Bank did well after a solid set of earnings. TCS and DLF were another gainers. Not too many losers, stocks like HCL Tech and Sesa Goa were slightly subdued. Reliance did not participate much to the index gains either. Overall there was a solid session for the large caps led by the telecoms. Broader market was fine. The breadth was even steven. There were individual winners as already spoken about the telecom names.

However, stocks like Hexaware , HCL Infosys rose on the back of the restructuring expectations and MCX , Yes Bank ahead of results. Renuka , Berger Paints , South Indian Bank and BPL were some of the names which did quite well. All in all two good days on the trot which has raised expectations of a breakout pass 6050 and 20000 Sensex once again.

Nifty January future closed at 6083 up 26 points. Nifty Futures closed at a premium of 27 points.Nifty Jan 6200 call saw an unwinding of 1.89 lac with total OI at 86.62 lac. Nifty Jan 6100 call saw a decrease of in OI and . Nifty Jan 5900 Put added OI . Nifty Jan 6000 Put saw a significant addition of OI. This suggests that floor for Nifty exists at 5900-6000 level and ceiling exist around the level of 6200.

For the day coming by, global cues are mixed and not so charged up. However, the overall trajectory and underlying trend of Indian markets in the intermediate trend is strong so going short on the markets except in certain situation is absolutely no. Otherwise traders could get caught in bear trap as it happened on Jan 11 when traders aggressively initiated shorts and got knocked out on Jan 14. Buying can be initiated at lower levels. Yesterday's closing was quite important as it surpassed its resistance of 6050. But staying above 6050 is important.

Source : Equity Bulls

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