Nifty update for 16th November 2011

Nifty came close to the 5030-5040 and stocks were trading close to their 52 week lows. Though the turnover is low in equity market many banking and some other large cap stocks are close to their 52 week low like L & t and maruti. These stocks don't seem to be good at least for a bounce if they break 52 week lows. Nifty started its up move from 5010-5030 range and this becomes a crucial range in the coming days.There would be multiple support levels at 4950-5000 range thus any break from here could lead to a bounce and thus instead of playing with futures it is better to trade with puts on any downside. If banks are not breaking 52 week low from here there is nothing much to sell in those stocks. Stocks like JSW steel remained strong through out the day but broke crucial support levels at the end of the day. Panic selling is evident in all the large cap stocks and remember the most beaten down sectors are banks and infra, thus the bounce backs would be more severe in these stocks. Upside rallies would be met with selling anywhere close to 5150-5170. If it spends some time or consolidate at these levels it would be a decent pull back. As of now below 5040 - 5050 levels another cut is possible to 4970-5000 , but try to get some cheaper but stronger stocks to play the bounce back. On the upside 5130-5170 would be a hurdle to pass, as that is the area where lot of new shorts got created. Dollar and dollar index are both moving against nifty and that still remains as a major threat for any up move. Dollar index is already done with its base formation and on the way up.