Nifty weekly update 12-16 December 2011

Though we can't call this quite a downtrend in the short term as a medium term outlook Nifty is still in a bear marker. It can be a sideways moving market for an interim base formation or it could be cracking the 52 week low of 4640. As long as 4840 holds on the down side we could expect a bounce close to 5000-5020 levels where lot of short positions are hiding.If this is a consolidation or bottom formation process one could see major high beta names rallying with good volume.If it breaks 4840 as a trader i expect the downside is still open till 4500 levels , but as an investor i would wait till 4640 to be taken out to square off my long positions.One major worry would be FII's taking out money for the first time on friday.Thus it would be a sell on rise market unless and until a base formation or consolidation process is happening. If we have a look into the daily charts if 4840 holds we still have a higher bottom formation and that would be a good sign for the bulls.As it is a downward slopping channel 5200 would still remain as a hurdle to confirm a bullish reversal. Dollar index is also making a higher bottom and forming a high above 80 levels would be a real worry for Nifty.Turnover data shows that when ever there is a bounce retail investors are getting rid of their long positions and leaving the market.As of now 4840-5020 should be considered as a broader range. If Nifty breaks 4840 retesting of 4640 is very much possible and that too with in a week. As per time cycle 20th,21st of December could be crucial dates for a turn around.