Except 5 - 10 minutes in the final hours of trading nifty held our lower range of 5180-5190 zone. It tried 5250 but failed to cross and slipped back to 5200 zone and it clearly shows the weakness or some more time for accumulation. Nifty futures made a new low and thus indicates that we don't need to buy if there is one more fall but keep waiting for an accumulation pattern. I did discuss about the weakness in bank nifty and stocks like SBI and ICICI bank in yesterday's post. As they are yet to make an accumulation pattern we should wait for an up move in bank nifty to give the leading signal. If we go by the logic and market cycles we could see some lower turn over days and the institutional traders have not started liquidating their positions. Retailers were left out of the previous rally and they are the only buyers at this point of time.As we could see some buying happening at 5180-5200 levels if nifty breaks below this zone the liquidation will also happen at a faster rate. Thus i would not like to short the market below today's low for a target of 5100 , but would wait for a decent buying opportunity at lower levels. Though we fell from the highs we could see some intra day up moves in TATA steel and L&T but the negative open interest data shows that these were short covering and not long accumulation. In the commodities market we could see some profit booking for copper and nickel is still making new lows. Thus the base metals should be back in its buying mode for a strong up move in the equity market too. Before nifty makes any move bank nifty and metal index should lead the way ,let it be up or down. Thus wait for some more lower levels in nifty below today's low and it can be close to 5070-5100. On the upside we could see 5200 call got written around 40-45 points and the call writers would definitely fight for these levels and thus 5200+50 = 5250 would be the upside cap for nifty from a short term perspective. Lets keep a range of 5150 - 5250 and consider the break of 5150 on nifty futures as a break down. Watch for any upmove beyond 5250 to make it a sustainable one.
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