Nifty update for 08-May-2012

As said in the previous post Nifty cracked close to 5050-5000 levels and bounced back to 5130 levels. I would like to see it as a bounce back as per time cycle than a meaningful pull back. I did mention about the importance of date close to 5th May for a trend deciding move. Though it was a decent short covering rally based on GAAR news the banking stocks are really broken down and continue to be the worst performers in the short run. Stocks like Axis bank and ICICI  bank held their support zones but SBI did crack its support zone. The current pattern in nifty shows one more wave down to 4950 with a reversal placed only above 5200-5230 zone on a closing basis. Volatility index is showing some short covering happening at lower levels but no long accumulation is visible as of now. There is only bigger stock i was recommending from an investment perspective ie; BHEL (see the previous week post). Leave banking space for a better accumulation pattern and let the market consolidate or give a reversal for any upward momentum. Thus we have completed a 50% correction of the big rally (4530-5630)and it is considered to be an important support zone. It is expected to retest these zones in the coming days with the mentioned reversal levels.Lets keep a range of 5200 - 5050 and consider the upper band as an exit point for any long positions.

Time cycle - Important dates.

As per the above chart if 4950 has to be hit this would most probably happen on the 14-15 th of May 2012.Any up move would be resisted close to 5230-5250 so there is a good chance of nifty going up and trapping the bulls. If the mentioned level(4950) is not hit on the specified dates we can assume that the downtrend is matured and it might turn on the upside soon.