Nifty registered a new high but it is struggling at highs close to 5140 and a lot of resistance points are meeting at the zone. Thus the chances are high that it can give a false break out on the upside as we could see some distribution pattern in nifty at higher levels. As I said in the previous posts it could still be within a range of 5150 – 4950 and if it is a range bound market it would be difficult to maintain long positions at higher levels and buy the dips close to 4950-5000. On the upside the breakouts should be with good volume and any moves on the upside can be seen only as a short covering rally as lot of short positions are already there in the system. Volatility data shows long liquidation at higher levels and some short build up. It looks like the market is waiting for RBI policy out come; inflation data and this could be a trend setter in the short term. On the downside 5080 could be a stop for any long positions and wait for a deeper cut close to 4950 to get in as a fresh buyer. In a nut shell 5140+ levels is not a level to create fresh buying positions but one can hold the existing positions with a trailing stop.
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