Nifty gave a sharp bounce from the previous low zone and it is expected
to trade till 5300 with a reversal below 5020. As it is an action packed week
with RBI policy and Greece drama the market can be quite volatile but the
option premiums are expected to fall sharply as we could see very high IV’s in
the current series. It has clearly established a short term support zone close
to 5020-5030 levels and that too without even going back to the Fibonacci zone
of 4950 and it tells us the momentum is on the upside but the volume is still
on the lower side and this could be a worry for a further rally. Thus as of now
it is fully driven by the domestic and global news flows and we need to go in
that direction. If we notice the momentum we could see nifty making new highs
every day with an interval of 10-15 points starting from 5130, 5140 and 5150
levels and for a chartist it could be addition of long position but it
clearly tells us that the news flow will give the further direction . One
important positive development for the equity market would be the short term reversal
in copper and dollar index which could be in favor of bulls. As lot of short
positions has been accumulated during the last week (and the above chart says
that these got accumulated at 5130-5140 range) any up move could be a short
covering and as per the options data long positions have got accumulated from
the lower range of 5050-5060. So it is giving as a tight range of 100 points
and a range break out on the upside is a break out from the downward slopping
trend line which could lead nifty to higher target of 5300 though it could take
some time. On any up move in nifty I would like to go with a stock like Tata
steel which could see good accumulation pattern and it is a decent break out
above the resistance zone of 415-420 for a 5-6% move.
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