Nifty update for 05-July-2012

It tried for a profit booking session but strong buying on dips is protecting nifty from any downside risk.Thus as of now 5270 has become a crucial support zone as lot of buying is happening close to that level. As the volatility index is giving a negative close with decent volume and open interest i assume long positions are getting created on any dip.The positive momentum in the market is still strong and a favorable market breadth is supporting that.As per the volatility index we are close to topping out but the chart says the date would be around 15-18 of July. Thus either the price has to achieve the target of 5470 or time has to mature without achieving the target. Options premiums have become so cheap so that volatility is expected to rise after nifty tops out and that would be the first signal to go short on nifty.The upside targets are still intact with a short term reversal only below 5090 level.If we have a look into the stocks we could see Axis bank and Canara bank are on the verge of a breakout and i would like to go for a bull spread in Axis bank. Canara bank would be more of a trading call for me for a 5-6% jump above the previous high.The trading range can be 5260-5360and it is advisable to reduce the buying positions in nifty when we are close to 5400.