Nifty update for 19-July-2012

Nifty held the mentioned lower band of 5170 and gave a sharp bounce from those levels. We could see this as a short covering rally in the large cap stocks like SBI and L&T. As nifty held the lower channel the stocks could not break out from the low zone. Turn over and volatility data are showing some short covering than fresh long positions. Though we could see some long addition in nifty for 5260-5270 levels stocks are yet to see some amount of fresh buying. We could see some long liquidation happening at 5270 zone in the previous week and the zone has to be crossed to confirm the buying happened at 5170 -5180 zone. The weaker stocks like L&T and SBI did not come down as nifty held the range but i doubt whether this move is to make a new high or not. The weaker names like Jindal steel might continue the short covering rally but nifty looks like holding 5170-5180 and give a bounce to 5270 zone. The pattern looks like a range bound session in the days to come and 5200-5300 range is likely to hold in the coming days too. The trading range can be 5170-5270 and use the upper range break out to exit longs in nifty not to create new.