Nifty broke down to 5620 levels where some short covering happened and there is no evidence to see that the recovery was due to addition of long positions. We could not see any significant increase in the premium and thus it can be assumed that some amount of short covering is happening at lower levels but the volatility data is showing that the downside pressure is increasing. We had a false rally towards 5800 levels two weeks ago and whenever we have a false rally the resulting move would be very severe on the opposite direction and that is what we are seeing now. The turnover data was good and the advance/declining ratio was in favor of declining counters.Nifty is yet to decide whether it has to break below the previous low or not but the false upside moves happening in stocks would be giving a signal that some more downside is left in the market especially in infrastructure stocks. If nifty is making a pause here two stocks to bet would be HUL and Bata India (above the previous high's). Both these stocks are consolidating at lower levels for quite few days and these stocks are seeing good accumulation pattern in daily charts.S&P has almost reached the closest support zone of 1350 and i expect the market the consolidate in 1340-1350 before any downward move.
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