Nifty update for 18 - Jan - 2012

Nifty had a decent run up above our resistance levels of 4930 and it gave about 50 points on the upside. As I said in the previous posts any run up above 4950 should be considered as a profit booking opportunity and look for an entry at lower levels. As an investor one should stay with the buying positions as it is in a strong short term uptrend. There is no need to go short in a rising market and use the dips to create buying positions. One can see multiple support levels at 4880 and 4820. Thus use these levels to add some positions in the stronger sectors. If the market is moving up further one can see some profit booking happening in the defensive sectors like pharma and FMCG. Thus traders should reduce their buying positions when we are close to the upper channel of 5050-5060 (strictly for traders and investors should stay invested) and would be looking for short positions if it is giving a topping out pattern.The turnover data is still disappointing but as long as the trend is up we need to be with the trend.Volatility index is showing strong buying and some short covering above 4930 levels with a good advance/decline ratio.On the upside next important channel resistance is seen around 5050-5060 levels and we need to see whether that channel would be broken on the upside.Keep 4880 – 5060 as the range for options traders.