Nifty broke our support zone of 5240 zone and as said in the previous post we could see long positions got squared off at a faster rate. We could see volatility index jumping to new highs above 20 which resulted in an increase in option premiums. The structure looks weak and it is a trend line break out on the downside and the expected levels on the downside would be 5050 – 5040. It would not be a sudden break down and it can take some time. We are at an important support zone of 5180 levels and if it breaks it is logical to think about 5050 levels. Though the turnover data does not show any portfolio unwinding some of the major stocks are below the support zones like Axis bank, ICICI bank and L & T. On the upside any bounce would be well resisted at 5230-5250 zones as nifty might need some time for accumulation. We had discussed about the weakness of bank nifty in the previous reports too and that is the real danger for nifty.
Stocks with negative bias (below previous low)
Aban , ABB , ICICI bank
