Nifty did make a pause close to the mentioned upper level of 5050 and made a low close to 4950. There would be some more short term relief rallies and after some sideways move it is expected to trade till 4800 in the short term. It is testing the 61.8% Fibonacci zone many times and all the short term bounce backs till 5130 are expected to be sold into. Volatility index closed on a negative note an we could see a marginal increase in the premium. It indicates some short covering happening at lower levels and the indication is not many short positions are trapped at lower levels. Thus we could not expect a short covering rally, and we could see some buying happening at lower levels. Though i'm not denying the buying happening at lower levels smart money is not entering the market and the lower levels in SBI is an evidence for that. If we observe the Dow chart we could see the secondary rally started from 12750- 12700 levels and traders should consider these levels as important as Dow could slip to 11000 levels once again after the support zone is taken out. We could see Dow flirting around the support zone in this week and it is yet to be seen whether it is doing a base building process or getting ready for a downfall. At this point we focus on Dow too because personally i don't believe Indian markets could be decoupled from the rest of the world.
Nifty tested its 61.8% level close to 4950 but the corresponding level in Bank nifty would be around 9200.The level is yet to be tested and with the fall we had in SBI after a quick bounce in the morning it is evident that no strength is there for a meaningful upside journey. One stock that i would like to get off would be Orchid chemicals (below the previous low) as the distribution pattern is getting dangerous and as an investor it is better to avoid this stock. A short covering rally in nifty could save the stock in the short run but the structure looks really disappointing in the longer term.
