Nifty broke below the immediate support zone of 4830 and made a low close to 4780. It is surprising to see some of the major large cap stocks held high despite the volatility index shooting up to 27. All the major stocks look like waiting for some news flow to happen in the coming days. Dollar is registering new high everyday and reached a remarkable high of 56 which could drag the country to a much dangerous situation. As usual government and RBI could not utilize the falling crude price and the interest rate hike cycle is expected to continue in the near term. As i said in the previous posts time has come to lighten the trading longs and wait for panic bottoms as an entry point. It seems there is some more pain left in the system especially because of the half dead government. As the problem of Dollar/INR has to deal with more of fundamental factors it would not be easy for them arrest the current rise with any rapid action.If there is any downfall happening in nifty banks could lead the down fall and i would be surprised to see nifty in a positive mood in spite of bad news.Any rise close to 4950 could be considered as a short covering rally and only above that could be considered as a major trend reversal for nifty on the upside. Volatility data shows some fear among traders and the discount in nifty shows lack of interest among traders for creating any long positions. With a reversal only above 4950 nifty is expected to trade till 4500 if it breaks below today's. There would be sharp whipsaw's on both sides and traders are advised to trade with caution and wait for panic bottoms to be a buyer.
