After a negative weekly close nifty ended the session at the lower band of 5200 where one should be cautious with their short positions. It has got a runaway gap support close to 5180 and a major support close to 5090 levels and that could be the stop loss for positional long positions It is worth trying to buy the dips at this point with the mentioned stop as we are close to the lower end of the channel for a 70-80 points rise. I expect nifty to give a secondary rally before falling further.A buyer should only buy nifty from the perspective of a bounce back and a bearish island is already in place close to 5350 zone. One could see lot of options writing happening in 5300 calls and the mentioned support zone of 5270 was decisively broken on friday thus any buying positions below close to 5200 will have an immediate target of 5270 levels. Volatility index is showing some call writing happen on every rise and the tight range bound situation is still intact till july expiry. Institutional traders are still on the long side and in the options trades an upper band of 5300 is clearly visible. Nifty is expected to trade between 5170 - 5270.
Stocks to watch
1. L & T - the stocks has formed a double top pattern and is expected to trade lower till 1340 once it breaks the previous low.
2. Cairn India - the stock is finding good accumulation pattern in the range of 310-317 and bigger move towards 335 region is expected once it is able to move beyond the previous days high.
