Nifty closed at the upper end of the channel and a break out above the upper end would be the right to initiate some buying positions in nifty. Though the downside targets were unfinished and nifty got support at 38.2% retracement and that is a good sign for the index is concerned. If we have a look into the turnover data its still low and one has to be stock specific if you are long. Volatility data is showing addition of long positions at 5700 levels but the move on the upside wont be quick even if breaks on the upside. The volatility index is again at historic lows and it would be threat for nifty's upmove and the premium is at the peak of 35-40 points which shows extreme demand conditions in the market. Some stocks like Sesa goa and Hexaware are on the verge of a break out and these are the stocks to consider if one has to be a buyer in this market. If we look at the attached chart of nifty we could see that nifty is getting supported at one of the most important angles and any downward move could get enough buying interest. The upper end of the channel lies close to 5950-6000 and that has to be the target as long as 5700 holds on the downside.That upmove should complete a 5 wave pattern in nifty and that could be considered as a long pause for the current rally.
