Nifty might be consolidating in the mentioned range of 5550-5840 levels in the coming weeks and options writers could really make good use of the range. We could see a lower turnover day combined with a negative volatility index which shows squaring off short positions at lower levels. It opens up for a bounce from the current levels to 5800 levels within a week or two. The market itself is confused and the leading indicators like bank nifty and mid cap index are making new lows.There is a clear Head & Shoulders(a bearish chart pattern) break down evident in bank nifty which could make things worse for nifty to sustain any bounce. Bank nifty is most likely to break down to sub 11500 levels in the short term after spending some time in forming the neck line close to 12200. We could not see nifty in a discount till now and that is where we could say it has formed a temporary bottom. If we analyse the chart structure of nifty we could see that the up move started from 5550-5600 zone and there is nothing wrong in nifty retesting these zones. The European market charts like CAC, DAX and FTSE seem to be forming a double top than breaking out to new highs. For nifty 5800 - 5840 should be stiff resistance in the coming weeks too and stocks should witness mild pull back rally from current levels.The index is at the bottom of a trendline joining the previous low zones and many stocks are in oversold territory.
Short covering expected - Jindal steel,Sterlite,Andhra bank,Biocon
On the short side - Idea,Sbi (below previous low)
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