Nifty gave a smart bounce close to 6000 bounce failed to retain the momentum and ended at the lower end of the range at 5930. If we look at the options table we could see significant addition of 5900 calls and as i mentioned in the first day of the series we could still see huge build up at 5800 strike.On the calls side 6100 strike has seen the maximum build up. The technical charts are still showing the same old head and shoulders break down and the targets would be much lower to 5750 levels but the width of the pattern is really creating some doubts in me regarding the downside targets. As mentioned in the previous posts there would be a little more downside left in the large cap names like SBI, Reliance, JP etc and we should wait patiently for these stocks too to bottom out so that nifty could see a reversal. It would be important to watch the addition in 5900 call on 05th June so that we would come to know the depth of the cut and as of now i would not expect nifty to break below 5800 in the short term.Volatility index is still trading with a little positive bias as we could not see much positive move today and it is indicating that the fall in the final hours would be due to long liquidation than short build up. The premium has not come down and the indication is that futures trades are betting on long side but with the intention to average it out on the downside.Nifty is at the 40 day moving average which is considered to be a crucial support zone and it is yet to wait and watch whether it could hold this zone on the downside. A break below the 40 day moving average can easily lead to 100 points cut in nifty.
