Nifty at a premium of nearly 3%

Nifty is currently trading at a premium of nearly 3% at 6121. This means either today or tomorrow it will correct at least as much or more. It will close below 6K in the next 2 days if the premium pricing is still working. With expiry coming close, volatility will rise. Global markets will contribute to the downside move.
If you think one day 100 point crash is going to end with just one day, you may be wrong. It is better to play safe.

Continue shorting on every rally for now as the trend is clearly down.

Weakness likely in second half of the week

The Nifty is likely to face considerable resistance around 5,432, which is the higher end of the Bollinger band on the weekly charts. The daily chart indicates resistance around 5,407. Bulls should continue to have the upper hand, as long as the index sustains above 5,400. On the negative front, selling pressure may intensify when the index slips below 5,320.

Bulls to have upper hand above 12,100

This week, the index is likely to face resistance around last week’s high of 12,270, while support on the downside would be around 11,650-11,480. The markets will favour bulls only if the index manages to sustain above 12,100. On the downside, a break of 11,400, could see the index take a sharp dip towards 10,600.
The NSE Nifty moved in a range of 238 points, from a low of 3,479, the index surged to a high of 3,717, and finally settled with a gain of 4.2 per cent (147 points) at 3,621.
The index is likely to face considerable resistance around 3,710-3,770-3,815. On the downside, the index is likely to find support around 3,530-3,475. The short-term (20-days) daily moving average is at 3,455, and the mid-term (50-days) daily moving average is at 3,070.

nifty resistance seen around 2825

The markets bounced back last week in tandem with other global markets, led by a strong rally in the US. The Sensex, which touched a low of 8,110, rallied sharply to a high of 8,793 – up 683 points – before settling with a gain of over 5 per cent (431 points) at 8,757.
Among the index stocks, Tata Motors, ICICI Bank, Sterlite and HDFC soared by 13-17 per cent each. Maruti, Reliance, Mahindra & Mahindra, Hindalco, Reliance Communications, Grasim, Infosys, Tata Steel, Larsen & Toubro and ACC rallied by 6-10 per cent. Bharti Airtel, however, plunged by over 7 per cent, and NTPC shed 4 per cent.
The index, after having seen a breakdown, has bounced back. Hence, the upmove looks susceptible and is likely to fizzle out sooner or later.
As per Fibonacci calculations, the Sensex has given a sell signal on both monthly and quarterly charts. The first signs of weakness from hereon should be the breaking of 8,435. On the upside, the Sensex is likely to face resistance at around 8,900-9,000 levels. In a very extreme scenario, this particular pullback may see the index move up to 9,580-9,650.
This week, the Sensex is likely to find support at around 8,495-8,415-8,335, while resistance on the upside could be at around 9,015-9,100-9,180.
The NSE Nifty moved in a range of 171 points. From a low of 2,556, the index rallied to a high of 2,726, finally ending with a gain of 99 points at 2,719. The index is likely to face some resistance at around 2,760, above which the index may move up to 2,825, which would be a crucial hurdle this week.
On the downside, the index is likely to find support at around 2,655 and, further deeper down at around 2,615-2,590.

Nifty may trade in range of 2,700-2,930 next week

The markets moved on expected lines last week with the Nifty exhibiting weakness below the 2,835-mark. The index hit a low of 2,702, and finally closed with a loss of 45 points at 2,828, despite a good quarterly performance by IT giant Infosys and decent gains recorded by blue-chip Reliance.
The bollinger bands have now expanded to a broader range of 2,700-3,175. Although, the markets may move up early next week, but chances of a continued uptrend remain bleak. For any sustainable rally, the index needs to comprehensively break above the 3,150-mark. The 2,700-level will act as an immediate support level for the index.
This week, the index may see rangebound trading with support around 2,725, and resistance around 2,930-2,960. In case, the index sustains itself above 2,960, then it may re-test the 3,150-mark.
The Sensex moved in a range of 466 points, from a high of 9,341 to a low of 8,947, before settling with a loss of 83 points.
Among the index stocks — Infosys, Reliance, Reliance Infrastructure, Mahindra & Mahindra and Tata Power gained 3-6 per cent each. On the other hand, Tata Power declined by 10 per cent to Rs 218. HDFC Bank, ICICI Bank, TCS, Tata Motors, Grasim, Wipro, HDFC, Hindalco, Tata Steel, Hindustan Unilever and Sterlite shed 5-8 per cent each.
The Sensex has given a sell signal on the monthly charts and, hence, is likely to face stiff resistance on the upside. Key resistance for the index would be around 9,600-9,650, above which the index may spurt to 10,025. On the downside, the index is likely to test 8,600 in the coming days.

Wkly Tech: Crucial trading sessions ahead

The markets ended the penultimate week of the year on a weaker note. The Sensex remained in the red throughout the holiday-shortened week as derivates expiry and the India-Pakistan tension weighed on the market sentiment.
The Sensex, which was in the overbought zone, saw a more-than-expected downside with the benchmark sliding 7.6 per cent (771 points) to 9,329. Among the index stocks — Jaiprakash Associates, Mahindra & Mahindra, Satyam, Tata Motors, Reliance Infrastructure, ICICI Bank, Sterlite, Hindalco, Reliance, DLF and Bhel — dropped 10-17 per cent each.
Geo-political factors followed by the quarterly numbers are likely to dominate the market sentiment for a while. Around this time last year, the index was holding the 20,000-mark. So steep has been the fall that the index is most likely to end the year with a loss in excess of 50 per cent.
Further downside could see the index take support around the 9,000-9,100 levels, while on the upside, the index is likely to face resistance around 9,670.
The NSE Nifty touched a high of 3,110, then slipped to a low of 2,845 — down 266 points from the week’s high. The Nifty finally ended the week with a loss of 220 points at 2,857.
The Nifty is precariously poised just below its short-term (20 days) and mid-term (50 days) daily moving average (DMA). While the short-term DMA is 2,873, the mid-term DMA is 2,908. With both lines converging and the index at around the same levels, it indicates some crucial trading sessions in the coming days.
As and when the short-term DMA crosses the mid-term DMA, the trend will change to positive. However, for this to happen, the index needs to sustain above the 2,800-mark for the next three-four trading sessions.
As per the fibonacci analysis, the Nifty is likely to find support around 2,755 in the short term and will face resistance around the 2,900-2,960 levels. A sustained break of 2,750 could accelerate the fall in the index.

Nifty resistance at 2960 / 3040 and support at 2670

Nifty moved close to our first short-term target at 2958 and closed with a 207-point gain last week. The short-term trend in the index is positive since the trough at 2502. This up-trend can extend to 3112 or 3490. The medium trend in the index is, however, sideways and a move between 2500 and 3500 is likely in this period. The medium-term view will turn positive only on a weekly close above 3500.
Nifty will face resistance from 2960 and 3040 in the week ahead. A downward reversal from the resistance zone between 2950 and 3050 will pull the index lower to 2670 or 2500 once more.