Nifty Slips Into Another Range, Gold Shoots Up

The Nifty today opened weak, stayed weak, made a weak attempt to recover after noon but failed and became weaker after the European markets opened weak. So, there is weakness all around. The only thing that’s not weak is Gold, which went up sharply today rising $84, almost 11%.

After breaking down from the double top pattern formed on the 30 minutes charts a few days ago, the Nifty achieved its target at the opening bell of the third day. After achieving the target, the Nifty has now slipped into another range, this time on the 30 minutes charts, as seen above. This range is between 3950 and 4100. While the target on the daily charts remains 3800, it will be only after this range is broken through on the downside. In case the prices break out decisively above this range, that target of 3800 will be cancelled, at least for the time being.

If the prices do break out of this range on the downside, what will be the target on the 30 minutes charts? Well, this range is 150 points wide (4100-3950) and a breakdown will give us an additional 150 points which gives us a target of 3800 (3950-150). So, well, that conforms to our views/target on the daily charts.

That’s fine, but which side is the market likely to break out on? Well, we don’t know. That is what happens in a range. In a range, not only is the market confused/unsure, it confuses us too. Well, we may get some early indication from oscillator indicators when there is a divergence visible, but in this case the Relative Strength Index (RSI) is also not showing any visible divergences. This means, that we shall have to wait till a divergence is visible (which may or may not come) or for the market to come out of the range. So, for now, it is buy above 4100 and sell below 3950 (in the short term). Investors are advised to wait for now and not take any long positions, at least not till the market either achieves 3800 or breaks out on the upside above 4100.

But the international markets may provide some cues. There is some good news from the US. The Fed government has agreed to bail out AIG by giving them a $85 billion loan (that will be repaid by liquidating the company) in exchange for a 80% stake in the company. But there are fresh concerns about Morgan Stanley and Goldman Sachs (the two remaining independent securities firms), the result being that, at the moment, Dow Jones is trading 240 points in the red while the Nasdaq has lost 75 points. Crude remains flat near $97 a barrel. So, all in all, it looks like we are going to have a downside breakout from the range that we are in.

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Nifty At Crucial 4200 Support, Wait for Next Move

As expected the Nifty, after making a confirmed double top pattern on the 30 minutes chart, came down. Though, the target for this double top formation was 4160 but there was support on the daily charts at 4200. The Nifty respected this support, made a low of exactly 4200.15 and then recovered to end the day at 4228 to close 62 points down while the BSE Sensex ended the day with a loss of 323 points. European markets were good on Friday and ended the day with gains between a percent and 2 percent. The American markets, however, were flat. Crude also remained, more or less, flat and maintained support at $100 to end the day at $101.

Seen above is the daily chart of Nifty and, as can be seen, the Nifty has now reached the bottom end of the range at 4200. It is expected to find support at these levels, unless it proves otherwise. In the bottom half of the chart is the Relative Strength Index (RSI) and that shows that it has not yet reached 40 (it is at 42, to be precise). The price at the support level and the RSI still above 40 may indicate that the support maybe respected by the markets. In case they don’t and 4200 is broken decisively on the charts then we may be staring at 3800 in the face.

Since we know that we are at the support level, this may be a good time to buy Nifty futures or Nifty calls. If the markets were to break 4200 then we shall close our long positions with a small loss. For the record, Nifty 4200 calls are trading at Rs.138/- while 4300 calls closed ar Rs.90/- per Nifty. The lot size happens to be 50 Nifties.

Update: The Rupee to Dollar exchange rate has moved up to Rs.46 to a dollar. Last time the dollar touched 46 was on Sep 29, 2006. Asian markets have opened and are trading weak with losses between 2 and 4 percent. Nifty in the Singapore market is 155 points down at 4070. Expect Nifty here too to break 4200. Do not take any long positions.

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Nifty Breaks Down Further, Support Between 4160-4200

Exactly like yesterday, the Nifty opened flat today and almost immediately started losing ground but stabilized soon and then went into a narrow range and kept trading in those levels for most of the day. The bears, finally, took the index below the lows of the day when only an hour of trading was left and the index ended the day about 78 points in the red. The Nifty still remains locked inside a range of 4200-4650. As mentioned in earlier posts, a clear trend would come about if this range is broken on one of the sides. Or when the ADX indicator line starts rising again. This line seems to be stabilizing near 14. Such extremes are rare in the ADX and this clearly shows that a trending should now come about soon enough.

Seen above is the daily chart of Nifty and shows the range within which the index remains locked. The lower end of the range is shown at 4200. However, as explained in yesterday’s post, the index has broken a symmetrical triangle within which it was moving on the downside. The target for this downside breakout is 4160. If we look at the chart above and notice the pivot low which was formed in the end of July, the value happens to be 4159. So, this 4160-4200 range may provide good support to the Nifty. Looking at the Relative Strength Index (RSI), we find that it is now very close to 40. If the RSI does find support near 40, it may mean that all is not lost yet. A breakdown below this range of 4160-4200 should definitely take the RSI below 40 and that would be negative for the markets, and we could be looking at 4000 or 3800 then. Alternatively, if the Nifty were to find support near these levels and the RSI near 40, then the outlook remains, more or less, the same that we would still be in a sideways market but would be saved from the downside, for some time at least.

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Trending Move May Come About: Direction Unknown

The Nifty on Friday managed to make another doji candle. That makes it three consecutive dojis, each candle having a lower high and a lower low. Interestingly, each day was a green day, meaning that the Nifty closed with gains on each of these three days. The Nifty ended with 14 points of gains on Wednesday, 6 points on Thursday and 5 points on Friday. A doji suggests indecisiveness and technically signals that the market is taking some rest before starting another big move, which could be up or down. But after a long rally or a long decline, the formation of a doji may signal a reversal in the trend.

In this particular case, a doji was formed after a rally of 800 points from the lows. And we have seen three consecutive dojis since then. This should have signaled the beginning of a downtrend. The fact that it has not means that more analysis needs to go into this. Let us look at the details and the circumstances under which the doji was formed. The short term trend has been for quite some time now. On the daily charts, we have seen a pattern of higher highs and higher lows, which again suggests bullishness and which means we are in an intermediate term uptrend too. On the daily charts, a bullish head and shoulders pattern was formed and a candle going through the neckline should have been a large range candle with good volumes but that turned out to be a doji. On the weekly charts, we are seeing a pattern of lower highs and lower lows, which means we are in a long term downtrend. And it will remain so till we have a pivot low higher than 3800 or if the prices were to go above 5300.

This means that we are in a short term uptrend, an intermediate uptrend but in a primary downtrend. We would expect the market to follow the longer term trend, which remains down. But that does not stop the market from following the short term and intermediate trend before following the primary trend. In such a situation it is best to follow the short term trend. Short term trends can be seen on the 30 minutes or 60 minutes charts. Attached below is the 60 minutes chart of the Nifty from the lows made on 16th July till date. Initially, we saw a big rally and then a corrective period before the rise started again.

Since the last three days the Nifty has been moving within a narrow range trend channel, as seen on this 60 minutes chart. As can be seen, this is a falling trend channel or a channel sloping downwards. The significance of a falling trend channel or a falling wedge after a long rally is exactly the opposite of the significance of a doji after a long rally. While a doji after a long rally holds negative implications, a falling channel or a falling wedge after a rally is a bullish sign. Another important thing present on the chart is a trendline connecting the lows formed on 16th July, 29th July, 1st August and Friday’s lows. This trendline shows that the Nifty is now at support and may not go down further. The trend channel shows that resistance is at 4550 and should not go above that. But Nifty cannot remain in this 50 point range forever. A trending move should now come about which would take the Nifty above 4550 or bring it below the lower end of the trend channel at 4450. We shall take a position depending on which side the Nifty breaks out on. For now, it is just wait and watch.

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Nifty Breaks Down, Support Between 4160-4180

The Nifty opened flat today with a slight positive bias. But soon after 11AM the RBI Credit Policy was announced in which repo rates were increased by 50 basis points to 9% while the CRR was increased by 25 basis points to 9% with an effort to reduce inflation. Though, a rate hike was already discounted into the prices, a 50 basis points hike was not expected. Most participants, with inflation figures stabilizing near 11.8-12%, were expecting a 25 basis points hike. Hence, when the news of the hike came, the markets tanked and then just couldn’t recover throughout the day. Finally, the Sensex ended the day with a loss of 557 points while the Nifty was 142 points in the red.

After yesterday’s dull day, it was clear that the Nifty didn’t have the steam to go up despite its going above the resistance line. Attached above is the 30 minutes chart of the Nifty. We can see clearly that the Nifty today broke through the support marked by the upward sloping trendline numbered 1. As expected, there was additional support near the top of the trend channel between 3800 and 4180. While the Nifty did go below the 4180 support, it finally closed the day at 4190. Now the first support available is between today’s low near 4160 and the top of the trend channel, 4180. If the Nifty does manage to go below 4160, the next support comes in at the trendline marked 2 near 4100. There are other supports too below that near 3900 and 3800 but for tomorrow, I don’t think we need to look beyond the 4100 support.

News from the international front is better too. While the European markets closed flat, the Dow Jones is up almost 200 points. There is good news from crude oil too. It did lose about $5 today but at the moment it is trading with a loss of $3 for the day at $122 per barrel. If the Asian markets too remain good tomorrow morning, we should see the Nifty bounce back from the top of the trend channel. Going by the Fibonacci retracements too, the Nifty has already retraced 50% of the rise in the last week. Now, whether the Nifty sees this 50% retracement as a good retracement or whether it finds the 61.8% retracement a more reliable support is yet to be seen. 61.8% retracement comes in at 4077.

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Lackluster Day for the Nifty

The Nifty opened flat today with a slight positive bias. All through the day, it maintained a very narrow range of about 40 points. It did move up and down about 2-3 times during the day but all through this range of 40-45 points was maintained. A slight dip in the first fifteen minutes found support near the trendline discussed yesterday (and today). The Nifty, as predicted that it might, reversed from that trendline. But then all through the day it remained lackluster, which is worrying.

Attached above is the 30 minutes chart of the Nifty. Just like yesterday’s chart this also comes attached with the same two trendlines and the 14 period Relative Strength Index (RSI). There are some negatives and some positives to this chart. Let us look at the positives first. First of all, support was found at the lower trendline and it moved up from there. Secondly, the upper trendline was broken through, which again is a positive for the National Stock Exchange (NSE) Index. Thirdly, the RSI is finding support at 40 repeatedly as marked by the brown circle.

But, as I said there are some negatives too. Firstly, the trading throughout the day was dull and boring and even after the breakout above the trendline, there was no enthusiasm which suggests that things may not be all that good for Nifty. Secondly, international cues are not too good. European markets closed more than a percent in the red. Dow Jones, at the time of going into print, is trading about 200 points down while crude is attempting a recovery, though it is not very successful at the moment.

All we can say for tomorrow is that the Nifty seems to have slipped into another trading range, though, a much narrower one, between 4280 and 4380. A move above 4380 should be bullish while a move below 4280 should be bearish in the short term. Long term and intermediate term investors should wait for the pullback to complete before taking the plunge.

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No Major Move Till Trust Vote

After two days of gains, we saw another good day today. Politics has become very interesting and Parliament has become a comedy circus with our honourable MPs going back on their words and changing loyalties by the minute. The numbers game and the ‘horse-trading’ continues as the countdown to the trust vote draws closer. At 4pm on Tuesday the members will cast their votes and it will become clear whether the UPA government will fall or will stay. This will become another nail biting finish going down to the wire.

As of now, the UPA has 269 MPs supporting it, 268 against it and 3 are still undecided. If the Opposition gets the support of at least two of these and the UPA gets one then it is going to be a tie and the speaker would have to vote. The speaker, Somnath Chatterjee, being from the Left, it goes without saying where his loyalties stand but to be fair to him, nobody knows who he will vote for in case of a tie, not even the Left. The closest finish so far was when the Vajpayee government lost the no confidence motion in 1999 by a single vote when Jayalalitha led AIADMK withdrew support from the 13 month old government. However, Vajpayee came back to win the elections and even lasted the full term as the leader of a coalition government.

Attached above is the daily chart of the Nifty. As suggested in yesterday’s post, 4165 was supposed to act as the resistance and today’s high turned out to be 4168 before closing at 4159. It is still not possible to determine whether this resistance would be broken or not. If the prices go above 4165 tomorrow, they could go to the top of the range at 4200. A breakthrough above 4200 will also mean that the next target for the Nifty would be 4600. I personally feel that tomorrow is going to be a dull day for the markets in terms of price change. But I do not rule out a volatile session (without any major change in the closing price). I do not expect the Nifty to go above 4200 before the vote is cast. But there may be a lot of participants who would like to close their long positions before close tomorrow, and some may even be willing to go short, to cash in on the opportunity if the government were to lose the trust vote tomorrow. This may take the markets down. The next two days are going to be news driven days and for technical traders it is the best time to go on a holiday since technical analysis does not work on news driven days.

There are no international cues to talk about right now. The European markets were nothing to write home about while the American markets, at the time of posting, were trading flat. Crude was about $2 dearer but that was only to be expected after such a sharp fall was seen in the last two days.

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4000 Stop Loss for Open Long Positions in Nifty

Today was one day when the Nifty kept going up throughout the day, except for a sell-off that was encountered in the last hour and a half. At one point the Nifty went high enough to cross the figure of 50 points in the green but after the sell-off, in the last 30 minutes went as low as 40 points in the negative but then managed to close only 9 points below yesterday.

The Nifty, as seen from this 30 minutes chart shows that the index has been moving within this trend channel since the beginning of the month. It is constantly finding resistance near the top end of the channel and support near the bottom end. As seen from the trend channel, support comes in close to 4000 levels while the resistance level lies between 4230 and 4250. A move outside this trend channel should give us a reasonable big move. The two dojis seen at the end of the day and the Relative Strength Index (RSI) within the black circle, which shows that it is finding it difficult to go below 40, suggests that this downmove maybe over for the time being. But like always, every positive is accompanied by a negative, and in this case it is the fact that the last rally that was seen today, failed to reach the top end of the line. Now, which side of the channel will the prices break is for the market to decide. We shall just follow the trend as and when that happens. As of now, we keep the stop loss for short term long positions below 4000.

The fact that every positive is accompanied with a negative is what makes the markets so fascinating and thrilling. This is why the uncertainty comes in and why one person wins while the other loses money. If there is no uncertainty in the markets, the thrill will be lost. And this is why the markets, time and again, continues to remind us that our analysis is no good and is thoroughly wrong. This is why it is improper to predict the markets and wise to follow the trend. This is why we analyse the markets just to get an idea of what may happen and be prepared with a strategy if that does happen. And whether or not, that will happen is totally the market’s prerogative.

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Nifty Breaks Important Support

Before I start this edition, I must apologize for not being able to post my views on this blog on Thursday night for Friday due to some personal problems. Rest assured, I’ll try to be as regular as I’ve been in the past. I’ll continue with my plan to post a newsletter for every market day and an extra on a weekend. The Nifty, on Friday, did open slightly in the green but soon started losing ground. It managed to hold on to the support between 5000 and 5050 for a couple of hours but soon after noon it started slipping quite heavily and from there it was a unidirectional decline for the Nifty.

The chart of the Nifty has suddenly changed in the last two days. If we ignore the last two candles in the chart, we can see that we were pushing against the resistance line and the blue candle had a long lower shadow which showed that the price did go down but buying came in at lower levels and that actually took the price past the day before’s close. Suddenly, that day was followed by two red candles which changed the chart completely. Now we have broken through the support line near 5000, as signified by the solid green line, which is highly negative. A lower high is now already in place and below 4913 we will have a lower low too, thus signifying the start of a new downtrend according to the Dow Theory. According to the trendline theory, we have now entered an intermediate term downtrend. The target for this downtrend may be somewhere between 4500 and 4550. However, support also comes in at previous lows of 4913, 4630 and 4470. There is a reasonable good support at current levels near 4950. It is important that the previous low of 4913 is not broken if we are want some stability in the markets.

A lot of the current fall in the markets has been attributed to inflation which has been on the rise due to the jump in prices of crude oil. Crude Oil has almost doubled in the last 10 months and the jump has been exponential in the last two months. What actually has been happening in crude oil? Is it likely to come down? Well, some people say it is likely to come down now and there are others who say a price of $150 per barrel is likely in the next few days. Who do we believe? The best thing, I would believe, is to look at its chart and decide for ourselves.

Given above is the daily chart of crude oil futures as traded on the Multi Commodity Exchange (MCX). The price is in Rupees but the chart, whether in Rupees or in Dollars will remain the same. As seen in the chart, the thick red line is the line chart (close) of crude oil and we can see that it has now found some resistance near 5650 near the blue line. We can see that the support trendline is too far down near 4800 (which will reach 4900-5000 by the time the price comes down). A fall to 5000, though, may not be possible but a fall to 5100-5150 is likely. 5150 also happens to be the 23.6% Fibonacci retracement level of the rise seen from the February lows. That would correspond to roughly $120 per barrel. Also embedded on the chart in the gray line is the chart of Gold futures on MCX (the scale for Gold has not been shown). As seen by the chart, the price of both Gold and Crude is moving in tandem and a fall in crude could also make the yellow metal cheaper.

Buying should be avoided for now since the short term trend is now down and it is likely that the intermediate trend may also turn to down, if it already hasn’t. Keep strict stops on all open long positions.

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Credit Policy Gives Positive Boost

I must apologize for not posting anything on the site except for the webinar for the last two days. It was a busy few days for me since Saturday. Anyways, I am back now and, hopefully, should continue to be regular like always.

Yesterday and today morning was nervous for the markets. The RBI credit policy announcement was supposed to come out today and a major percentage of the market was expecting a hike in the repo rates to control the inflation. A hike in the repo rates would have been negative for the markets. Fortunately, the nervousness subsided and a thrusting upmove came about when the credit policy was announced and it was made public that only the CRR would see a hike of 25 basis points while the repo and reverse repo rates would be left untouched.

This upmove today was significant in the sense that it crossed the 200 day simple moving average (the green line) today. The 200 day moving average determines the trend in the long term. The price above the 200 day moving average indicates bullishness while it suggests bearishness of the prices are below it. This move should find some resistance near 5300 near the blue trendline, though, according to our earlier post, the target still remains 5441.

Cipla has broken through its upward sloping trendline with the Relative Strength Index (RSI) showing a stronger dip than the price. This may not be very good for this pharma stock. Consider closing long positions.

This is the weekly chart of Hero Honda. Now that this range has been broken, we can look at some nice upmove for this auto stock. Consider buying on a pullback to 800 with a stop loss of 725 for a target near 960.

Sterlite Industries seems to have broken through the line at which it was finding resistance. With a stop loss of 800, it seems to be a good buy at current levels for a target of near 1040.

Tata Motors, on its weekly charts, has been moving within a range of 600 and 840 for over a year now. Now that it is at the bottom of the range, it seems to be a good time to pick up this stock for a target between 800 and 840.

For all those lovers of Tata Power out there (I hope you are reading, Mr. GK), this seems to be a good time to pick up the stock (or hold it if already holding) when it has broken through its resistance line at 1360. With a stop loss of 1300, one can expect a target of near 1700.

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Nifty Downward Bias Continues

Today was again a flat day for the Nifty with a slight negative bias. No breakouts out of the range, just stayed within it but closed near the bottom of the range at 5000. As suggested yesterday, a move below 5000 could take the Nifty to a level of 4930-4940. There is another support at 4900 and the next one at 4830. We shall have to see which support the Nifty decides to respect, if at all it were to go below 5000. An upmove shall be productive only if it were to cross 5080.

But what I found interesting in this 30 minutes chart of the Nifty was that the Relative Strength Index (RSI) seems to be finding support at 40. This may be good for the market if it decides not to break down.

Today was also the F&O expiry day. That was expected to bring high volatility and choppiness into the market. But the kind of volatility that was expected did not come about. Maybe it was because of the low volumes and open interest this month which was caused by the nervousness in the markets.

As expected, our recommendations yesterday did not go right today because the broader market remained weak. That was what we had warned yesterday that though some buying signals were there, the reader has to use her own discretion whether to take the trade or not because we were expecting the broader market to come down.

No stocks being discussed today since the Nifty is showing signs of weakness and taking long positions now may hurt our financial health. We shall wait for the Nifty to give us a buy signal before taking any long positions.

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Small Downfall Still Expected

As expected, the Nifty did go down today. During the day the Nifty did try to go up but could not go above yesterday’s close. It did manage to reach there but turned down again to close near the lows of the day.

Today we have the 30 minutes chart of Nifty with us. In the last 3 days we have seen that the Nifty has remained within a very narrow range. It may be consolidating within the range. What will happen after the consolidation is over is anybody’s guess. It has support between 5000 and 5010 and resistance between 5070 and 5075. This gives us a total range of 75 points. Once the Nifty decides to move outside this range then it gives us a target of another 75 points in the direction of the breakout. Of course, these targets can easily be overshot too depending on the momentum.

Let us look at the pros and cons of this range. The pros first. The Nifty had gone up about 450 points in the current rally, on the daily charts, without any meaningful correction. A correction/consolidation is healthy for the market. We want the Nifty to consolidate and catch up its breath before it starts running again. We don’t want it to keep running, become breathless and then collapse. So in that regard this consolidation will be good for the market and the results will be known once the Nifty crosses 5080.

And the cons? The latest rally, which was today’s rally, failed to reach its earlier highs near 5070-5080 and that signifies that there is weakness in the markets at higher levels. Another interesting observation on the charts is that it has made a small bearish/inverted head and shoulders pattern within this range. This pattern, though, has not been confirmed yet. A break below 5000 will confirm this pattern. The target for this bearish head and shoulders pattern will be about 4940. At this point, there seem to be more negatives than positives in the short term.

There are a few charts which are giving buy signals and have been discussed below. But one’s own discretion is required because we are expecting the broader market to come down a little. Please note that some of these stocks may be available at a cheaper rate in a day or two but the buying signals remain valid till the stop loss level is hit.

Aditya Birla Nuvo is showing some signs of improvement, as can be seen from this daily chart. What looks positive for the stock is the support for the Relative Strength Index (RSI) near 40, as marked by the circle. A move above 1500, which may or may not come tomorrow, should be positive for this textiles stock. A stop loss of 1375 will be prudent while waiting for a target of close to 1700, where it will meet the resistance line.

Arvind Mills, on the daily charts, has broken through its resistance line accompanied by huge volumes. This is bullish for the stock. The RSI is close to 80 and it is generally advised to wait for a pullback before buying. But seeing the chart, we can see that Arvind Mills has closed near the highs of the day without showing any signs of a pullback. Under these circumstances, it can be bought at the current levels with a stop below 50 for a target of between 65 and 67.

Hindustan Constructions has been moving within a narrow range between 110 and 140 since the last month and a half. It is now near the top of the range and may break out of this range. If it does it gives us a target of close to 170. A stop loss below 125 may be safe. But this stock should be bought only if it were to go above 140. Ignore the movements in the first 30 minutes as they are subject to volatile movements more because of global cues than because of technical or fundamental reasons.

Another very interesting chart of Jindal Steel. As can be seen from the chart, the price has been making lower highs while the RSI has been making highs at almost the same level, if not higher. This is known as a bullish/positive divergence when the price is going down but the RSI is going up. Now it is close to its resistance near 2300 after a pattern which looks like a double bottom formation. Not only that the RSI which was finding resistance near the line has broken through it which gives an indication that maybe the price will follow. Buy only if it crosses above 2300 with a stop loss of 2100 for a target somewhere close to 2750.

Petronet LNG has been in a narrow range between 60 and 80 for a better part of this calendar year. It now seems to have broken out of the range, while the volumes, though increasing, remain significantly low. Not the kind of volumes one would expect to see with a breakout. So, one can take a risk using her own discretion to buy near current levels with a stop loss near 74 for a target of near 100.

As mentioned in earlier newsletters, we are inviting our esteemed readers to send in their contributions in the form of articles to be published on this page. Take this opportunity to voice your opinions to the world about the fall today, the markets in general or anything remotely connected to the markets. Please e-mail your articles and don’t forget to mention your name and location so that you are given due credit for the article that is published.

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More Downside Expected

Some new pages have been added into this site yesterday, which give good information and news about the Indian and the World markets. Please click on the tabs on the top to go to the other pages. For now, one would have to refresh the page at short intervals so that the most recent data is available in front of you but we are trying to incorporate a feature of automatic updation, which may take a couple of days. I need help of some tech savvy people who can help me to incorporate this feature. Those willing to help may please contact me.

Looking at the 30 minute chart of Nifty today, we find that we are in a short term downtrend now. We had another lower high and a lower low, as well. And in the process the Nifty broke through its short term trendline, had a small pullback and found resistance at the same trendline and turned down again. In the short term we have a small support near 5070 but as of now, there are no indications that it will hold. We have some resistance near 5300. As already mentioned, we are in an intermediate downtrend and will remain in one for some more time, or at least till the time 5500 is breached on the upperside. This level may change with time. Below 5070, we may be looking at a target of 4900.

It was the day of the Futures and Options expiry today. Tomorrow, and maybe Monday, there will be some build up of positions in the new month, which may be a cause for some volatility. After that the volatility may decrease and then only can we get a clearer picture of the direction of the Nifty. For short term traders, one should take only short positions and some of them have been identified here.

Air Deccan has a little support near 168. If this support breaks, it may come down to 140. Sell near 167 (stay away in the first 15 minutes of the morning) with a stop loss of 185 for a target of 140-142.

Allahabad Bank seems to have made a small head and shoulders pattern, which is bearish for this banking stock. Notice the sudden increase in volumes in the last half an hour when the stock broke through the neckline. Look to sell below 107 with a stop loss of 118 for a target of 96.

Bata India has also made a bearish pattern with a breakdown below the support at 167 with a sudden increase in volumes on breakout. This shoe company looks as a good selling opportunity below 160 with a stop loss at 180 for a target of 135.

IDBI is another shorting candidate after it completed its bearish head and shoulders pattern. With a stop loss above 118, it seems a good sell below 110 for a target of 96.

MTNL has also made a bearish pattern with a breakdown below the neckline at 119 with a sudden increase in volumes in the last half hour. This telephone company is a good shorting opportunity below 118 with a stop loss at 126 for a target of 103.

Network 18 also seems to have made a head and shoulders pattern with the head and the shoulders marked in the chart. With a stop loss of 350, it seems worth selling below 320 for a target of 285.

Under normal circumstances, whenever the price increases, the volumes also should increase, as has been happening in this 30 minutes chart of Reliance Natural Resources Limited (RNRL). This has been marked by the blue lines in the chart. But notice the price and volume pattern in this last increase and decrease (marked by the thick purple lines) where volumes fell when the price was increasing and volumes rose when the price was falling. This is a bearish sign and RNRL has also failed to reach its upper resistance of 150. One can profit from selling it below 130 with a stop loss of 143 for a target of 110.

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