Medium Term Trend: ☝UP (Changes to Down below 11450)
Volatility to the Fore: Nifty opened around 11700 but quickly dropped below 11600 and made a low of 11555. It protected the lows of Friday and once again moved above 11700 levels in the second half and again gave up most of the gains to close almost flat around 11650 levels.
Reliance turned out to be the spoiler today and fell around 8% to close below 1900 levels. HDFC came to the rescue and absorbed most of the Reliance losses. Anyways moving back to Nifty, in last post we had mentioned that there is a possibility of Market forming a contracting triangle but Nifty should hold around 11625-630. Nifty didnt and broke below 11600 levels on Friday itself hence the pattern was negated. Further, we had also mentioned that since Nifty has risen almost 1200 points in a straight line some sort of consolidation is ok and these 100-200 point fall shouldnt be taken seriously. We still maintain this view that Nifty is merely in a correction mode and has not started a new leg on the downside. Though we are seeing sharp falls , none of the falls are able to sustain and they are not seeing any followup selling either.
Its been 15 days since Nifty started this corrective pattern and in these 15 days market has just fallen 350-400 points. Whichever way one looks at it, this is extremely slow and in contrast market had risen 1200 points in 11 days (now thats what we call a trending move). Now going forward, this corrective move may last for few more days but as long as its trading above 11450 levels, we see it as a corrective move only.
Speaking of levels, today we saw a hammer like pattern which has positive implications and if tomorrow Nifty trades above 11725 levels then it can further move to 11800-11850 levels. Above that Nifty has one crucial resistance at 11875-11900 levels and if Nifty manages to move above it in next 2-3 trading sessions then probably we can say that corrective move is over and Nifty has started a new leg on the upside.
We reiterate that we continue to believe that eventually market has to cross 12K levels and move above higher ( thought it may not take a straight road to go there).
Happy Trading
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