Medium Term Trend: (Changes to down below 10750)
Weakness Surfaces: Nifty tumbled today, it opened weak around 11K levels and kept pushing down. Finally closed below 10900 levels , with a loss of around 180 points.
In last few posts we have continuously been saying that Nifty might start some sort of correction from 10200-10300 levels and it makes sense to book profit once at these levels. We have been advising against going long at these prices. In last post (Thursday) we had mentioned that:
"There exists some good support at 11050-25 level and market could try and test it tomorrow. If it holds then markets can move up again however if it breaks down then we can see some more weakness in near term"
Market tested 11050 support on Friday (bounced exactly from 11025 levels), however there was no further follow up buying and it broke the crucial support today and as a result slipped further in bearish territory. Even though 11025 level held, the way markets were trading did indicate that its likely to break this support on Monday and that's how exactly happened.
Now moving forward, we need to see Nifty make a strong move above 11125 levels, till that happens, we can continue to see weakness in Markets. Next support (major) for Nifty is around 10750-10800 levels and we need to see if markets are breaking or taking support at these levels. Holding these level and then moving back above 11K levels could signify returns of the bulls however if these levels gets broken as well (on closing basis) then the ongoing correction could deepen further and we might go down to 10500-10300 levels.
In Nutshell, markets continue to remain in correction mode and now has corrected almost 400 points in last 2-3 trading sessions ( 11300 to 10900). If the final support at 10750-10800 zone fails to hold then this downmove might get extended further as it could indicate an extended correction ( both price wise and time wise)
Happy Trading!
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