Nifty and False Starts. No Follow Up Price Actions.



Nifty Technical View :

Nifty over the last 3-4 months has made attempts to breakout or breakdown channel levels but all attempts have led to whipsaws. The

breakdown below 5000-5100 channel supports did take it to sub 4800 levels but managed to claw back to 5100 + levels.

A few days back the move beyond 5100 which looked like a breakout has failed as it was the first attempt. The short term supports are now placed at 5000-5020 which if broken may again lead us to 4850-4900 levels.

The medium term trend continues to remain sideways and long term positive till we continue to hold the 4800-4900 band on weekly/monthly

closing basis. In the short term we may expect pullbacks from 5000 levels.
The bias remains positive for the short term till 5000 holds. On the overall 4850-5300 seems to be a broader range.



Nifty Observations


The current market movements are terrible in terms of follow up price actions and so many outside events impacting markets. We get false starts for a breakout or breakdown.

Channel breakout of January got negated and seemed like a breakdown at 4800 but it jumped up quickly.

The recent channel breakout did not see any follow up action or rather a big engulfing bearish pattern today. But doubts of a follow up action tomorrow prevails.

Given the fact we have an event risk every week it has become difficult to take a short term call and one needs to be very nimble footed and take quick decisions.

Market has been in the range of 4770-5180 but sentiments have swayed to extremes.

Overall there is no reason to be optimistic with no reforms, RBI rate cuts, petrol etc etc  but with the lack of selling pressure seen on breakdowns the reasons to be very bearish also dont exist.

So till the time we see a clean move with volumes and broader market participation we may just trade with low volumes and focus on investment picks and research.

Continue to be optimistic and patient!! No Situation is permanent.


Broader Market Volumes declining

One of the major problems has been that since the last 1 month we have seen a huge drop in volumes in broader markets. At times there are no trades taking place in many counters for hours at a stretch.

This clearly shows the disinterest. In such cases even if stocks fall one may not get enough quantity at the lower prices. At the same time when the sentiment changes it will only take a 20% circuit to change the trend of a midcap stock.

Continue to research smallcaps/midcaps and set up price points where you would like to enter. Also one may look at buying into Junior Bees or Nifty bees as an alternative to accumulation and shift into stocks as when the market trend changes.



Happy Investing,


Nooresh Merani


  1. Anandha
    June 18, 2012

    Nice article.
    Thanks !

  2. Manoj
    June 19, 2012

    Sir If Possible Plz Update Any Positional Update in GOLD –Silver in Coming Days !!
    MCX Levels

    Waiting For Update !!

    Manoj Kumar

    1. Nooresh
      June 19, 2012


      Well right now currency movements impacting the moves a lot so not taking much of a view.

  3. feltra
    June 19, 2012

    Thanks for a very clear writeup, Nooresh ji… I too had thought on similar lines, though I wouldn’t know about the numbers (on the upside/downside). The point about not being to obtain stocks at low prices because of no trades, was an eye-opener. It means we must keep adding (our selected good stocks) in dips w/o worrying about when it will start rising. Also, the point about Nifty Bees is excellent.

    Thanks & Best Regards,

    1. Nooresh
      June 20, 2012

      Hi Feltra,

      Yes the midcaps are moving on very low volumes so when they reverse i believe we may not get a chance. So got to keep buying slowly below comfort levels.
      Looking towards Junior Bees. depends on your strategy. One of the strategies is suppose you are comfortable buying Nifty at 4500 keep selling 4500 put every month and pocket the premium. When it comes to 4500 buy Nifty. Similarly if you want to sell at 5400 keep selling 5400 call. Depends which strategy suits to people.


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