24 Sep'08: More “N” More Damage

In lines with the expectation nifty had a gap down opening below 4200 and found support near the mentioned level of 4141. In spite of a very weak US cues and weak Asian markets nifty did not had a very big gap down opening. Gap down opening was followed by a recovery which may be due to short covering or manipulation by operators which was not expected with weak US and Asian cues.

Nifty rallied to recover and fill the opening gap down up to yesterday’s closing only to fall back to breach the support level of 4141 which eventually took nifty even down to close at the lowest point of the day. Nifty is becoming weaker and weaker day by day and more damage been done in the charts in continuation with yesterdays fall. Intraday nifty trend was mostly dominated by the price movement of Nifty heavyweight champion “Reliance Industries”. Also IT and Bank stocks were hammered out of shape with their index down by 4-5%.

Inline with weak US and Asian market cues, nifty may also open with a weaker note. Nifty may find support near 4110 or 4088 levels. Trading below 4088 for a while may take nifty to test 4051. On the upper side nifty may find resistance near 4150 or 4195 levels.

My gut feeling is that either nifty may breach 3800 in case of increased downward momentum without taking any breath or it may take a pause near 4051-3992 levels. One interesting point has to be noted is that in this ongoing bear run, most of the global indices either tested or breached their 200 week moving average except our market. So it is logical to expect our index also to test or breach its 200 week moving average which is at 3639.

Happy Trading !