NIFTY: 11 May 2012: Failure @ 5040 will ignite for a fall towards 4790 in short term. For trading break below 4950 will push Nifty towards 4900.

We have seen a bounce from 4956 but before being impressive it died at 5040. We have seen immediate heavy sell off led by PSU banks. Yesterday low was exactly at 4950.

So it was just 84 points of bounce and I am sure that hardly any trader would get anything out of that rise. Surely I was expecting some more bounce before fall but it did not come. Here comes the problem if we slip below 4950.

Where is the support? I must say that if you can derive any support with bigger wave in magnitude then those may workout well. Few such supports are 4951 and 4913.

Ratio analysis suggests that above two levels will be crucial. Let us see how those are developed. (I am giving description rather than imposing my levels on you).

• 4951 – This is 38.20% from 4531 or 61.80% from 5631 (of rise from 4531 to 5631).
• 4913 – It is derived from its first impulsive fall from 5631 to 5268. We have next top at 5499. Take 1.618 times of 5631-5268.
• Suppose if we go for 2.618 times of correction which is likely. Then we will see levels of 4551.

In a falling market we can talk about lots of trading supports. Like 4930>4913>4880>4850>4800>4770 … so on. Well, to be a technician, I must accept that it can just confuse traders and investors if I kept on sticking on every such level. Rather than technical levels, you must put all your focus on trend which is down from the day we have broken 5135. Wave theory are suggesting for more dip in the days to come.  

So many logics are coming that US market is doing well. I accept that US market is not looking as weak as Indian market. We may see rebound in India market but I am repeating again that ‘no rebound can sustain’.

You must maintain distance from buying stocks for bottom hunting. I am feeling that we still far away from making any bottom.

For today’s trading we will face resistance at 4986 < 5006 < 5018 < 5040. We have IIP figure to come today and that may also dictate trend. Even if it try to rise after those numbers then also it will see dip in second half.

Intraday update - 11:30 am - On 17 Jan 2012 - when we got the gap up- low was 4904. will it work to save intraday fall?

Depending on market condition we will release intraday updates too. Till that time, you can post your views also so that I can present better result for you.

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Praveen Kumar

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