Nifty intermediate top in place?

Nifty continued to drift lower as we were expecting. USDINR chart also supports our bearish view on Indian markets!

Nifty weekly chart:

Nifty Daily:

Nifty 60 mins:

Nifty continued to move in downward direction. Advanced decline continues to deteriorate with 1800 declining stocks vs 1080 advancing on BSE. There is no relief rally either in smallcap or midcap space. All this continues to confirm our stand that current down move will lasts atleast for few weeks now.

As seen from Nifty weekly chart, we have a big red candle this week for first time since 4600. Psychologically many traders might still be holding onto their long positions and assuming the current pullback as minor downside correction. Fall might gain acceleration when longs start getting unwind. Objectively, long positions shall be exited unless we move back above 5570 which will then confirm current pull back as minor correction. But unless that happens we maintain our bearish stand.

As seen on 60 mins chart, we have now drawn a new blue channel. Prices are well confined within this band. Please lower your stops now towards 5540 levels.

We mentioned in our report published on 2^nd January 2012, “An end of terminal pattern result in euphoric rise that retraces the complete previous down pattern in less than half the time and sometimes in just a fourth of the time. A move up as shown on chart will be surprise to many but not to our readers.

An up euphoria will then be created by Nifty breaking above crucial resistance levels as shown and a new up trend has started in 2012 will be the talk of the town. Nifty can move high to as much as 5600 – 5800 levels. However we would be looking out for shorting opportunity…”

And following is the statement by “IIFL” yesterday on current rally in Indian markets -

“If I had to choose one of the options, then I'll say it is the beginning of a bull market rather than a bear market rally…”

We can clearly see drastic shift in the sentiments from acute pessimism to extreme optimism. This is not a surprise to us and we had clearly mentioned this will happen on 2^nd January 2012. Also the statement has come exactly at the time when we are looking for shorting opportunities.

In short, the trend continues to be down and sentiments along with USDINR are supporting our bearish stand which might last atleast for few weeks. Any move above 5570 will however indicate one more minor up leg is pending after which the correction will start but that looks like a lower probability scenario as of now.