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India proposes, Greece disposes! The rally early morning led by the banking goliath SBI was short-lived since news from Greece’s soaring budget deficit to 13.6% or even higher sent equity markets all over into a tizzy. Our market tanked and the Nifty nosedived from 5331.80 to below 5250 levels before closing at 5269.35. What a relief for the bears!

Today, the battle would be fought once again as the crucial range for the Nifty would be between 5242 and 5213 for the day. Unless the bears succeed in pushing it below 5213, things would start becoming increasingly difficult for them. However, the FIIs selling index futures worth US$ 100 million put a lot of pressure on the Nifty and if they continue selling then the index would surely be under pressure once again. Be that as it may, unless the levels of 5242 – 5213 are decisively broken the Nifty and the bulls both would retain their ability to stage a bounce back.

Any fall below the level of 5213 on sustained basis would mean a retest of 5185 – 5152 range by the Nifty. However, till such time the bears are able to push the Nifty below 5102 as of today, no sustained corrective swing is likely. Even if the market gets pushed down now by the skeptics, the maximum downside that can be projected would be a test of the range between 5102 and 5055.
On the upside, if the Nifty were to maintain above 5280/85 range then the tables would be turned on the bears again and they could be scurrying for cover; however, any short position taken in the index yesterday or kept from earlier period now needs to be covered only when yesterday’s high is breached from a conventional technical point of view. Your money management might dictate things otherwise. Do as you think fit.

While the Nifty Put-Call ratio came down from an intraday high of 1.45 to 1.33 at the close it is still quite healthy as it stands above 1.30 and also since it has posted a jump from the previous day’s reading of 1.20 to 1.33. The Nifty VIX moved up though from 19.23 to 20.53, a jump of 130 basis points.

Thus, things are evenly poised but with some advantage to the bears as the concluding price action was very much in their favor. It would be an interesting battle to watch.

Rajat K. Bose