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The Dow sneezes again though mildly; the common cold virus has already been transmitted to Europe and Latin America. It has also traveled far and wide: Asia is already seeing mild onset of fever. Use this metaphor of common cold and influenza or any other; the fact remains that these days equity markets around the world are behaving like mini clones of the US market while their own economic realities may differ considerably. This is because the major participants in all of the markets remain the same group of investors and/or traders. It is their shifting from one asset class to another not so much one market to another.

Asia is already trading down anywhere between 0.6% and 1.4%. The SGX February Nifty is down by 25 points albeit on low volumes.

The Nifty needs more consolidation before it establishes the 4766 low on Jan 29. Today, if it manages to stay above 4899 then there would not be much of a weakness; however, to show real strength it needs to move above 4950. The range between 4930 and 4950 would continue to exert supply pressure and it needs a real strong push to get past the Nifty level of 4950.

On the downside, 4880 and 4854 are two levels that would act as immediate support while 4841 and 4820 are stronger support levels. On the way up, immediately 4913 is a resistance before the 4930 – 4950 supply zone and above 4971 and 4996 are two resistance to overcome before it tests 5000 mark for the Nifty.

Today, any breakdown-if, at all, it were to happen-below 4823 would mean a most likely test of 4766 low again while any strong swing above 4950 would mean strong bullish gumption emerging again.

Rajat K. Bose