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In all likelihood, our market is likely to open below the Nifty level of 5000 and probably we would see a test of 4960 around the level where the 200-day Simple Moving Average is located currently. The market continues to look weak and the immediate technical projection that we get, on the downside, is a range between Nifty levels 4960 and 4880. The downtrend is quite likely to be over by this current week only: we have a feeling that the current downtrend is unlikely to stretch beyond May 14 or May 17.

Despite strong economic underpinnings we continue to suffer on account of weak global cues; however, this situation is going to improve for we are now coming close to clusters of major technical support levels that are there not just for the Nifty but for major pivotal counters as well.

For the day, we need to watch out 4974 as initial support below that 4961 would be the level to monitor. If the latter is taken out on the downside, the level of Nifty 4923 would be a very strong support to contend with.

On the upside, if there is any recovery, the Nifty needs to cross at least 5056 for without going beyond this level there would be no sign of strength. Even if it does manage to get past this level, the index is likely to see a lot of selling pressure surfacing between 5100 and 5120. Only when the Nifty crosses 5185 – 5203 range, it is going to be out of the woods.

From the derivative side, the cues that are emanating are rather negative; we have seen that option transactions value tend to increase on the downside, and this time on Friday last it went up by Rs 45.1 billion while that futures went down by Rs 10.85 billion. The Nifty VIX has scaled up to 28 posting a jump of 13% over its previous reading. This is a clear bearish sign.

The May Nifty 5000 call options have added 1.33 million shares in Open Interest (OI) while the 4900 and 4800 put options have added 0.9 million and 1 million shares in OI. This suggests while there would be quite a bit of pressure and the Nifty might settle down below 5000-level and would find to difficult to stay afloat above 5000-mark it may not be going down much either for the smart money is betting on strong support between 4900 and 4800 levels. The bottom may well be found anywhere between 5000 and 4800 in this downswing.

Even the Nifty Put-Call Ratio (PCR) is at 1.11 much below the comfortable 1.30 mark for the bulls. While the PCR may not yet have gone down below 1.00 it is suggestive of weakness continuing in the short-run.

Unless the bulls quickly reclaim 5120-plus levels for the Nifty, bears would be in the driver’s seat for now though that may not be for long.

Rajat K. Bose