My analysis and view :-
There was a steep fall after testing 7660(spot) which atleast i wasnt expecting, there can be many reasons for it and some of which come to my mind are -
1. News event because of which some longs chose to exit.
2. 7660 zone is a supply zone from which strong supply came last time so again there were sellers here.
3. Long unwinding and shorts triggered more stop losses on way down
accelerating the fall.
4. Rupee fall which was acting almost inversely to nifty today.
We usually see sector rotation i.e money taken out from banking, realestate, energy etc is usually put in IT, pharma sectors but strangely even with rupees gain we didnt see any buying in IT sector..maybe they are expecting lower levels in market or are switching to currency instead of stocks.
Nifty has been in range since 6th june of 7500 - 7700, with sellers becoming more active at higher levels as shown by lowering highs. Buyers have been trying to hold 7500. I am considering following scenarios -
1. We form a symmetrical triangle i.e lower highs, higher lows and consolidate to breakout above. Current range is of about 150 points so there should be few more days of consolidation in this scenario.
2. We have a breakdown failure of 7500. One variation of this maybe that it sustains below 7500 with 7500 as resistance level and forming higher lows. This variation has worked very well intraday in recent times.
3. It sustains below 7500 and tests 7370 zone.
As of now i am more biased to first 2 cases and will be long , 1st target would be around 7650 to 7700, next target for budget will be 7900 but i am expecting consolidation of higher lows with 7700 as resistance for a successful breakout. If it breaks above without any consolidation below 7700 i am more biased to breakout fail.
Selling here(bigger tf) doesnt make sense to me as budget is a big event, people are expecting reforms and strong decisions and most important thing is that people are optimistic about it, so they are likely to buy ahead of budget rather than after it. And not many days are left, whatever moves come will be mostly before july 2nd week.... on 7th, 8th its most likely to consolidate ahead of rail budget on 9th( if on 9th). So even if we have a fall from here how many days we can have downfall ?
Anyways lets see, please share your opinions.
