Coming into the new week, it would be interesting to see if the attempts at a pullback seen Friday on the NIFTY were more in the nature of a reaction to the sharp retracement on Thursday. Or was the index trying to make a short term relief rally. Or if the strong flow of funds is still intact, and there would be an upside sometime soon.
Logic would suggest that the corrective phase would not last merely a few days, and that there would be intense selling pressure at higher levels leading to prolonged volatility, as was witnessed on Friday.
Logically then, it would be prudent for the market movers to keep things steady and let the market drift sideways for calm to return. I had written Friday morning that volatility is fine, but stability is absolutely vital. This point cannot emphasised enough.
The market movers are also aware that the safe zone to be at in the current phase is 2500 and above for the NIFTY. If we can arrive here without further bloodshed, we are indeed protected. Below 2450, we are staring at trouble in the eye.
Making an unsustainable charge at 2500 plus would lead to immediate short term weakness, and here a quiet consolidation at current levels to build up momentum for a late charge would be desirable. Sanity is the name of the game.
For today the levels are pretty much the same as Friday.
2507 is the magic number to sustain.
2470-2474 were good supports on Friday, and below this, 2464-2468 have been good in the short term.
2450 is the key support level today.
To the up, 2479 was resistance, then 2486 gave significant resistance, and past this 2490-2495 and 2499 were found difficult.
Will follow and update.
