NIFTY has been in a range since last few days. Unfortunately, clarity evades us as the level of 7691 on the downside has not been broken by NIFTY, which leaves us with a possibility of major rally in NIFTY. Unless the level of 7996 is broken on the upside with the right kind of price action, any bullish considerations should also be kept in check. The fact that stock markets have yet not tested the Modi Era support range (7125-7561) and instead taken a prolonged pause, only underscores the importance of this support. If the markets indeed stay strong from here then the scenario of a significant 5 wave move to new highs cannot be ruled out (although it may be premature to take such a call right now). The first signal for such a move will be break of 7996 on the upside, the price action would need to be watched closely for confirmation and we will update it on this blog if this scenario unfolds. For bearish scenario to unfold it becomes very important that markets test the Modi Era support range. The upper end of the range at 7561 if retested would very likely not hold and a deeper test of the range would unfold, specific price targets will be released once the price action unfolds in this direction. We continue to maintain a negative bias as the evolved price structure does not look bullish yet. We continue to track the markets closely to catch any change in balance of the market on either side.
Disclosure: We continue to maintain long NIFTY put options in anticipation of test of 7561-7600.