Why NIFTY is Behaving like Earthquake - 11 Jan 2011

We have seen huge bloody sessions from some trading sessions specially from 03 Jan 2011 to 10 Jan 2011.

NIFTY Spot Movement from 03 Jan 2011 to 10 Jan 2011

If we see the movement of NIFTY Spot from 20 Dec 2010 to 10 Jan 2011, its clearly states that NIFTY Spot has become under bearish trend. No Support is seeing for further upside.

NIFTY Spot Movement from 20 Dec 2010 to 10 Jan 2011

Major Support on the basis of Last 4 months (Sept 2010 to Dec 2010) was 5846.53, which the NIFTY has broken and also broken 5742.99 on intra-day basis, which is the Major Support on the basis of Last 5 Months (Sept 2010 to Jan 2011). So the Next Major Support is 5496.10 on the basis of Last 5 months and 5692.30 on Jan expiry basis. Overall look is huge bearish trend in NIFTY, NIFTY can go up to 5496.10 if there is more panic but i think NIFTY Spot can take Support on 5725. Because FIIs have Long Position in Index Future of Rs. 525.33 Cr. and Rs. 2085.58 in Index Option according to NSE Derivative Segment data on 10 Jan 2011.

The main reason for this downtrend is 

Europe's debt crisis returned to the fore of investor concerns on Monday amid reports Portugal is facing mounting pressure to accept an aid package to prevent contagion to other countries.

Stocks in Europe have fallen sharply as Portugal's market borrowing rates have jumped higher in the wake of the renewed bailout talk.

So, this pressure can more panic the Indian Market for further clarification.

But I Strictly suggest don't take long position in NIFTY. Firstly watch the NIFTY, see the trend if NIFTY is taking support at definite level then take long position but Stop Loss should be Strict. For the current movement Stop Loss is 5720, if it breaks then exit from the long position.