“We had a sluggish start today as indicated by the SGX Nifty early in the morning. During the first half, there were couple of attempts made to inch towards the 10700 mark; however due to strong selling at higher levels, these attempts got sold into. In fact, post the mid session, the selling aggravated to eventually push the Nifty below 10600. Fortunately for us, an emergence of strong demand at lower levels during the penultimate hour, resulted into a v-shaped recovery to reclaim 10650 on a closing basis.
Today, at one point of time, things looked extremely scary; but fortunately, index managed to find support precisely at the 61.8% retracement of the previous upmove. With today’s wild swings on both sides, the daily chart now depicts a candlestick pattern which resembles ‘Long Legged Doji’. An occurrence of this pattern at the support levels certainly bodes well for the market. Going ahead, a move beyond today’s high of 10691 would confirm this pattern and would lead to some relief move towards 10750 – 10780 levels. On the flipside, 10630 followed by 10583 would be seen as key supports.
At this juncture, a prudent strategy would be not to remain aggressively short, rather, keep focusing on stocks which are poised to give some bounce back from their important supports.”