Update for 31st January 2011

   Will the Downtrend Continue ?

Pointers :

• The February series Nifty futures closed at 5630 as on last Thursday, the derivative settlement day.
• On last Friday, the first day on which the Feb. Nifty contract became near month, the contract could not even reach the previous day's last traded price of 5630.
• Therefore, the Nifty contracts again made a subtle gap by not reaching the previous day's last trded price.
• These subtle gaps are normally associated with technical weakness, especially in trends and at the highs.

Nifty Futures - Intra-day Chart 

• Though the 5550 level was indicated as a minor support, Nifty future could make a bounce of only 30 points from this area. 
• However,  a bounce seen in the last hour of trading almost reached the 5550 level.
• The 200 day moving average ( DMA ) at 5630 may act as a resistance on any recoveries from now.

Update for 28th January 2011

    A Close Below the 200 DMA, But What Now ?

Following the formation of a bearish engulfing candle on last Tuesday, which indicated further weakness, Nifty futures made further losses on the derivative expiry day and closed below the 200 day simple moving average ( 200 DMA ). However, the February month Nifty future contract closed at 5730 for the day, almost coinciding with the 200 DMA of 5725. This author had indicated in the previous post that the derivative expiry might lead to further market pressures, especially because of the the heavy losses suffered by long position holders in the settlement. It was also indicated that the expiry might be between 5600 and 5700 as per the indications from the Nifty options open interest data. As indicated in the previous post, the market heavy weight Reliance broke the 950 support on Thursday and this factor also contributed for the market's close below the 200 DMA.

Nifty Futures - Intra-day Chart