Nifty heading for sub-5000 levels soon...Bear grip to strengthen

Nifty has closed at the lowest level since its top of 6312 on 5 Nov, a loss of 1277 points or 20.23%. Spot Nifty is now unable to sustain at higher levels, even above 5100 since last 3 sessions. The second leg of correction will start soon. Nifty is now trading below all major supports. The next support is directly at 4930, which is likely to be broken soon. Thereafter 4880 is the lone support. If Nifty closes below 4850 consistently, then expect a 2008 like situation. Nifty can then freely fall to 4580/4440/4290/4100 or lower. Although this seems difficult to imagine now, it is very much possible.

The long term bear trend may soon be confirmed on the Indian markets. Since Oct 2010, I have been advising profit booking. At that time, most people must not have believed me. But now, they can see for themselves. Nifty would soon be trading at sub 5000 levels.

On higher side, Nifty can trade at 5100, 5150. Major resistance levels are 5220/5250/5310. I have my own doubts whether  Nifty level of 5300/5400 will be seen for a long time to come.

20 Aug 11

Spot Nifty closed the week @ 4845, close to the support area (Intraday low of 4796 on Friday). Now some bounce can be expected here, but it may not yet be the end of the correction. Mood - Cautious.