Nifty for 06 May 08

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

As was suggested yesterday, we seem to be in a correction. Had it not been for the IT and FMCG sectors, the fall could have been worse. This sector rotation keeps the sentiment bullish from a longer term perspective. We may see an up day tomorrow and the day after, but the profit booking could drag the correction down later.

The healthier aspect of this correction is that when there is profit booking in one sector, others prop the Index. So the general mood remains buoyant.

We have had a good 28 calendar days up move for this last leg from 4 April. It means that the sentiment has been generally bullish for about one month. It is unrealistic to assume that the bullish sentiment for a month can be corrected in a day or two.

The new orange box is the level now to watch for. That is why we suggest that stops may be retained at a close below 4971.

The suggestion to buy on dips still remains valid.

Trade happy after planning your trade.