November has brought in a degree of optimism and cheer after the acute pain of October. Three days of up moves and now yet again the Nifty is at a crucial juncture to find direction.
As written a couple of days ago, the hundred odd points band at 2306-2406 has been a twilight zone, a troubled threshold of sorts for the Nifty, from July to September. The qualitative difference now is that during that period the bull run had the ready support of strong institutional buying. As always, even during that entire period there was a loud clamor for a correction which, thanks to sustained buying, never really materialised. But yes, there was much faltering nevertheless. And it was only after 2430-2450 were tested and sustained that the onwards march came.
Now in the present, back into the same zone after hitting all time highs, the struggle continues. But the vital buying support, the strong institutional liquidity inflows are being elusive, and the contrary direction of money-flow is causing most of the pain. Unless there is a reversal in this flow, we can expect increased supply at every high.
From the recent moves the one main positive aspect is the support at 2300 levels with 2280, the other strong support remaining untested. The acutely oversold conditions of a few weeks together with the resilience at 2300s had given a bottom base for the Nifty to rebuild upon which appears to be underway.
The confirmation of this, as in the recent past, will come with 2430-2450 being sustained. If so, then the next area to expect would be another hundred points to the up.
However, only time will tell, if and when this happens, whether this would be a short to mid term corrective rally to the October crash, or the resumption of the long term up rally.
For today the crucial level is 2403, the hinge support for the day. Below this the sentiment would sour again with 2380 exposed.
To the up, 24436-2440 is the important mark to rise above and sustain.