Nifty may be tested at 4510-4540 levels: Modern Shares

A: That is what bear market rallies do to you, it moves through a vaccum and that is why these kind of rallies emerge in first place. We have seen in the past that the bear market rallies can extend right upto about 30%-35%. So we are done about 19%-20% rally as of now and we still have another 10% going forward.

But within that for the day since it has moved up so much between 4,510 to about 4,540 that is where there could be some trouble for the Nifty because that is where the longer-term trendline and the down trendline is hitting the resistance line. So there could be some softening from there. But if it takes off that then you are looking at 4,640 and 4,770, which anyhow was our original target that would compare to about 15,500-16,000 on the Sensex. If it stretches itself maybe it will go to about 16,400.

So we have got about a 1,000 point rally left in the Sensex and another roughly about 200 point on the Nifty but ideally around 4,540, one could take some trading profits as a trader and if it softens down to about 4,250 level one can go long again. So for the time being there could be a pause at this level.

A: Ideally if one is aggressive, if one has bought it at lower levels, I would like them to book some profits in this band of 4,500-4,540. On the other side if one is looking for a position to short maybe this is a level one can short and only cover that if it closes above 4,550-4,560 on a closing basis. So both trades are possible profit book if one is already long and if one has not done anything so far then maybe open a small short trade with a 4,550-4,560 on closing basis stop loss.

A: There is a bear market rally but the past says that bear market rallies could be really vicious which can take off by about almost 30%-40%. So you take out 30% target from about 12,500, you are going to hit 16,000; if you take 35% you are going to hit 16,500. I think that is the maximum. We need to watch for the price action there, is there any softening? But on the lower side my answer would be whether we already had a bottom, at best, what I feel is if it comes and retest the bottom of 12,500 it is only on the retest will you know whether that was the real bottom or not. But for us more or less the band between 12,500 and 11,800 is the area where the final bottom is going to be but this is the rally within the bear market and this is not a resumption of a major bull market for you.

Q: As a trading position at around 4,500 mark what kind of trade would you initiate as a Nifty trader, if you been clean out of the market up until now?