There was an exuberant opening in the Indian markets on Monday morning. The sensex opened at 3909, with an upward gap of 170 points and touched an inter day high of 3930 in early trade. But the players seemed extremely cautious and used the opportunity to book profits. This resulted in the entire gap getting filled by the time trading ended for the day. Volumes were moderate for the day and breadth was largely positive.

The sensex returned to 3729 at close on Monday. So where do we go from here? As far as the short term (next few days) is concerned, the movement of the sensex can be thus,

• In case the sensex recovers from 3714 or around 3650, we can have the sensex oscillating between 3650 – 3900 for a few days.
• If the 3600 mark is breached powerfully, a fall to 3447 becomes a possibility. Interim support exists at 3549.

We are in the process of making an important market low. This can happen in the area between 3400 – 3550. But things can get pretty turbulent till then. As we keep advising the bulls, they can buy with the intention of holding for a month or more. For short term trading, bulls need to step aside. The trend along all time frames, long term, intermediate term and the short term is in favour of the bears. So they can continue to sell on rallies as long as the sensex stays below 4200.

TODAY’S TRADING DAY

We had a previous low at 3714. So support can be expected around the 3700 level for the day. If the 3700 level is breached, a fall to 3656 or 3627 can be expected. A rebound from the 3600 level can take the sensex to 3800 or above once more. In case we have a very bad day at the bourses and the sensex falls below 3600 too, then subsequent targets are 3543 and then 3447.

Resistance level for the day will be at 3729, 3811 and then 3862.