The Indian markets tumbled further to a new yearly low on Tuesday. The sensex opened at 3702 and fell to a low of 3614 before ending the day at 3665. The nifty too ended the day in negative territory at 1158. Volumes were good while the breadth was negative on both the BSE as well as the NSE.

The market is said to be waiting for a positive news to start a rally. But we forget that the positive as well as negative news is always present side by side in the market. The investors focus on the good news and ignore the bad in a bull market and vice versa in a bear market. This bearish trend will end when investors get bored with the constant selling and start buying en masse. We already have indications of slow down in the momentum of selling.

That was all about market psychology, which is constant over centuries, across the globe. Coming back to the sensex, the turbulent times here seem to be unending as the NASDAQ is still in a downtrend. The NASDAQ can halt at the 3000 mark again and bounce up to 3400. Fall below 3000 will take it to the support band between 2880 – 3000 where a significant low is likely to be formed.

As far as the sensex is concerned, breaching of the 3600 mark is likely to take the sensex to 3527 or 3447. This figure of 3440 is coming up too frequently in many of our counts. So it takes on quite a bit of significance. Our outlook remains the same as yesterday. Stops for short positions can be at 3950.

TODAY’S TRADING DAY

The most likely scenario for the day is a range bound move between 3600 to 3750. There can be a dip in the morning followed by a recovery. Support will be available from 3631, 3614 and then 3588. A sharp fall below 3600 will mean that the sensex is heading for 3470, 3447 and then 3349.

Resistance levels for the day exist at 3660, 3699, 3725 and then 3750.