The session on Thursday was extremely volatile particularly when viewed in relation to the somnolent range bound moves of the past few weeks. The sensex initially seemed very bullish and rose to an inter day high of 5059. But it tumbled from those lofty heights to end the day at 4881, garnering a loss of 83 points over the previous day’s close.

The sharp fall from the high of 5059 yesterday shows a short-term trend reversal. Though we would like a fall below 4863 to confirm this, the trend could be subdued for a couple of sessions at least. We however have insufficient evidence to suggest that the rally from the low of 3832 (23-05-00) has ended. We will wait for a close below 4680 for confirming that.

For the time being, we are looking at a reaction to 4811 or 4758. An inter day bounce from the 4700 – 4750 zone will keep the chances of the up trend continuing alive. The short term outlook has turned negative after yesterday’s fall but the medium term and the intermediate term trend are still up.

As per one of our E-wave counts, the rise from 3832 could terminate in the zone between 5000 – 5100 zone. For the sensex to rise to 5400 levels or 6000 levels, we need a strong and vertical rise and not a choppy one like the one witnessed yesterday. This factor calls for extra caution with long positions.

TODAY’S TRADING DAY

The closing on Thursday afternoon indicates that there can be a dip on Friday morning. The initial targets are 4847, 4811 and then 4764. A recovery from these levels can make the sensex fluctuate between 4750 – 4900 for the rest of the day. A sharp fall below 4720 is required to take the sensex to 4695 or 4608.

A recovery on Friday morning can terminate at 4905, 4919 or 4943. If there is a rise beyond 4980, that would mean that the bulls have regained control. Subsequent targets will be 5023 and then 5059.

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