Given the recovery rallies on Wall Street and this morning in Asia, it appears that there could be a good short covering rally in our markets. It is expected to open gap up and might cross the resistance around 4403 – 4415 very fast.

However, we need to see whether this rally sustains or not since the chart patterns suggest that the intermediate uptrend has already been terminated and selling pressure may resurface again at higher levels. There is one good thing about the Nifty, it did not decisively breach its 50-day Exponential Moving Average (4355.59). So long the index does not stay below this moving average there is no major threat to the current bull run.

Resistance above 4415 might come at 4440 and 4472 while any fall below 4340 support is likely at 4318 and 4291. For positions that are stuck at higher levels, it would be better to use this probable rally as an opportunity to get out since in our view the intermediate term picture continues to look weak.