Nifty may fall to 4200 as key supports break
Finance Secretary RS Gujral said that there was no question of the government negotiating with any company on the tax amendments proposed in the Finance Bill for 2012-13.
The Nifty has broken below the medium term trend channel supports (bold red), and this is definitely a cause of concern. A negative follow through today would confirm the weakness and rule out any possibilities of a whipsaw.
5,040-5,050 remains crucial resistance from hereon and the Nifty needs to get back above these levels immediately to prevent further sell off.
Every even year from 1986 (barring 1988) has registered a medium to long term top for the Indian markets. Majority of the tops have been either close to March or June. If markets fail to recover and decisively move back within the red trend channel, 5,630 would qualify as that top.
The fact that prices have re-entered the bullish flag would mean that the pattern has failed, thereby leading to more weakness (bulls trap).
The medium term bias than would be down for targets of 4,200, though initial targets can be pegged around the 4,650-4,700 support zone (lower blue channel).
The next couple of sessions remain very crucial in the context of the trend for the next few months.