Yesterday,  we witnessed one of the sharpest correction in the index in 2016.

This correction looks to be more technical in nature after a smart rally of over 900 points in the Nifty and was part of global sell-off. All the sectoral indices led by the bank index closed sharply in the red. with the Nifty breaching 7,600 on an intraday basis, I expect the Nifty to go down further to 7,500 though the index managed to close above 7,600 yesterday. Every intraday rally will encounter profit booking and drag the index down on a closing basis. So smart, intraday rallies can be a shorting idea for traders. The level at 7,500 is likely be tested now and if the selling accelerates further, the Nifty can go down to ~ 7,250, which will be a 50% correction from the high of 7736 hit yesterday. This looks to be reasonable possibility as there not many positive news lined-up this month, but

companies reporting good numbers may not see a deep cut in price. The level of 7250 in the Nifty incidentally happens to be the gap-up area formed in the first week of March 2016 and the ongoing correction should end there, if the short term upward trend is not to be vitiated. Please note that, the gap-up at 7,250 formed in the Nifty is the equivalent of 14,400 in the bank nifty, which I mentioned in my previous mail. Both Nifty & Bank Nifty mimic

each other and position can be taken in either or both. However, these are rough, rule of thumb estimates and it will be better to keep the market movements under close watch before taking fresh positions.

G R CHARI