NIFTY Likely To Head Down To 11,500 Levels Before Taking Support

The bellwether NIFTY continued its frustrating time correction last week, closing a shade above the 11,700 mark after an impressive intra week rally that brought back some hope for the bulls of D-Street. Although the markets failed to post a robust rally post the positive general election results and the RBU rate cut earlier this month, many investors are now vocally worrying about the direction of the market. 

Technically speaking, we are now witnessing a retracement of the relief rally that began in the week of 13th May when the exit poll results indicated a strong win for the NDA. That particular eave appeared to have peaked out in the week of 3rd June, as confirmed by the bearish crossover on the stochastic oscillator in the week of 10th June.

In the near term, we are likely to see this retracement continue, dragging the index down by a further 200 odd points. The broad trend continues to remain bullish, albeit weakly, and a bounce may be expected from those levels.