June 5:it is a sector specific fall, no panic in broad-based indices.

NIFTY/SENSEX have continued to drift relentlessly under the pressure of tired bull liquidation. Both the indices are approaching the panic low of 4468 and 14677 respectively. The fall in equity values has been precipitated by the stocks from AUTO, BANKING, PSU and CAPITAL GOODS SECTOR which have registered a new low. Stocks from all the other sectors are far off from the present fall. All the broad-based indices are, in spite of the present fall, in comfortable zone. To be specific, the present turbulance is due to the dollar affected sectors.
Technically, the stocks are trading in an extremely oversold zone and hence fresh short positions may prove disastrous. It is certainly not a time to be adventurous with all the sectors. Pick up the stocks from the remaining sectors which continue to out perform both NIFTY/SENSEX by wide margin.
NIFTY/SENSEX will have to cross 4691/15865 respectively today for a sustained recovery. Alternatively both the indices can drift further to 4470-4480/15150-15180 zone.
There is,however, no need to panic.

June 4: Avoid short selling at current levels

The indices, as expected, recovered substantially from panic low opening. The rceovery can be expected to continue today.The crucial levels for NIFTY/SENSEX are 4745 and 16030 on upside. If these levels are crossed then NIFTY/SENSEX will moce up further to a level of 4820 and 16225 respectively. Alternatively NIFTY/SENSEX may decline to test the frsh support around 4630-4650 and 15740-15760 respectively.
Avoid short selling at the current low levels. Traders with a minimum holding period of 3-4 days persepctive should buy in small lots on further decline.

June3:Cover short on further decline.

The indices have reacted slightly excessively at the end of trading on June2, 2008. Liquidations by the entrapped day traders added to the excessive fall at the end of day. It has closed in the over sold zone on intra-day basis. Further selling at the current low levels is, therefore, not advisable. NIFTY/SENSEX are likley to find fairly good support in the range of 4670-4700 and 15800-1580 respectively. Resistance, on the upper side, can be expected around 4830 and 16360 respectively. Panic openeing, if any, should be used to cover open short postions. The higher levels may attract some partial profit taking in the stocks from HEALTH CARE and IT sectors.

Weekly stop loss: NIFTY 4975 and SENSEX 16740.

At the current close of 4870 and 16415 NIFTY/SENSEX remain in down trend as per the weekly oscillators. The stop loss levels for NIFTY/SENSEX are 4975 and 16740 respectively. A move above these levels in this week would pave the way for renewed uptrend. Alternatively, the higher levels would attract some more profit taking by the tired bulls and in such eventuality NIFTY/SENSEX may drift downwards to seek fresh support around 4725 and 16975 respectively. Most probabaly it would remain as a trader's market by moving up and down on alternate bouts of intra-day price swings. Keep the volumes light and avoid aggressive buying in this week.