For two days, the 4055 level has been holding well for the Nifty (ignore the spike below this level for a few minutes). We have seen three days of lower lows and one inside day. The absence of any gains for four successive days in not bullish. But, all trends will be interrupted by counter trend moves. It does seem that the Nifty may be ready for a relief rally.
But, we have another big news day tomorrow, when Infosys reports its Q1 results, and, I presume, it gives a gudance for the rest of the year. So, what Infosys says will affect short term sentiment. If the market likes what Infosys says, then we can expect a big up move because the market is oversold. If Infosys somehow dissappoints, then markets are likely to continue moving down.
A rally should be a correction in an ongoing down move. the first line of resistance is 4250 which was support earlier. Another decline should see the Nifty touch 3900 or nearby. Tomorrow morning may well decide what the market wishes to do in the next few days.
Men asked a question was asked about the IT Sector: "On CNBC you said that if one had a 3 year view then one could buy IT stocks, could you please explain what one should look for a long term view, I track infosys and it has been making lower highs and the last 3 peaks are 2415(15-2-2007),2020 and 1850(ignoring the post election high of 1900+) though it has been maintaining 1050-1080."
My Notes: For a long term view, I ask myself: Which sectors are outperforming now? On a monthly chart, Infosys is showing relative strength when compared with the Nifty. So is Wipro, TCS and HCL-Tech. Therefore I assume that this outperformance may continue. I chose three years to suggest that the view needs to be long term. The period was chosen to denote the long term - it could have been 30 months or 40 months =- no rocket science here.