India short-term technicals

Nifty(4974.35): Yesterday's price action on the Nifty was a mildly bearish set up. The index got repelled from it's 50 day SMA and closed near the lower third of the range.

Nifty - Daily Chart

So what I had projected on Oct 3rd is still a possible count as long the Nifty stays below 5170. The volume footprint tells us that if Nifty drops below 4950-40 zone the likelihood of Nifty dropping to 4855 is a strong possibility. Given that we have Infosys results today, be ready for a quick drop if Nifty breaches this level.

Talking about Infosys, the CNX IT Index saw a much more significant bearish price action.

CNX IT - Daily Charts

The pattern formed on the daily charts was a bearish engulfing candle at the end of potential wave 4 end and the beginning of a wave 5. You would I recall from my CNBC interviews that I'm expecting CNX IT to drop to about 4800.

So how do I convert these to actionable strategy:

Nifty: If Nifty drops below 4940, I would sell with stop above the first hour highs or a 35 point stop whichever is further for a 1-3 day price objective of 4855. If it drops right below this level out of the gate - I would buy Minifty 4600 Oct puts between 25-28 with a stop of 15 for a price objective of 70-75. Do Nothing unless Nifty breaks 4940.

CNX IT: The weakest amongst the IT stocks to me is Wipro. I would sell Wipro short and use 363 as stop at a daily closing level and look for 280 in the next 6-8 weeks and 320-15 as price objectives for the short-term (1-4 weeks). Again do nothing unless yesterday low is broken.

PS: All levels correspond to cash/spot price unless stated otherwise.