The benchmark indices ended lower for the second consecutive day led by metals, and reality stocks. The weak Asian and European cues also dampened investor sentiments. It was a very volatile session as the Sensex ended lower 257 points at 14,265 after trading in the range of 14630-14118.

The Nifty shut at 4251 down 105 points or 2.4%. Among the broader indices - CNX midcap index fell 2.4 % and the BSE smallcap index dropped 3.7 %. The market  breadth was also negative for the second day as the midcap sector has been badly hurt. Barring IT all the BSE indices ended in deep red. The June Nifty future ended with a 31 point premium at 4282.

Inflation for the week-ended June 6 came in at -1.6% heading into negative territory for the first time since 1977-78. The markets have indeed broken the two major important support levels of (4530 & 4360) and have ended lower for the second consecutive day. Now this clearly indicates that the Bears have taken full charge and the chances of markets going down is very high. Even the global cues are not supportive and the FIIs have turned negative from the last couple of days. All this factors suggest that we heading for a downtrend and buying should be avoided at this point. Technically the first target looks 4150-4110 and further extreme it could be 4050-3830. All these levels depend upon the development in the upcoming Budget and the FIIs flow.

We once again advice traders/investors to be cautious and wait for the markets to settle down as the fall could be very sharp. If we look at the chart pattern for the last five trading sessions, markets are forming lower top lower bottom formation which is a very negative sign. This indicates that at every rise one should think of selling and buying should be avoided.

On the Future & Option side the Put Call Ratio has declined further to 0.88 suggesting that markets are slightly oversold and chances of a pullback is high. These pullbacks will be for a short-time and every rise should be used as an opportunity to go short. The 4,200 Put added 10 lakh shares in Open Interest and on the higher side 4300 Call added 13 lakh shares and 4,400 Call added 10 lakh shares in open interest, which clearly suggest that there is lot of pressure build on the higher side.

For tomorrow intraday 4215-4115 levels should act as a major support area for nifty and strong resistance is placed at 4430. Unless we see nifty crossing and sustaining above 4330-4360 on an intra-day basis buying should be avoided.