Volumes have come off in the last three days, granted Aug 31 was impacted by MSCI rebalancing but a drop of 50 percent is a reflection of the margining issue. I suspect that in time, activity will stabilise once all the wrinkles of CDSL/NSDL system get ironed out on the pledge/re-pledge issue.

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If that coincides with Nifty breaking 11550, so much the better... But today, if it weren't for the continuation of the SC hearing on the banking saga, the move on the global indices overnight should have provided the right impetus.

The telecom companies, having secured a lifeline of 10 years should be in the limelight as they seek a curative petition. Banking might remain a bit iffy till the court decides the current case, but my bits here are that a GoI claiming force majorè on an event cannot bar others from making the same argument. But then, logic sometimes takes a break especially when the law is being read.

Having waited a few days to let the trend emerge, the gut call is that 11550 gets taken out today and that puts the onus on the bears to act, either they run for cover like I think the emerging markets ETFs will be forced into, or they double down and hope for another event. That USD has taken a bit of a breather with a slight uptick, might help those looking for downside, but I think that is temporary, at best.

I'm banking on Nifty remaining married to the developed markets after a brief trial separation and benefitting from any short squeeze, either from EM ETF's or more locally. If the FPI flows continue to remain positive backed by dollar weakness and local institutional selling abate, the return of non-institutional volumes after the margining changes become second nature, could make the move a sharp one in Sept itself.

The author is an independent trader-cum-blogger and has worked at leading brokers on the institutional sales desk over the course of his near three-decade long career in the stock market.