Most tend to get excited when they see a gap up and expect the gap to be filled soon with a downward move; the same holds true for the other way around too; yesterday's gap down was significant and there were many shorts left to be covered in the system as the relief news from Europe came after market hours; similarly in Dow as well, the shorts were covered and hence it was logical to see some upside today on the basis of short covering.
The volumes were not all that high in Nifty futures [July + August Series showed OI of 24 mill to 24.3 million through out the day]; allow me to repeat myself from yesterday again; on the downside, the crucial levels are 5408, 5440, 5480 and 5532 as of now; on the upside, the crucial levels are 5580, 5608, 5655, 5690; Europe is going through a sovereign debt crisis review whilst US is contemplating on debt restructuring and way forward; a lot of this news has already been discounted which is visible in the rising dollar index, fall of Euro against the US Dollar and the flight to safety once again being witnessed in the form of a mania for gold;
Whilst Dollar is still at a low compared to JPY, CAD and CHF, it is appreciating significantly against other currencies significantly [or shall we say other currencies are correcting] The Higher Dollar Index compared to the High Price of Gold shows that there is panic amongst institutional investors and fund houses at this point of time. This volatility is expected to continue in mature markets until 15th i.e. the Full Moon day and then we can expect some range bound but relatively calm sessions next week, unless there is an unexpected catastrophe
For Nifty, with the results season coming in and frequent political tensions, there can be trouble but it is far lower than what a lot of people are expecting; 5408-5608 is a good zone for Nifty to consolidate considering that we have seen sub 5400 and sub 5200 levels in February, March and June as well; It was heartening to see that Nifty was struggling to cross over 5580 in the same manner as it used to struggle to cross over 5532 in the previous 3 series; also significant is the fact that we are having a lot of sessions above the crucial levels on the downside; to the extent 5408-5440 hold on EOD basis, dips will provide buying opportunities and rises in the 5580-5608 region will present selling opportunities.
Such moves are only for risky traders; the fall from 5740 to 5496 on Nifty and 11450 to 11050 on Banknifty has already generated a lot of profitable moves along with Infosys and Tata Steel that were covered earlier. Now one should wait for the bottom to be ascertained for July series before taking fresh long positions.
2 more days of volatility expected and after that there can be more consolidation and flat range bound sessions next week; as of now, the expiry target remains in the 5600-5690 zone with a retest of lows pending; expecting the falls to be arrested within the 5480-5532 zone but no panic is required to the extent 5408 holds firm on EOD basis; the major upsides can be expected to come towards the expiry week
15th July and 23rd July are 2 crucial dates for the current series prior to expiry; 23rd being Saturday, the move corresponding to 23rd may come on 22nd or 25th
The options data has a lot of noise and the aim as usual is to milk premium from both sides; stock specific action, Nifty futures, Banknifty values and RIL / LnT hold the key; as long as they are at respectable levels, no major fall expected
Just to recap: Banknifty at 11k, RIL, LnT at respectable levels and other heavy weights corresponding with a mixed bag still keeps 5608-5655 zone a very much achievable target;
No comments:
Post a Comment