Thursday, July 14, 2011

EOD Analysis for 14th July 2011 and Outlook for 15th July 2011

As expected there was too much volatility on both sides today for Nifty; Gold rallied to make another high at USD 1593 on Spot Prices today indicating the panic amongst institutional investors and fund houses. Tomorrow is a Full Moon day and volatility will continue; Banknifty surged well to cross over 11350 before closing at 11260; Nifty went all the way to 5653 before closing at almost 5600;

Volumes were low initially in Nifty futures OI at about 24 million but rose with the cross over of 5590-5600 zone to OI of 25.2 million; a lot depends on how much profit booking comes in gold overnight as the Dollar has started retracing from the lows created yesterday against CHF, JPY, CAD; Medium term traders will also be settling their leveraged positions on NSE tomorrow.

Nifty may try to retest the 5650 zone once before going down; falls are expected to be arrested in the 5480-5532 zone for this week; Recommendation for trading positions are 1 lot short as close to 11350 as possible for Banknifty (if it comes there) and 1 lot below 11250; for Nifty, 1 lot short near 5650 (if it comes there) and 1 lot below 5608; considering that it is Friday, Full Moon, one may wish to reconsider taking positions for trade tomorrow and not more than 20-25% should be invested in options

Stock specific shorts can be initiated in Sesa Goa as close to 300 as possible, LnT as close to 1830 as possible via August futures [values above correspond to spot prices]

Rather than looking at the fall as a bear attack, one should consider this as a healthy correction for the markets to the extent 5408-5440 zone is maintained on EOD basis; Monday onwards, expecting markets to be calmer as the Full Moon effects will start dilating over the weekend; some flat sessions are inevitable as option writers would like to suck options premium on both sides.

As of now, expiry target still remains 5600-5690 after testing some of the lower levels
Crucial Levels on the Downside: 5408, 5440, 5480 and 5532
Crucial Levels on the Upside: 5580, 5608, 5655, 5690

Upside cannot be sustained without volumes and the approximate values for the same were given earlier this week; for the downside, today's volume is sufficient to take markets to test the 5480-5532 zone

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