Nifty OI futures were pretty much constant throughout the day at 25 million; the initial session was flat as expected to milk the premiums but the expected short-covering came much later after a fall towards 5532 level; the 5532 level has held firm but it may not be able to sustain for a longer time should there be such volumes on the downside; Banknifty gave up a lot and ended at 11049; based on the futures and options data, seems like there are some more shorts left to be covered but tomorrow being Friday, there will be some margin calls as well so it is difficult to forecast which way Nifty will take; some of the other heavy weights managed to hold on to some gains and hence the fall in Nifty got arrested despite Banknifty giving up so much gains.[congratulations to all who took short positions at specified levels and reaped the profits]
As far as Eurozone crisis is concerned, markets have discounted for all of Greece's woes [this is reflected in the fact that in the international Fixed Income Markets, Greek bonds of shorter terms are trading at 20% to 25% coupon rates and the 5 year and 10 year bonds are selling at a 50% discount to par values] Also Portugal's woes have been factored in and so is the case with Ireland and Iceland. The only 2 countries that have not been discounted for are Italy [only about 30% of the expected debt has been factored based on the bond auctions] and Spain has not been discounted for. It is just a matter of time that all the skeletons will come out of the cupboard one by one after a brief rally on the bourses for this year. It is important to note that there will be challenges in the UK as well and Bank of England has categorically stated that only deposits upto
GBP 85,000 pounds will be guaranteed for personal accounts. [the source for this information is listed on my blog and one can go through Nadeem Walayat's detailed profiling of Europe on his page]
With employment statistics coming out of US, there are some fears which is reflected in the fact that the Dow rallies a couple of days prior to that and then starts falling as the news come out. Gold once again is hovering about the 1600 per ounce mark but that comes on the backdrop of a falling dollar as well;
Recommendation for tomorrow is to fold out all trading positions regardless of profit and loss and take fresh guard on Monday. If one does not have positions, it would be better to sit on sidelines for tomorrow and let the week settle down.
The crucial levels still remain the same for both upside and downside; the breakdown of 5532 on EOD basis will force Nifty to retest the 5480-5500 zone and I would expect shorts to be covered over there. Below 5480, Nifty opens for a retest of 5408-5440 but I expect 5408 level to hold firm on EOD basis and no panic is required to the extent this level holds firm. Banknifty shorts seem to be pending for covering and we may see some short covering to gain 80 to 100 points but I would discourage taking fresh long positions for the expected bounce on both Nifty and Banknifty.
There is a lot of weakness in the forex markets as GBP, USD, EUR are all falling uniformly against CHF, JPY, CAD and the risk aversion is getting reflected in the high volumes of T-Bills, German Bund and Gold. Long Gold positions should book some profits now as it is an artificial bubble and a fall towards 1525-1560 can come through within 5 to 8 trading sessions. Note that the increase in interest rates by ECB has brought the Euro-Dollar support level to 1.40-1.41 from 1.38 which was a knee jerk reaction last week.
Stock Specific as well as Index specific levels for positions will be updated on this blog over the weekend after all markets have closed for the week. Dow below 12400 levels on EOD basis will usher in a lot of fresh shorts and a sharp correction towards 11700 levels may be expected should that happen. This will have an impact on other equities as well.
As far as Eurozone crisis is concerned, markets have discounted for all of Greece's woes [this is reflected in the fact that in the international Fixed Income Markets, Greek bonds of shorter terms are trading at 20% to 25% coupon rates and the 5 year and 10 year bonds are selling at a 50% discount to par values] Also Portugal's woes have been factored in and so is the case with Ireland and Iceland. The only 2 countries that have not been discounted for are Italy [only about 30% of the expected debt has been factored based on the bond auctions] and Spain has not been discounted for. It is just a matter of time that all the skeletons will come out of the cupboard one by one after a brief rally on the bourses for this year. It is important to note that there will be challenges in the UK as well and Bank of England has categorically stated that only deposits upto
GBP 85,000 pounds will be guaranteed for personal accounts. [the source for this information is listed on my blog and one can go through Nadeem Walayat's detailed profiling of Europe on his page]
With employment statistics coming out of US, there are some fears which is reflected in the fact that the Dow rallies a couple of days prior to that and then starts falling as the news come out. Gold once again is hovering about the 1600 per ounce mark but that comes on the backdrop of a falling dollar as well;
Recommendation for tomorrow is to fold out all trading positions regardless of profit and loss and take fresh guard on Monday. If one does not have positions, it would be better to sit on sidelines for tomorrow and let the week settle down.
The crucial levels still remain the same for both upside and downside; the breakdown of 5532 on EOD basis will force Nifty to retest the 5480-5500 zone and I would expect shorts to be covered over there. Below 5480, Nifty opens for a retest of 5408-5440 but I expect 5408 level to hold firm on EOD basis and no panic is required to the extent this level holds firm. Banknifty shorts seem to be pending for covering and we may see some short covering to gain 80 to 100 points but I would discourage taking fresh long positions for the expected bounce on both Nifty and Banknifty.
There is a lot of weakness in the forex markets as GBP, USD, EUR are all falling uniformly against CHF, JPY, CAD and the risk aversion is getting reflected in the high volumes of T-Bills, German Bund and Gold. Long Gold positions should book some profits now as it is an artificial bubble and a fall towards 1525-1560 can come through within 5 to 8 trading sessions. Note that the increase in interest rates by ECB has brought the Euro-Dollar support level to 1.40-1.41 from 1.38 which was a knee jerk reaction last week.
Stock Specific as well as Index specific levels for positions will be updated on this blog over the weekend after all markets have closed for the week. Dow below 12400 levels on EOD basis will usher in a lot of fresh shorts and a sharp correction towards 11700 levels may be expected should that happen. This will have an impact on other equities as well.
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