The volumes today showed a sharp drop with OI in Nifty futures hovering around the 20 million mark [Last 2 days of July Expiry had reflected an OI of over 29 million and even 30 million for some time!] There is nothing much to read into foe today's trade as Nifty is as good as flat in the 5480 zone and one should not give too much importance to the fact that we did cross 5500 levels once.
The crucial level of 5532 will need some more volume and effort to cross over as the downward trending line from 6338-6181-5944 is pretty close to this mark now; already in the first half of 2011, we have seen the way this level makes bulls struggle and it is safe to assume that some more attempts will be needed to take this out now. For next week, I expect the broad range to be 5408-5532; While most falls should ideally be arrested within 5480-5532 zone, if the volumes remain thin like this, sessions will be flat and with sheer time factor, we will end up retesting the 5408-5440 zone.
As of now, it seems like 5408 will hold out on EOD basis; should we get a close below 5408, then the carnage downwards will continue to 5280-5348 zone (1% probability for this) Whilst Nifty may go a few ticks below 5408 on intra-day basis, I expect the level to hold on EOD basis. However, 2 consecutive closes below 5408 can open Nifty for 5225; 5177; 5092 (Last hope for any upside)
As of now, 5200 has been pounded twice in 2011 and 5400 has been pounded 7 times; both levels can probably support once more but any subsequent pounding will seal the fate of bulls for the next 2 years completely. In such a scenario, all rises towards 57-5900 must be used to get out of investment holdings in equities, mutual funds and Index / Thematic ETFs
The initial part of August series may be quiet but stable; there should be no panic at all to the extent 5408 holds out on EOD basis. If we get a close below 5408 on EOD basis, then the volumes, global cues and domestic cues must be factored to decide further steps for trading / investing
Safe to assume for now that Nifty is consolidating very well in the 5408-5608 zone and some good counters are available at very attractive valuations. I am very bullish on Indian banks and believe that they will lead from front in the next rally which I still expect to come in after the monsoon session of parliament and political stability. The current scenario is similar to that we saw in early 2010 where there was lot of negativity around Europe and US but all Asian equities, BRIC countries led from front for the rally. Gold is already at a high level and with doubts looming about intrinsic values of the fiat countries, India, Brazil and China are very well poised to generate healthy returns on investments on a short term basis.
Fundamentally, we must realize that regardless of the name that US Fed or ECB give to the various stimulus packages, they are indirectly releasing money for hedge funds and institutional investors to speculate in the market and such speculations are always on the long side be it equities or commodities. On the other hand, these bailouts are not bailouts of the original problem but bailouts of previous bailouts (like the vicious credit card repayment scheme) [courtesy of quote 'Bailout OF Bailout' goes to EWI Socionomics booklet by Pretcher Jr]
For Nifty
Crucial Levels Remain The Same
Critical Support Levels: 5408-5440-5480
Critical Resistance Levels: 5532; 5580; 5608;5655;5690
As of now strategy remains Buy on Dips in the 5408-5440 zone for Nifty with initial targets of 5480 or above EOD 5532 only; I would peg 5440-5480 zone as a 'No Fly Zone' for shorts or longs till the signals become clear. If one takes a position on either side at these levels, then one should hedge appropriately
Banknifty is marginally below 10900 levels and if the weakness persists, it may retest 10660-10750 where most falls would be bought into IMHO. Retail traders should stay away from Banknifty for a week till signals get clearer. At this point of time, the possibility of getting chopped on either side is very high and the Banknifty Options premium are extremely high [one could rather hedge the position with the next series future in the opposite direction of the primary position for a slightly higher margin!]
By the end of August, Indian exports will start surging to cater to Fall / Autumn related goods for the developed countries as well as the 'Back To School', 'Back To University' goods and services. Fundamentally, we are on track for a short term positive outlook and the domestic consumption story is still going very strong.
However, one must review the portfolio of investments on at least a fortnightly basis and use corrections to buy. The current price of gold is appearing inflated due to the falling dollar value and with rupee gaining strength, gold prices should hold steady or take a small correction before soaring towards the festive season in October.
I hope all of you had a profitable week. I wish all of you a very happy weekend and a profitable week ahead. Thank you for taking the time out to visit this blog.
Comments, Feedback, Criticism are most welcome.
The crucial level of 5532 will need some more volume and effort to cross over as the downward trending line from 6338-6181-5944 is pretty close to this mark now; already in the first half of 2011, we have seen the way this level makes bulls struggle and it is safe to assume that some more attempts will be needed to take this out now. For next week, I expect the broad range to be 5408-5532; While most falls should ideally be arrested within 5480-5532 zone, if the volumes remain thin like this, sessions will be flat and with sheer time factor, we will end up retesting the 5408-5440 zone.
As of now, it seems like 5408 will hold out on EOD basis; should we get a close below 5408, then the carnage downwards will continue to 5280-5348 zone (1% probability for this) Whilst Nifty may go a few ticks below 5408 on intra-day basis, I expect the level to hold on EOD basis. However, 2 consecutive closes below 5408 can open Nifty for 5225; 5177; 5092 (Last hope for any upside)
As of now, 5200 has been pounded twice in 2011 and 5400 has been pounded 7 times; both levels can probably support once more but any subsequent pounding will seal the fate of bulls for the next 2 years completely. In such a scenario, all rises towards 57-5900 must be used to get out of investment holdings in equities, mutual funds and Index / Thematic ETFs
The initial part of August series may be quiet but stable; there should be no panic at all to the extent 5408 holds out on EOD basis. If we get a close below 5408 on EOD basis, then the volumes, global cues and domestic cues must be factored to decide further steps for trading / investing
Safe to assume for now that Nifty is consolidating very well in the 5408-5608 zone and some good counters are available at very attractive valuations. I am very bullish on Indian banks and believe that they will lead from front in the next rally which I still expect to come in after the monsoon session of parliament and political stability. The current scenario is similar to that we saw in early 2010 where there was lot of negativity around Europe and US but all Asian equities, BRIC countries led from front for the rally. Gold is already at a high level and with doubts looming about intrinsic values of the fiat countries, India, Brazil and China are very well poised to generate healthy returns on investments on a short term basis.
Fundamentally, we must realize that regardless of the name that US Fed or ECB give to the various stimulus packages, they are indirectly releasing money for hedge funds and institutional investors to speculate in the market and such speculations are always on the long side be it equities or commodities. On the other hand, these bailouts are not bailouts of the original problem but bailouts of previous bailouts (like the vicious credit card repayment scheme) [courtesy of quote 'Bailout OF Bailout' goes to EWI Socionomics booklet by Pretcher Jr]
For Nifty
Crucial Levels Remain The Same
Critical Support Levels: 5408-5440-5480
Critical Resistance Levels: 5532; 5580; 5608;5655;5690
As of now strategy remains Buy on Dips in the 5408-5440 zone for Nifty with initial targets of 5480 or above EOD 5532 only; I would peg 5440-5480 zone as a 'No Fly Zone' for shorts or longs till the signals become clear. If one takes a position on either side at these levels, then one should hedge appropriately
Banknifty is marginally below 10900 levels and if the weakness persists, it may retest 10660-10750 where most falls would be bought into IMHO. Retail traders should stay away from Banknifty for a week till signals get clearer. At this point of time, the possibility of getting chopped on either side is very high and the Banknifty Options premium are extremely high [one could rather hedge the position with the next series future in the opposite direction of the primary position for a slightly higher margin!]
By the end of August, Indian exports will start surging to cater to Fall / Autumn related goods for the developed countries as well as the 'Back To School', 'Back To University' goods and services. Fundamentally, we are on track for a short term positive outlook and the domestic consumption story is still going very strong.
However, one must review the portfolio of investments on at least a fortnightly basis and use corrections to buy. The current price of gold is appearing inflated due to the falling dollar value and with rupee gaining strength, gold prices should hold steady or take a small correction before soaring towards the festive season in October.
I hope all of you had a profitable week. I wish all of you a very happy weekend and a profitable week ahead. Thank you for taking the time out to visit this blog.
Comments, Feedback, Criticism are most welcome.
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