Wednesday, August 10, 2011

EOD Analysis for 10th August 2011 and Outlook for 11th August 2011

Nifty opened with a gap-up today following some tranquility and filling up some of the gap-downs. Banknifty led from the front as expected with a whopping 2.75% gain in the morning session. It was intriguing to see so many shorts built up and Banknifty futures of both August and September series trade at deep discounts for a very long time in the middle session today. This is yet another unprecedented move on the bourses in the 2011 series.
[In June series we had Nifty futures of the next series trading at a discount by end of May series]

As indicated yesterday, the call premiums rose despite a falling market and OTM Puts like 4900 PE were trading at exorbitant prices and that too in a low PCR scenario. On opening itself a lot of OTM Puts were crushed to almost half their values [they never had intrinsic values anyways and with a fast premium eroding scenario, one should not be surprised]

It was actually a mixed bag performance from the rest of the Nifty counters and a little more pain is likely following weak global cues. This is the third consecutive close below  5200 and we are below the crucial level of 5177. Global cues are mixed and we may see one more visit to the 5120-5075 zone before resuming towards the upside next week. A close over 5225 will bring in some fresh supply of Long Positions hopefully.

Unless 5225 is not taken out convincingly on the upside for Nifty and 10660 levels for Banknifty, there is always the danger of Nifty falling again. The optimism for more upside in the coming few sessions stems from the fact that even 55/5400 PEs are going almost at par [agreed the time value is decreasing fast]. A close below 5092 remains a pain point for bulls that can suddenly trigger a sharp fall.

Crucial Levels remain unchanged [until we take out 5225 on EOD basis]

For Downside: 4950;5020;5092;5120;5177;5225

For Upside: 5240;5280;5308;5348;5378;5408

As of now expiry target remains unchanged @ 5408 plus levels.

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