Friday, August 12, 2011

EOD Analysis for 12th August 2011 and Outlook for 16th August 2011

Nifty started on a muted note yet again and the volumes were pretty much the same as yesterday. Roll-overs can be seen in Nifty futures already. Banknifty is yet to take out the crucial zone of 10400;10660 on the upside. The long weekend brought about a lot of profit booking and possibly some margin calls as well. The broader markets also under-performed and we did not take any cue from Europe or other markets.

IMHO, there is a fundamental and sentimental outlook to this performance on Nifty in the last few days. The monsoon session in the parliament has not at all brought any confidence to institutional investors. All that we are seeing is a lot of mud slinging and adjourned sessions with no progress on any significant issue. Moreover, with political unrest in so many parts of the country, there will be a natural risk aversion to India for the very short term and it is critical for political and business leaders to bring that confidence in the India growth story.

Technically, we have closed well below last week's close [I was expecting a cross-over of the critical 5177-5225 this week but it was not to be] Crucial levels remain unchanged

For Downside: 4950; 5020; 5092; 5120;5177;5225
For Upside: 5240;5280;5308;5348;5378;5408;

As I mentioned yesterday, a close above 5092 would keep the expiry target of 5408+ intact while it would need reconsideration with close below 5092. This needs reconsideration and we now should not expect anything beyond 5348 on the upside for August series expiry.

There is a lot of weakness in the market and below 5020 on Nifty spot there is a high probability of revisiting 4950 levels. If the carnage does not stop here, then it may go all the way to 4800-4900 levels where some bottom fishing may come through but then it will further limit the upside for August expiry to 5225 levels.

As far as portfolio building for short-term upside is concerned, there are value buying opportunities available in the banking, automotive and FMCG counters.

Now Nifty has to take out 5225 on EOD basis as quickly as possible and 5543-5655 levels by mid-September. The damage is quite a bit right now and there are gaps on the upside to be filled. Upsides will only be possible with 2-3 gap-ups in time to come.

1 comment:

Waverider said...

Congratz Nag for starting this blog and getting wave guru Raghu on board with you.

Wish you both the best of health and happiness. I left out the wealth because when you combine discipline with your knowledge the path makes a beeline towards wealth.