With weak global cues, lower volumes and lack of conviction to cross over the 5532 barrier helped the downside to be rapid and furious in the initial part of trade itself. For the first couple of weeks, this is what one can expect on Nifty. Gyrations in the 5408-5532 zone unless some major upside or downside triggers come in.
Banknifty fell a lot today following its global counter-parts. The retest of 10660 is pending but 10700-10750 level provided the interim support today.
With low volumes, it is a bit difficult to interpret the level of short-covering that has been done already but there are quite a few shorts in the system for sure. I expect Nifty to visit the crucial support zone of 5408 Friday and as of now, seems like we will bounce back from this level. The litmus test for Nifty is to maintain 5408 on EOD basis until 10th August.
The crucial levels remain the same
For Downside: 5408;5440;5480
For Upside: 5532;5580;5608;5655;5690
1 close below 5408 and we open for 5348-5280; 2 consecutive closes below 5408 and the carnage can go down all the way to 5225-5177. To the extent we don't go below 5177, the last rally has its chances to come up. Below 5177, 5092 is the last hope for bulls to generate any upside but that upside is in all likelihood capped at 5944 levels.
This month has lesser number of trading days compared to June or July; hence one should be very careful with options strategies on the Long side as the time value will rapidly decrease. The OI for both 5400 PE and 5500 CE are highest at about 6.5 million. The risk reward ratio for Nifty Futures is in favour of Longs as close to 5408 as possible and shorts as close to 5532 as possible with appropriate hedges.
I missed out on the aspect of lesser number of trading days in yesterday's post. For both Nifty and Banknifty, the best way to play out the futures is Long Current Series - Short Next Series or vice versa. Hence for a few days, low margin players still need to wait till the trend becomes clearer. For now we can assume that the market is consolidating for the next move and will take some time to rationalize the fast and furious upside of 544 points in 16 days [20th June to 6th July moved from 5196 to 5740] and then another rapid downside from 5690 to 5480 in 4 days [25th July to 28th July]. Eventually Nifty has to rationalize both these moves at about 10 points per day which I presume will happen through out August series. [The current natural rate of change on Nifty is 10 points per day in terms of calendar days]
Banknifty fell a lot today following its global counter-parts. The retest of 10660 is pending but 10700-10750 level provided the interim support today.
With low volumes, it is a bit difficult to interpret the level of short-covering that has been done already but there are quite a few shorts in the system for sure. I expect Nifty to visit the crucial support zone of 5408 Friday and as of now, seems like we will bounce back from this level. The litmus test for Nifty is to maintain 5408 on EOD basis until 10th August.
The crucial levels remain the same
For Downside: 5408;5440;5480
For Upside: 5532;5580;5608;5655;5690
1 close below 5408 and we open for 5348-5280; 2 consecutive closes below 5408 and the carnage can go down all the way to 5225-5177. To the extent we don't go below 5177, the last rally has its chances to come up. Below 5177, 5092 is the last hope for bulls to generate any upside but that upside is in all likelihood capped at 5944 levels.
This month has lesser number of trading days compared to June or July; hence one should be very careful with options strategies on the Long side as the time value will rapidly decrease. The OI for both 5400 PE and 5500 CE are highest at about 6.5 million. The risk reward ratio for Nifty Futures is in favour of Longs as close to 5408 as possible and shorts as close to 5532 as possible with appropriate hedges.
I missed out on the aspect of lesser number of trading days in yesterday's post. For both Nifty and Banknifty, the best way to play out the futures is Long Current Series - Short Next Series or vice versa. Hence for a few days, low margin players still need to wait till the trend becomes clearer. For now we can assume that the market is consolidating for the next move and will take some time to rationalize the fast and furious upside of 544 points in 16 days [20th June to 6th July moved from 5196 to 5740] and then another rapid downside from 5690 to 5480 in 4 days [25th July to 28th July]. Eventually Nifty has to rationalize both these moves at about 10 points per day which I presume will happen through out August series. [The current natural rate of change on Nifty is 10 points per day in terms of calendar days]
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