Wednesday, August 3, 2011

EOD Analysis for 3rd August 2011 and Outlook for 4th August 2011

The volumes were relatively higher compared to yesterday but way behind the July expiry volumes. Nifty Futures OI stood at 22 million in the morning but surged to 24.5 million after Europe opened. Banknifty had a pending retest of 10600-660 levels and at one point of time went below 10600 as well. Banknifty is precariously placed at 10600-660 levels now but with weak global cues, it may spend some time in the 10500-10650 zone before moving upwards. Even the heavy weights were badgered and hence the prolonged downward moves.

As mentioned yesterday as well, 3rd August was a crucial turning point for Nifty and retrogade mercury fuelled the down move further from an astrological perspective. Now the next turning point will come on Monday or Tuesday and some moves to the upside can be expected. 3rd August also completes the Fibo cyle of 377 days with the 5th Feb 10 bottom of sub-4700 levels [almost 4600 levels at one point of the day]
4th August marks the Fibo cycle of 34 days from the 20th June 11 low of 5196. If this short term cycle is extrapolated to the 49 day cycle, we should be testing 5280 levels within 26th August 11 before marching upwards to meaningful levels.

The broad range still remains 5408-5532 with an occasional throw-over or throw-under. These dips are good opportunities to buy Nifty to the extent we do not fall below 5177 in August series. Weakness will continue until 26th August and then some upsides will follow.

Conditions remain unchanged
1 close below 5408 and we open for 5348-5280 levels
2 closes below 5408 and we open for 5225-5177-5092 (Last hope for any meaningful upside)
If we go below 5177, the upside for Nifty will be capped at 5944 for rest of 2011.

Banknifty having tested the lows should start pulling back now and a lot of the upside for Nifty will be determined by Banknifty but I expect this to come in only from Monday.

Crucial Levels remain unchanged
For the Downside: 5408;5440;5480 [below 5408, I have given the conditions above]
For the Upside: 5532;5580;5608;5655;5690

For Banknifty
10600-10750-11000 remain Support and Resistance Levels

Banking counters like HDFC, HDFC Bank, IFCI, JM Financial, Navneet Publications, BHEL, LnT, Tata Motors, Mahindra and Mahindra are all at attractive valuations and one can buy them in a staggered format on delivery basis. On the pharmaceutical side, Lupin, DRL, Cadilla, Biocon, Sun Pharma, Cipla etc are all very attractive counters and one should look at opportunities to buy them during the low and gloomy period of August series for a short term bounce of 15% to 18% [3 months to 6 months time frame]

Today, I will be uploading 2 charts in the same manner as I gave the Master Time sheet earlier; 1 chart has been made with the pivot date of 5th November 2010 with high and the other has been made with the swing low made on 11th Feb 11 low of 5177; both these charts will provide useful turning points for the remainder of 2011

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