Monday, September 12, 2011

EOD Analysis for 12th September 2011 and Outlook for 13th September 2011

Nifty opened on a significant gap down and did not show any signs of recovery for a long period of time in the morning. The OI in Nifty futures surged to almost 31 million that accelerated both the fall and the subsequent pull back in the mid-session. This is the second consecutive close below the critical level of 5092. The odds of retesting 4800 levels are now almost at 99% IMHO and possibly a retest of 4720 as well. The scenario will only change if Nifty closes above 5092 on EOD basis now that will once again open the chance of retesting 5150-5177 levels. Upside seems to be capped at 5225 levels for now. VIX almost hit 33 level today and may continue in 31-33 range for this week.

If by tomorrow EOD, we don't cross over 5092 on EOD basis, this will probably be a barrier until Thursday EOD. On the other hand, as long as 4880 levels hold on EOD basis, some interim bounces will come through. From a high of 5169 last week, Nifty tested 4900 levels within 4 trading sessions. So a relief rally towards 5k levels is still on the cards. Lending credence to this is the huge gap-down that we had today which will probably get filled at least to Friday's lows. A close below 4880 will seal the hopes completely and make a retest of 4690-4720 levels near certain. The Rollar effect played out as expected after 46.1 was breached on the upside and the SELL buttons went off en masse.

The steep cuts on Banknifty are absolutely worrying and it needs to stay consistently above 9500 levels to help Nifty achieve some relief. Until there is calm on the European side, it is going to be very difficult for Banknifty to move up. Now as far as the downside is concerned, if 9200 levels are breached on the downside for Banknifty, it will go down all the way to sub-8k levels within 55 trading sessions after breach of 9200 on the downside. All major levels have been indicated in last week's posts. Would just like to conclude for today saying that no hopes for bullish stance unless 5092 taken out on EOD basis.

No comments: