Monday, September 26, 2011

EOD Analysis for 26th September 2011 and Outlook For 27th September

A flat open and immediately followed by a sharp sell off and just when things looked calmer, the open of Europe session and subsequent pull-back was followed on Nifty as well. 3 days to go into expiry and the upside seems capped at 4944 for now. There are too many shorts in the system and the Put Writing has been aggressive; one can expect the Puts to be crushed well tomorrow IMHO and after a brief short-covering upside, we should be able to see some more shorts and downside.

As of now, It seems like the market is intent on making a doji for the monthly candle i.e. we should be able to see expiry more or less at the same levels we saw on 26th Aug. Volumes as usual are high on the downside and retail participants are staying out of the upside momentum. For tomorrow, 4944, 4911, 4880 will be the sell levels on Nifty and each short should be opened with a corresponding long in the next series futures with a 25 point stop loss on both legs. The major pull back after expiry if it indeed comes through should not go beyond 5032 IMHO and only a close above 5032 can bolster the bull side. Low margin players may prefer to wait on sidelines till expiry manipulations manifest and a clearer picture emerges.

Always remember at the back of your mind that 16th-22nd Nov is the most likely timeline when we should see extreme panic on the bourses and a break down of most crucial levels - it is a Sell on Rise market (in tranches though) till this bottom is not completely taken out (3800-4400 is what I am expecting) The reason to highlight the timeline is to ensure that followers don't go on Put shopping blindly only to see options premiums erode out. Stick to futures as they seem to be far more rewarding in such trending markets.

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