Thursday, September 8, 2011

EOD Analysis for 8th September 2011 and Outlook for 9th September 2011

Nifty opened on a muted noted and was just drifting around aimlessly till Europe opened. As indicated yesterday, some upside was very much on the cards and once shorts started entering the system, the eventual upside came in. This is the 2nd consecutive close above 5092 and we had 2 retests of the 5150 levels. If the OI in Nifty futures stays like this only around 29.6 million on the upside movement of Nifty, we are still open for a retest of the 5177-5225 zone.

Banknifty did not participate as well as it did in the last session on the upside. However, it is already hovering around the 9900 mark and if global cues remain positive, it may finish the technical pullback to 10k levels or perhaps, a little more as well. On the other hand, as I mentioned yesterday, this entire upside over the last 5 trading sessions have taken place due to a technical pullback and relief short-covering. Don't go by analysts who say that there will be fresh supply on Banknifty beyond 10k-10100 levels etc. Profit booking will begin if and when we start hitting 10k levels on BNF now.

A close above 5177 will almost with certainty invite a retest of 5348, filling up all the gap-downs. There is nothing really to cheer about what is happening on the bourses. Nifty is still very much vulnerable to a retest of 4800 level within the next 13 to 21 trading sessions.

On stock specific action, Sun Pharma showed a high of 505 on spot price but this is the 3rd consecutive close below 500 level. Remains a prime shorting candidate as far as institutional investors are concerned. Base metals are slowly giving up on their gains.

The Rollar rates are temporarily sprucing up IT but it won't sustain for long. Gold prices are still high and continue to take support in the 1750-1800 zone for the very short term. These 2 factors are enough to trigger a sell at any point of time on the equity side of the markets. Too many global news events lined up but this may add some confusion in the direction of asset classes in the short term.

The outlook continues to remain bearish for equities but shorts should be opened from suitable resistance points or after a confirmation of breaking down a channel. Gold may soar and make a counter-trend rally but even for medium term USD 1450-1500 will remain an interim support. With risk of hyper-inflation looming around, there might a temporary boom on commodities.

The initial part of Buy on Dips on Nifty is done for this series. The mantra to trading success will now be 'Sell on Rise'. For tomorrow, there is absolutely no reason to initiate a fresh BUY; 5177-5225 remains the preferred shorting zone and one can continue with this short for a target of 100-150 points on the downside. Alternatively, if the close happens to be below 5092 on EOD tomorrow, it is a clear signal that the relief rally is over.

1 comment:

reachnagraj / theknight16 said...

Please note that I always provide Gold prices as per CRB standards in USD.

So it is gold price of 1 troy ounce in USD. One can look up the prices of gold in any forex site against the pair XAU/USD or follow the charts on