Monday, October 10, 2011

EOD Analysis for 10th October and Outlook for 11th October 2011

A pretty good day for the bourses with a lot of short covering seen on Nifty, metals, auto and the IT pack. Banknifty did not participate too much into the upside though there were some good moves from individual stocks like IDFC. Airtel actually rose pretty well from the lows of the day and Reliance played a good move to the upside as well. It was good to see VIX cool off significantly today to 30.5 odd levels but as seen in the a recent past, it just takes a fall of 50 points and VIX starts spooking up. The OI in Nifty futures was pretty much unchanged around 23-24 million despite such a good pullback. This also is one barometer for Nifty; on the downside, a fall of 30-40 points manages to attract OI of 2-3 million but even a rise of 100 odd points does not significantly add up to the OI and this is disturbing.

The outlook remains unchanged that we are currently stuck in a range of 4720-5032

Bulls can only cheer beyond an EOD above 5032 and then 5092
Bears should wait for a confirmed weakness below 4880 before going ahead with shorts.

The threat of retesting the recent lows is very real and will happen in a jiffy when it decides to do so. One key point to note today is that deeply ITM Puts like 5100/5200 were carrying some premium. Markets are not out of the woods yet and any upside now actually represents a shorting opportunity IMHO


animoitra2011 said...

According to time price alerts 10th oct is major trend change day.But where is trend change today ?Nifty was in short term uptrend on friday also.Will you ellaborate a little bit ?Shuvo Vijaya.

reachnagraj / theknight16 said...

Friday's upmove was signalled towards the closing of 5th October itself [please refer EOD analysis of 5th]

Now the Time-Price alerts do signal a trend change for 10th but that is indicative in nature - the time price alerts take the movement of Sun into account and there are occassions when the trend change occurs after market hours and we see the trend change a day later.

Hence our team always insists on taking positions with appropriate hedges and adhering to stop losses

animoitra2011 said...

Thanks Nagraj ji.

reachnagraj / theknight16 said...

One Critical update for tomorrow
watch for 5032 and 4944 on the hourly charts
If you see a candle with low above 5032 on the hourly candle - continue with longs

If you see a candle with high below 4944 continue with shorts

In the middle path of these 2 levels stay hedged via futures on either side.

As mentioned earlier there is an assured fall to 4750 levels to fill the gap but there is a time factor involved. Play safe with futures than burning margins with puts and calls