Monday, October 17, 2011

EOD Analysis for 17th October and Outlook for 18th October 2011

Nifty made a modestly positive start today and Banknifty also made that cross-over of 9750 level within minutes of opening bell and profit booking was witnessed around this pivot point as expected. The morning session had OI in Nifty futures hovering around 23.8 mill thereby keeping action subdued for some time. The first leg of fall attracted another 1 million of OI [unlike last week where a fall of 30 points was enough to attract an OI of 2 to 3 million] The VIX too did not shoot up drastically in the first leg of fall and in fact towards the end showed a lot of calm. Is it the silence before the storm - time will tell.

This is the 4th consecutive close above 5032 and IMHO this should hold out tomorrow as well and the downside risk should not go below 4980 for tomorrow at least [this is also the 2nd consecutive close above 5092]. Banknifty may once again try to cross over 9750-9800 levels but unlike what analysts project, very difficult to expect fresh supply here. Would rather look for signs of profit booking in this zone and that would be the recommended strategy for BNF futures. Open shorts around 9750 levels on spot with a hedge for the first short and 9800-9825 for the next one.

Automotive counters like MnM, Tata Motors continued their winning streak in the morning session. Now Tata Motors has fulfilled a crucial condition of 2 consecutive closes above 180 levels [of which 1 was a weekly close last week with an inverted hammer on the charts. Still vary of this because Tata Motors has gone through a sharp sell-off within a week of formation of the inverted hammer in the past few weeks. Technical Resistance lies at 195 and 215 now and the eventual target is sub 125 levels for this counter]

I keep mentioning Tata Motors and MnM from time to time because I see mass mailers going out from 'expert advisers' to short these 2 counters - whilst falls are inevitable, blind shorting will only increase losses especially considering the higher lot sizes for these counters. One should not short Tata Motors unless it gives a close below 175 and one should not short MnM before it gives a close below 780 levels IMHO.

Lot of noise and divergence seen on the bourses today. RIL and LnT gave negative divergence whilst automotive and IT gave a positive divergence [though some profit booking was seen in this segment] Markets are definitely not out of the woods and the proposed solution to the Greek debt problem will not result in a happy ending. There might be a knee-jerk reaction to the haircut on Greek debt balanced by money printing by the central banks in Europe and US - what will follow is a sharp sell-off worse than what we witnessed in September. Please ensure that you take hedged positions and adhere to stop losses and ride the winning leg.


animoitra2011 said...

Dear Nagraj ji would you pl send me an invitation to join the google group ?My email id is .

animoitra2011 said...

Nagraj ji according to time price alert chart today i.e. 17th is a major trend change date.You have told previously to keep a filter of one day for that .So can expect a trend change tomorrow ?Regds.

reachnagraj / theknight16 said...

Dear aniji: yes I do expect some weakness to set in this week but we must also note that the trend changing dates have different weightages on different dates.

For instance, the 22nd September date had a lot of weightage whilst the 10th Oct one had minimal. 17th/18th Oct has medium weightage, effect of which was seen today and will be seen tomorrow.
A negative date with same weightage as 22nd September now turn up at 17th Nov and 21st Dec
[Nov negative and Dec positive] IMHO

animoitra2011 said...

Thanks but pl send the invitation for google groups.Regds.

SMR said...

Hi Nagi,

Please refer the excel spreadsheet MasterTime-Price-Alert-Oct.xls that you have shared with us with Sep 30, 2011 as the centre (in blue)

In this sheet Nov 17, 2011 appears in the right bottom (Pink) and the Dec date with similar angle is on Dec 19, 2011 (again Pink). In your comment to Aniji, you have mentioned Dec 21, 2011 -- bit Konfuzzed.

Are you following a different spreasheet now? If yes please share. Thanks.


reachnagraj / theknight16 said...

Dear SMR- No the reason why I specifically told Dec 21st is because it almost co-incides with the longest night of the year. You should also look at the chart uploaded with Aug 26th as pivot and June 20th as pivot.

Wherever a cluster of dates coincide in both charts, we are bound to see a change of direction on the bourses.