Wednesday, October 19, 2011

EOD Analysis for 19th October and Outlook for 20th October 2011

Nifty opened on a positive note with positive [albeit temporary] positive news and today the volumes were encouraging with the rise; Nifty futures had an OI of almost 28 million throughout the day and Banks led the way along with Capital Goods and Reliance. Weakness will come in only with a close below 9500 and until then one should retain hedges on shorts until BNF does not show volume and momentum to the DOWN below 9650-680 levels.

2 consecutive closes above 9750 will open BNF for a retest of 10k levels whilst a close below 9500 opens BNF for a retest of 9000-9250 levels. For Nifty 5032 is extending its support and safe to assume that this may hold until Friday as well. On the upside, 5092-5125 zone was successfully tested and now the onus on bulls is to stage a close above 5150. With a close above 5150, Nifty can get a lot of steam to gain upto another 144 points filling up that gap of 5177-5328 on the upside. Markets are not out of the woods but for those expecting the down gap 4750-4880 [including me personally] - this will only happen after Nifty posts a close below 4880. The volatility factor seems to be a bit under control now as yesterday's fall did not trigger a big increase in VIX whilst today's rise has brought VIX to sub-25 levels [though this does not warrant complacency for bulls as it could simply be a ploy of hot money trying to suck out options premium and accumulate them at lower prices!]

Also it was strange to see the way Nov 4800 Put behaved today - at spot price of 5115 in the middle session, it was quoting 41 a piece and then towards the end even with Nifty at 5140+ on spot price, it managed to quote 42 a piece [whether this is accumulation or simply a lot of retail traders jumping on to OTM Puts remains to be seen towards the end of this week] Yesterday, similar behaviour was seen at the Nov 5200 Calls that extended significant premium towards the end of the session [at Nifty spot 5025, the 4800 Put was going for 70 a piece whilst the 5200 Call was going at 80 a piece] Whilst the options data do contain a lot of noise, even amongst the top stocks, some divergence was seen

Banks had a stellar gain and same was the case with LnT, DLF and marginal gains from Reliance. However, Infosys still maintaining a close above 2700 showed signs of tiring out and likewise with MnM. Good short-covering seen in IDFC, Tata Motors whilst TCS still remains a laggard.

1 comment:

Falcon said...

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Writing outside the context of this blog.

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Hope these suggestions make sense and you address them appropriately.