Tuesday, October 25, 2011

EOD Analysis for 25th October and Outlook for 26th October 2011

This was probably odd expiry by every means; the OI in Nifty futures were high at 34.5 mill throughout the day; Banknifty took steep cuts but no signs of Nifty giving up whatsoever; RIL extended strength whilst MnM, Tata Motors, Infosys all saw significant upside and lots of short-covering seen on LnT. VIX cooled down by almost 3 points which is actually confusing given the upward and downward gyrations seen [and a negative market breadth on the bourses] Nifty has broken out of the tight range and given a close above 5150 and this implies a high probable chance of filling in the gap all the way to 5328 on mahurat trading. Towards the end, lots of short-covering seen on BNF as well.

Markets are certainly not out of the woods and the danger of retesting sub-4700 levels still lies but that has to wait for some more time towards the critical time zone of 16th Nov to 22nd Nov; tomorrow for mahurat trading, we may not see too much negative action on the bourses regardless of global market cues. Again in November series, there are a lot of holidays so one should be very careful with the options of Nov series.

Weakness will only get confirmed with BNF giving a close below 9500 and Nifty giving a close below 4880; as mentioned earlier, closing above 5150 raises the chances of generating another 144 points in the same direction and hence now shorts should wait for a breakdown to be confirmed. All interest rate sensitives along with banks will lead the fall; 9750-9800 still remains a profit booking zone for BNF;

Last but not the least, this is a bear market rally and has remarkable resemblance to the patterns seen in April and August - enjoy the ride till it lasts but the next fall is again going to be severe;

PS: For all who are wondering why this corrective is taking so much time; would encourage reading the section on correctives following a sharp impulse action that usually takes the form of a Zig-Zag/Flat/Zig-Zag; From the 26th July to 26th August, Nifty dropped from 5702 to 4720 levels i.e. it fell at ROC = 32 points per day where as normal ROC for Nifty is 10 points per day. Second, with such sharp falls, a 50% retracement is very logical [we saw this at the fall from 6181, 5944 and now with 5740] and that 50% retracement has been completed today. The zig-zag structure comes into play because the previous corrective could not attain the required price target. Through-out August and September, the market geometry was trying to balance the time and price factor.

Happy Diwali to All of You and a Very Prosperous New Year


animoitra2011 said...

Nagraj ji 29 th oct and 2 nd nov are probably minor and major trend change .What can be the significance of these dates.Regds.

reachnagraj / theknight16 said...

Dear Aniji-we first need to see how far bulls take this as they have achieved the herculean task of closing above 5150 against all odds - as I keep repeating the timeline with heavy negative weightage comes around 16th Nov and my eyes are glued to that only for now. Good luck

JEEVAN said...

Dear Nagraj ji and all

Wish you all Happy Deepawali.


Suraj said...

Dear Nagraj Sir,

Wish you a safe & Happy Diwali.

Arvind Katyal

Vanita said...

Happy and prosperous diwali!!!!!

nalin said...

wishing you & your family a Very Happy Diwali & a Very Prosperous New Year ahead...(Xhetani mmb)