Monday, October 31, 2011

EOD Analysis for 31st October and Outlook for 1st November 2011

A mild start to the day following weak cues from Asia and the OI in Nifty futures was hovering around 31.4 million through out the day. Finally some fresh supply seen on Banknifty and it completed the long pending technical pull-back to 10k levels. 5032-5092 levels have now survived 13 consecutive trading sessions limiting the downside to 4980 for another 8 trading sessions IMHO. One dip to 5180 levels is due and we should be able to see this within this week.

Other levels remain unchanged for Nifty; for Banknifty, now that 10k region has been conquered, need to see whether we get 2 consecutive closes above 10k levels that opens BNF for a retest of 10250-10400 levels. On the downside, now 9500-9750 levels should provide interim support for the next 5 to 8 trading sessions. So far volumes have been good for the first 2 days of November series and the premium has been pretty healthy as well on Nifty and Banknifty futures. As usual, would like to remind all that Nov series is filled with holidays like October series was; options premiums will dry up fast and hence trading via futures might be a better option. Small caps and mid caps are providing some value buying opportunities but for largecaps, we would encourage waiting.

For instance, Infy going at a PE multiple of 20 and EPS of 150 comes to a fair price of 3000 but the future EPS guidelines are muted and for all analysts on media shouting new bull market is on - have to re-think again. As given in the weekend update, the larger scrips have nothing much in order books and the fundamental problem is a demand slowdown. So I would be very surprised if we don't revisit the 4980 levels by the end of next week [and possibly much lower closer to 17th Nov]

For now, blind shorting won't help and Puts will be like groping in the dark. Stay hedged - stay profitable

1 comment:

Suraj said...

Hi Nagraj Sir,
I know you must be very busy but it has become my habit to daily read your, Harshalji's and Raghuvanshiji's blog. Hope it's only one day miss.