Monday, October 3, 2011

EOD Analysis for 3rd October and Outlook for 4th October 2011

Over the weekend, I had indicated potential weakness during the opening bell for Monday following weak global cues. However, I had estimated the falls to be arrested in the 4868 area [being the minimum level for the gap-up to be filled]. However, Nifty did drop lower and is taking support at the 4820-30 zone. 4816 is what works out as critical support in my calculation and hence expecting bouncebacks in the 4800-4820 zone for now. The OI in Nifty futures was just about 21 million today matching the outlook given towards expiry [when we saw OI go upto 35 million]

So where do we move from here? To the extent the 4800-4820 levels hold, we should be able to see 4880-4911-4944 by Wednesday IMHO and may go upto 5032 as well. The bull side will only get bolstered with a close above 5032 and then above 5092. All other critical levels remain unchanged. Banknifty's crucial support zone lies in the 9000-9250 for now and to the extent that holds out, we should be able to see some pull-back. In fact, it should not be surprising to see a sudden short-covering spree to come into Banknifty as the Banknifty futures of October series were trading at almost a 25 point discount towards the middle session of the day and some of them were trapped whilst tomorrow's session in all likelihood should trap the remaining shorts. The close towards 9200 from the lows of the day is a good sign [Adjusted close at 9185]

LnT is pretty much butchered at the moment keeping the negative divergence on the bourses intact. Expecting this counter to bounce back to 1350-1400 levels at least before going down. Eventual target is 1100 minimum to the downside by 3rd week of November. Today's bounceback from the lows of the day was commendable but some uncertainty on upside does prevail due to the high options premium on the 1350 Oct Call.

Another reason for anticipating some more upside before going down is that technically, the 3 swing bottoms of recent past have been going higher 4720-4760-4830 [and I concede that the tops have been lower as well from 5169 to 5140 all the way down] By the end of the day, Nifty Oct futures had some premium compared to the fact that they were trading at discount for most of the trading session today.

Please do take the counts from Raghuji's blog and Trendlines from Harshal bhai's blog for more refined levels as my levels and outlook generally stay at broader levels.

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