Friday, October 7, 2011

EOD Analysis for 7th October and Outlook for 10th October 2011

So 1 furious gap-down's damage seems to have been reversed to some extent but let us not forget that all bulls are still badly badgered. Today's price action is simply akin to a patient with badly fractured limbs being shifted from ICU to the general ward!

Nevertheless - signals of an upside were seen during the closing hours of Wednesday itself when significant premiums returned to the Nifty futures and a lot of Put-Writing was on-going. OI through out the day was over 24 million [a marginally positive sign] for Nifty futures; Banknifty recouped a lot of losses but is still precariously placed with Banknifty futures hardly commanding any premium from normal 30-40 points. Moreover, SGX Nifty had a blast yesterday and with the monetary stimulus being pumped in by Europe [and Obama now pressurizing Congress to approve the 400+ billion jobs package] the markets are bound to be on a short term Euphoria but the subsequent fall will be worse.

Some negative divergence was seen on IT stocks like Infosys (made a day low of 2487 on spot) and TCS (made a day low of 1037) as well which is already hinting at caution. LnT had a technical bounce to the 1350-1400 zone as indicated earlier and the same has been achieved. How much further will it go to - time will tell; IDFC, Tata Motors showed some strong gains but they should see some profit booking next week yet again. The bigger picture is simple - we are in a very grim global market scenario and things don't look encouraging for some more time.

Hope you enjoyed the profits and the festive cheer. There are some more to come as we move along for a few days and then one big bang coming for November.

[Upside still stays capped at 5225 for now subject to a close above 4944-5032-5092 levels in consecutive fashion. On the downside, 4663-4693-4720 forms the support but if pounded repeatedly, it will give way.]

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