Tuesday, November 1, 2011

EOD Analysis for 1st November 2011 and Outlook for 2nd November 2011

Following weak global cues, we saw a sell-off on Nifty as well; VIX managed to come up to 24 levels and OI in Nifty futures were hovering around 31.3 million through out the day. This is an interesting trend as all throughout Aug/Sep/Oct series, OI and volumes used to surge towards expiry and then take a 25% to 30% drop in the middle session of the series. November series though, has not seen OI and volumes drop relative to expiry volumes so far. The premium on both Nifty and Banknifty futures have been healthy despite steep cuts on the spot index prices. Critical levels remain unchanged and 2 gaps still pending to be filled on the downside. As indicated over the weekend, the Euro debt crisis solution announcement will just give cheer for a brief period and revert to the original course yet again. However it is still early to write off the western indices as well.

Crucial levels on closing basis have already been provided for DAX, Dow and FTSE. EUR-USD has printed below 1.38 which is a signal good enough to know that bears are preparing for a lethal attack on bourses soon; likewise, GBP-USD has peaked out above 1.61 and will retrace the entire rise from 1.55/1.56 levels within a month's time and both these pairs will impact Banknifty significantly. As of now, 9750 levels still seem to be holding out but with the EUR-USD/GBP-USD signal, one can short Banknifty as close to 10k as possible on rise [and as usual initially with a hedge]

For Nifty, 5032 levels still hold fort and will continue to do so for another week IMHO; BNF weakness will get bolstered only when it closes below 9500; stay hedged, stay profitable - some exciting times coming our way for profits in trade as well as long term investments. As usual, cash continues to remain king.

No comments: