Monday, December 5, 2011

EOD Analysis for 6th December 2011 and Outlook for 7th December 2011

Range-bound day with Nifty oscillating in a tight range through-out the day. OI in Nifty futures was around 24-25 million through out the day whilst VIX marginally went up by a point to 25 odd levels, hinting at some broader market selling pressure. Interest rate sensitives were also pretty much okay on the surface.

Markets are not out of the woods and it is understandable that at least from the retail traders perspective, nobody wanted to carry the trades forward for Wednesday with a lot of open positions. Some positive cues from Europe are being seen but one never knows how things will shape up on Wednesday.

This is the second consecutive close above 5032 and this is positive as far as the bulls are concerned though their critical condition for breathing easy is 2 consecutive closes above 5092-5125 levels. Bears have to still wait for a close below 4880 to confirm the weakness and to the extent these 2 levels hold out, range-bound sessions may continue. Our stance for negative bias and weakness stays for the period 5th December to 16th December after which we expect some upside to follow from whatever levels Nifty is at around that time.

All other critical levels remain unchanged. Today marked 233 trading sessions from the 4th Jan high of 6181 and IMHO, the EOD graphs until the end of this month will resemble the graphs we saw from 6th Jan '11 to Jan expiry to replicate itself [though the levels are lower now I agree - my expectations are on the structure and form rather than price levels; also note that this is just a hypothesis and I am NOT CERTAIN that actual movements will play out as expected.]

Enjoy the holiday tomorrow and let us see how things pan out on Wednesday.

Other updates:
Dow is expected to retest the 12200-400 levels once, DAX towards 6400, FTSE towards 5750-5800
Initial softness to be confirmed after a close below 11800, 5750-5800 and 5550 for Dow, DAX and FTSE respectively.

Euro-Dollar may try to make a poke at 1.3525 levels and GBP-USD at 1.56-57 levels before the down-leg resumes for targets 1.32 and 1.525 respectively

These movements will have an impact on Banknifty from external factors whilst RBI dovish stances may prop up BNF to retest 9350 levels before falling as 2 closes above 9150 levels on BNF spot is also some indication of strength on this counter.

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