Saturday, October 1, 2011

The Great Mutual Fund House / ULIP Paradox

ULIP = United Looters of Indian Public

MF - Need I say anything for this - samajhdaar ko ishaara kaafi hai; for purposes of decency it is Mutually FHundd

ETF: Eat Trader's Fund

This is how one can describe some of the most commonly used, heard and read terms in all periodicals and business news channels and what not. Whether through an ETF, or MF or ULIP, you think you are depositing funds with a responsible fund management team who care to grow your money?

Wrong - you just fund them for trading margins so that they can speculate as much as they want, earn fat bonuses and get away with the bad stuff [Red Herring Prospectus?]

So just in case as a mango man, you still don't realize how a fund house plays with your money - let us look at how the Fund house supposedly calculates the NAV in your folio

Here is some thematic fund [or ETF or ULIP] that ties the value of your portfolio to a set of companies. The justification given is that funds are invested in equity shares of a certain list of companies. As the value of this equity goes on increasing, the NAV will increase and vice versa when the market falls. For those who like to do number crunching and graphs - try to plot the curve of the NAV of the portfolio vs the benchmark index performance - no surprises for guessing; when the markets go up, your NAV also goes up but not in the same proportion as the markets. On the other hand, when markets go down, your NAV drops faster than the general market's lows.

So what exactly is happening with all your hard earned money apart from keeping aside cash for redemption pressures and a fund management fee (less than 2% and you thought this is what helps fund houses maintain such plush offices and all the marketing hoopla on television and out of home media?]

Picture this - when you have a DP account with a trading broker, the first thing he will tell you is that you can use 1:4 leverage for share trading, 1:1 for FnO trading [which works with 10% as margin for futures contracts and the rest as determined by exchange and some Black Scholes formula for options] and then we have the vast forex market with 1:400 leverage on currency pairs.

So a smart fund manager decides to allocate the cash, some equity companies for investments and then starts looking at the PnL - let us face a simple fact - with just 2% as management fee of which a cut needs to be paid to the fund agent, it is simply not possible for a fund house to have such plush offices, sophisticated computer terminals and lavish spending on media. So the money has to work for some purpose. A vast proportion of the money is deployed in the derivatives markets that help reap profits regardless of bull or bear conditions.

Assumption: Funds in place = 1 Crore Rupees
Allocation is 100% Equity [for simplicity]
Cash Reserve = 35%
This means 35 lakhs are lying as cash and the remaining 65 lakhs are [supposedly] invested in a list of companies. Let us assume that this fund manager is good and in fact does deploy 30 lakhs in shares listed. This still leaves him with 35 lakhs that needs to be deployed and money earned out of it. Market conditions are good, there is a bull market on-going and he decides to put in 15 lakhs of the remainder for futures, 10 lakhs for commodities and 10 lakhs for forex. Assuming that the fund manager and his team do well and are prudent risk managers, this 35 lakhs can more then triple in good conditions. Fantastic news and due to the bull market conditions, the shares in which money was deployed are also doing well and hence the NAV is pretty good. However, have you really got bang for your buck? The answer is a big fat NO. YOUR hard earned money was used to gamble on the various speculative instruments of the market but the returns of which were never disclosed or shared with you. All that you got as growth was the appreciation in equity holdings of the declared companies. The balance - of course they all need it for paying off for all the plush offices and the fat bonuses for the staff doing asset management.

Scenario 2: Everything else same but the bear market conditions prevail. However, the fund manager and his team are smart and play the trends well and make good money in the speculative markets as bears but this time, the job is very very easy for them. There need not be any justification whatsoever because the system based NAV calculator has already made you poorer by marking down the value of YOUR hard earned money so it is perfectly ok. As far as profits generated in secondary markets are concerned - of course they belong to the management of the fund house and the team of asset managers. They were smart enough to deploy the funds properly and your NAV is enough to keep you quiet.

Scenario 3: Everything else same but the bear market conditions prevail. However, this time, the fund managers are also caught on the wrong foot, betting on the wrong side of the trend and lose money big time in the derivatives market. No problems whatsoever as there is still cash and equity [though lower in value] that can be used to spook a sell-off thereby viciously increasing the rate of fall of the NAV.

[Incidentally, there is seldom a case for bull market conditions to prevail and fund managers getting on the wrong side of the trend for too long!]

Whether it is scenario 1, 2 or 3 there is 1 DEFINITE LOSER - The Investor
In majority of the cases, regardless of bull / bear conditions, fund managers use your hard earned money to generate maximum profit possible for themselves and you come last [the book Employees First - Customer Later may have been a best seller but our MFs, ULIPs and ETFs took that literally from a pretty long time]

Hence it is no surprise that a vast majority of the Indian public are not invested or get out pretty soon. Whilst they get out on a simple premise that most often than not, they lose money in such ponzi schemes and decide to stick to FDs, Gold and Real Estate. This is how most of your fund houses operate and loot your money. It is really a sad state in India right now that people work so hard to earn their money but spend very little time in deploying it appropriately and being informed about how to manage the funds. There are four distinct categories emerging in the middle class right now

1] Invest and Forget category [the most wanted people as far as fund houses are concerned]
2] Trading category [The gambling variety that wants to increase net worth exponentially each passing day and leaves the markets for good most of the times; most wanted by brokerage houses]
3] Consumerist Epicurus - Eat, Drink and Be Merry - Credit Card zindabad - no cash - no interest in savings or trading or investments. May decide to do some betting with poker, horse racing and cricket but certainly nothing to do with what involves a little research and time. [Some alec smart marketing agent might convert a few of such people as clients by telling them how important it is to have funds in place for the same lifestyle at later stages of life]
4] People with little savings after taking care of all family priorities and find themselves clueless on trends, terms and just stick to known forms of low risk low return investments always [oh oh - no point in wasting time with such people thinks a sales person for a fund house]

These very demographics [in most of the middle class of India] have put in a very potent ground for ULIPs, MFs and ETFs to thrive with your money. In fact, there is a certain degree of control brought in by SEBI/RBI that keeps some damage under control unlike the West.

The laundry list can go on and on but there have been numerous instances of ETFs, Hedge Funds and Institutions going bust with their ponzi schemes courtesy free markets fallacy

A Gold ETF pegs its value against a certain weight of gold price per unit of the ETF. So with each additional unit one buys, one is technically buying gold to be used for later purposes. Now as per principles, the ETF must have a significant portion of gold deposited in vaults and/or enough solvent long futures contracts that can be liquidated against redemption pressures. You think after hiring all levels of financial engineers and business school graduates, such ETFs would play fair? In most cases an emphatic no. A statistical expert models the probabilities of redemption pressures under certain conditions and tells the big guys how much cash should be reserved. The rest - voila for speculation to be used by one and all in the fund house for the big fat bonuses.

Surprise surprise -  there is absolutely no risk modelling technique for surprise events like sudden interventions by central banks to control prices, more than anticipated redemption pressures and of course losses by taking unidirectional bets. And of course if you thought that your ETF had enough gold reserves to honour your redemption pressures you are wrong.

Bottomline: Never ever trust your MF, ETF, ULIP [ULIP is something that should be completely avoided]

The typical sales pitch of the ULIP seller: Regardless of what happens, if you are not in a position to pay your premiums, then the value of the portfolio will pay off for the premiums.

Inference: Don't worry - we want to suck your premium and portfolio value i.e. loot your money.
Insurance and Investments should NEVER be linked together. Insurance is to ensure that you take adequate protection for covering your life and family against unforeseen circumstances of life. My counter argument as far as creating corpus for future premium payments is simple - I would rather work my own way out for reserves and hedges against inflation, uncertainties of life so that the premiums are paid up. My first concern with insurance is that I must have enough insurance to cover all my loans / liabilities should something untoward happen to me and further to that, there should be a corpus to provide liquidity to my family members in such a case.

Despite all modernism coming in the insurance space, I prefer sticking to the traditional money-back and endowment schemes of LIC like Jeevan Shree [I was lucky to enter in at a very early stage], Jeevan Anand, Bima Gold, Jeeval Saral etc. For pure risk management, I prefer Metlife Suraksha TROP that gives me excellent coverage till the policy is running and subsequently returns all my premiums with a simple interest of 10% on maturity. Whilst there are a few challenges with the way LIC plays the stock markets [sometimes forced by the government] there is no other insurance company in India with properties like LIC. Be it the Jeevan Beema Nagars of residential plots in all major cities of India, be it their plush offices - everything is gold dust. The introduction of other players actually forced LIC to eliminate a lot of bureaucracy, outsource projects to IT companies like Wipro and now a record of 1 policy settled per 2 minutes has been set. So much for the insurance part [Endowment schemes are good because the coverage covers a period even after you stop paying premiums which adds a cushion to your coverage]

Mutual Funds are worth investing into when a bear market prevails and despite the cash levels one has, one cannot invest in all blue chip firms. So allocating some portion to equity schemes that have exposure to the top 150 or 200 stocks on Nifty, Banks, and Mid-Caps help. The mantra to success here is SIP and invest when the bear markets prevail; book out when the trend turns bullish periodically [rather than how it is done currently - invest in bull conditions and withdraw in bear conditions]

Investment directly with the exchange like Nifty Bees, Bankbees will end up delivering stellar returns exactly as the index and if one entered at suitably low levels in mid-cap funds in bear markets, the odds of doubling or tripling the investment within 2 or 3 years is high.

The purpose of this post is to educate investors as to how innocent people are getting ripped off by financial engineers in the MF/ETF/ULIP schemes and how your hard earned money is deployed to the advantage of the fund managers and management. Unfortunately, the regulations in India are not strong enough to monitor these correctly. However, the periodic and sporadic interventions by RBI/SEBI ensures that most funds may not go bust due to excessive leverage. Had this not been the case, our MFs and ETFs would probably be sitting at 2% to 3% of cash as demostrated by the MFs/ETFs of Europe and US in the last few months of economic crisis. [The myth of market inefficiencies getting efficient by a complex web of derivatives is simply rubbish]

The main message is - Start doing your own homework rather than rely on advertisements, 'expert advisors' etc as the mechanism is very complex. The agent is worried about his commission, the sales person is worried about targets and 'concern' for your hard earned money is zero. At the end, we have been blessed by GOD with capacity to analyze and take a hard look at what we need to do for ourselves. As my lovely spiderman harshal bhai puts is 'Life is Simple - So let us keep things simple!'

You can design your own portfolio depending on your income and expenses. An ideal portfolio for middle class is

Assuming X is the total amount of investments to be made in a year [not counting a home loan and EMI of that and assuming that 40% of net take home salary is swept out for the home loan EMI]

30% in FD, Fixed Maturity Plans [I vote for FDs because you can easily sweep out funds in case of emergencies]
20% in Equity Mutual Funds
10% in NiftyBees / Bankbees
20% Directly in Top 20 counters of Nifty [Even if it is just 1 share of TCS or 1 share of LnT or 1 share of ICICI Bank - invest directly by yourself. Keep a fixed amount for equity investment and on the last Thursday/Friday of each month buy the number of shares that will be available with your cash outlay. Don't worry about bull and bear markets for this one. Just keep on accumulating but also keep a note of the profit / loss - if the portfolio value increases by 15% of the net amount you chipped in, book profits on some units] In a 5 year time horizon, these stocks will provide a CAGR of about 30% per annum

The remaining 20% needs to be kept aside for insurance - insurance is a must for the benefit of the family and also health insurance because of the rising cost of medical care. It is wrong to not take a Mediclaim policy just because you are covered by your company. That is simply a group policy and at some point of time, when you are out of the group, a lot of your problems may not be covered at a future date. The earlier the mediclaim is taken, in fact even with an increasing age, your premiums may start dropping due to No Claim Bonus. To the extent your medical expenses are covered by your organization, you are not claiming anything from your mediclaim policy. The benefit is bound to come and the earlier you take it, lower are your premiums. Most of the ailments are taken care of.

We don't need any tv channel or any advisor to tell us how to manage our money. All we need to do is evaluate our life goals, our priorities and hedge ourselves adequately under inflationary pressures. Salaries will not rise more than 7% to 8% on an average which is not sufficient to handle inflation at Consumer Price Levels [I never care about what the monthly numbers say because it is based on the Wholesale Price Index of a basket of goods that was made in 1950s. Today the basket has changed with the demographic changes - still our economists don't want to change that because it affects the netagiri!]

Cash continues to remain king but one should also be willing to enter the markets in bearish situations - in fact when the sentiments are most bearish, the MF units and index units tend to more than double or triple in 3 years because of the meteoric rise from the lows. After all, as Pretcher Jr says, the stock market is nothing but the sum of the overall social mood. It is simply law of nature and markets that we take 3 steps forward and 2 steps back but the longer term outlook is progress/evolution.

You don't need a crisp suit bearing MBA to come and tell you about alpha and beta and all such academic stuff. Good to know better to ignore. All we need is a little bit of self application and money management.

Global Markets Update - Special Coverage For Indian Bourses - 1st October 2011

Nifty expiry went exactly as predicted on Wednesday and the subsequent action came in as predicted after expiry. Markets are not out of the woods still. For Monday, we should be able to see a retest of 4880-4911 levels within the first hour of open [or a slight gap-down following the weak closes of Europe and Dow on Friday] In all likelihood, we should be able to see these falls being bought into. Banknifty will continue to follow the Eurozone drama for some more time. 9000-9250 levels still carry a lot of weightage as support levels though I would not encourage retail traders to participate in the rise of Banknifty / Nifty. Sell on Rise is a better strategy

The critical levels are as follows

For Upside: 4800-4840-4880-4911-4944-4980-5032-5032-5092

For Downside: 4880-4840-4800-4780-4720-4690

For upside, it will only get fuelled with a close above 5032 and then above 5092. 1 close above 5092 will open Nifty for a retest of 5125-5150 levels and 2 consecutive levels above 5092 [1 close above 5150] will give another 144 points in the same direction. IMHO, the upside is capped at 5225 levels and a close above 5225 will ensure a retest of 5348 but this seems highly improbable at this point of time.

Weakness will be confirmed with a close below 4880; 1 close below 4880 will open Nifty for retest of 4800-4840 levels and if the falls are not arrested here, the floodgates will open Nifty for a retest of 4690-4720 levels. A close below 4840 will give 144 points in the same direction in all likelihood.

At least in the initial part of the series, one can expect falls to be bought into by hot money. 10th October is a critical date for current series and I am expecting serious falls after 10th October [regardless of where Nifty is on upside]. Then some upsides may be expected as we move towards the mahurat trading session but don't worry - Nifty is set to fall drastically in the time zone of 16th to 22nd November [pivot date is 18th November 2011]

I had called for a potential new high this year on Nifty but the time/price actions were straightforward
5408 to be maintained until 12th August, 5532 conquered by mid-September and 5944 to be conquered by 17th October 2011 - none of these were fulfilled. Now also, I am still saying we are going down drastically but that does not mean rushing for shorts via futures or puts.

Cash continues to remain king and there are blue chips waiting to be picked up at rock bottom prices. So as far as investments are concerned, just keep those extra bonus handy ready to be deployed when prices come below. From a trading perspective, the team is ensuring that resistance, support levels and EW counts are updated for Nifty. Following those with hedges and adherence to Stop Losses will preserve trading margins and scalp some definitive gains. We don't follow the 20-20 format in our trade outlook.

Hope you enjoyed the profits on the upside as well as downside - we certainly did. Have a good weekend and good festivities that are lined up.

Global Markets Update - 1st October 2011

So the drama over the Eurozone crisis continues. SMI managed to post the counter-trend rise high of 5600 levels and DAX followed as well. Immediately the profit booking also came in. Likewise for the Dow, a counter-trend rise above 11k levels came in from the support levels of 10250-500 zone. Both for European indices and Dow, till critical support levels hold, such counter-trend rises may continue to come

Critical Support levels as follows
FTSE - 4900 and to the extent that holds, one can expect 5200-5400 levels resurfacing before a final breakdown.

DAX/SMI - Both have critical supports at intermediate levels in the 5000-5100 zone. To the extent these levels hold out, counter-trend rises to 5400-5600 levels will keep resurfacing before a final breakdown.
[Eventual targets are 50% of highs of 2011]

CAC40: On its path ro 2k levels but will take some more time depending on how SMI and DAX shape up.

Ibex35: On a set path towards 5500 levels but for now, range stays in the 7500 to 8700 levels.

Dow: 10250-10500 levels should hold out for the next 6 to 8 weeks.

I had indicated that the Greek bailout [which is a bailout of previous bailout to ensure some interest payments are made] will go through as the Eurozone think tank wants to get through a good recapitalization of European banks following an orderly default of the Greek sovereign debt. The hunger for yields ended up with a lot of high yield bonds to which a lot of banks have taken exposure to. Despite the bailouts, yields are simply unrelenting to the downside and CDS premiums continue to rise.

Now there are other potential actions that market think tanks are contemplating - for instance, forcing a yield cut on the bonds to reduce the interest burden on other European countries and banks to Greek debt. Whilst this may solve some problems of the debt part of the Eurozone, the stock markets will be badly badgered IMHO. They will rise for a very short-term and then nose dive to make up for the overall portfolio losses.

The dollar being the reserve currency of the globe will continue to spook up the dollar index towards 81 levels. Margin calls are certainly being triggered on the bourses due to excessive leverage on the system. The larger game going on both sides of the Atlantic is simple - if US can print money, we can print money too; despite all the repeated failures of QE, the leaders don't want to let the pain get over once and for all and revisit the drawing board on how to determine long term productivity and GDP growth can be fuelled. People want to continue with useless financial engineering that will only increase challenges on a brief period of hyperinflation and then a prolonged bearish deflationary phase.

One major divergence in the currency space is USD-JPY at present. USD gained significantly over AUD, CAD as expected and against CHF, it was artificially introduced by Swiss bankers. However, despite such a rise in Dollar Index, USD is falling against JPY and this pair probably is the next major one where JPY is set to collapse and revisit the 90 levels from the current 76-77 levels.

Thursday, September 29, 2011

EOD Analysis for 29th September 2011 and Outlook for 30th September 2011

First and foremost, I would like to apologize to all followers of this blog for failing to make an update last night. I put up a post in MMB at 1:31 am IST but could not add that as a comment here. This is the post I had made. Most of the fellow boarders read the message in conjunction with the posts from other seniors of the family.

Q

Hmm - a busy week for me and am certainly going to miss expiry action tomorrow.

22.01 CET/ 1.31am IST
This is my outlook based on review of charts, counts et al

Tomorrow, we are very likely to retest the 4865-4875 levels raising hopes of bears big time.This would ideally take place before Europe opens. Once Europe opens, expecting a sudden turnaround on all bourses. Above 4960 (harshal bhai`s hawala level, and now I know why ;))

4960-4868 is a no fly zone. A 15 min candle with High below 4868 and bang bang bhaloo power all the way until Friday. A 15 min candle with Low above 4960 it is saand power despite expiry day. Either side a century can be expected further. Enjoy the expiry and Im sure I will be missed on the forum tomorrow.

Rulez are simple - work pays for my bread n butter and helps me live my current lifestyle - that is Top Priority - always.

UnQ

So where do we go from here now? 5032 has provided the resistance as expected and shorts were royally trapped and so were Puts. Markets are not out of the woods and we should see some profit booking tomorrow and wouldn't be surprised to see the volumes suddenly drop over. Only a close above 5032 can usher further upside and there are negative divergences seen in stocks like LnT and other interest rate sensitives as well. Now we are still in Sell on Rise mode but the 4880-4911 zone may provide some support in the interim period. We have a gap up from Tuesday and that should be filled to the downside by 8 to 13 trading sessions max from now. On the upside, 2 consecutive closes above 5032 will give another 144 points to the upside and retest the 5177-5196-5225 levels [seems very difficult to go beyond this]

On the downside, 1 close below 5032 will open Nifty for retest of 4880-4911 levels. 2 consecutive closes below 5032 and we open for retest of 4800 levels yet again. If LnT joins this short covering rally then some more upside may come but at least for tomorrow, profit booking seems very much on the cards.

Wednesday, September 28, 2011

Master Time-Price Charts October 2011

We are just 1 day away from expiry and due to start a new series from Friday. I am uploading the Time Factor chart for your reference that must be used in conjunction with the pivot chart given earlier with 26th August as the centre. This one has 30th September as the centre which is the first trading day of October series.

Click here to download the chart for reference

Just to clarify how to use the chart for analysis and trading - always look for the dates that have the pink or yellow shades. These dates are high probable dates from where a trend change can possibly commence. The probability of a trend changing session becomes even higher when compared with the chart of a previous pivot point. [for instance in the current month chart, 10th October marks a high probable trend changer; now if we look at the pivot chart of September series, 10th October is a date with a potential trend change there as well. This increases the probability of the trend change that can come through. In advance it is difficult to forecast whether the trend change will be positive or negative; it is just an alerter to look for changes around that date. [Sometimes the trend change commences in the middle of a session and gets confirmed the next day]

These charts can be used for any index or stock that one tracks - just that the direction of trend will be specific to what one is tracking [could be negative for Nifty but positive for Airtel for example] However, this works only for most liquid indices and stocks [or even currencies for matter provided the liquidity aspect is not missed. If one tries to use this for USD-ZAR contract or USD-DHM, probably it will get little success. But for Group 1 and Group 2 currencies this works pretty well]

Disclaimer: This is something that harshal bhai and I are working upon as a part of our research on Fibo-Gann time analysis. With passage of time, as we are getting some success, we are sharing our files with our fellow-boarders. Kindly do not take this as absolute as a confident and high probable forecast can only be done after going through these iterations for a couple of years.

EOD Analysis for 28th September 2011 and Outlook for 29th September 2011

A false alarm at open at 5k levels [couldn't last even for 2 minutes] and Nifty futures with OI at over 35 million. The divergence for downside was clearly indicated in the first few minutes of trade when Banknifty went to the negative territory but Nifty was hovering around the surface. Dow futures were trading below the lows of yesterday and hence it was very evident that a fall is imminent. The high OI in Nifty futures indicated 2 major points - desperate roll-over of shorts from current series and/or chopping off of positions of low margin players. Roll-overs were evident from the fact that the Oct series futures started trading at a discount [and only yesterday it was commanding a 25 point premium overall]

All news and drama regarding Europe and US are simply noises and nothing more. All are destined to fall and are currently going through relief rallies. The pending target of 5600 on SMI [given in Global Market Update over the weekend] has been achieved. Nifty has a pending fall courtesy expiry and a retest of 4800 levels is imminent. Upside for now is capped at 5032 on EOD basis IMHO. By the end of this week, we should be at the same Nifty levels where we started this series on 26th Aug.

Banknifty managed to retain 9500 levels and hence some pull-back may come through. We are supposed to have a royally badgered expiry yet again but the fall may just get postponed by a day or two courtesy options premium sucking game. We are still in Sell on Rise market and the sell levels are

5032-4980-4944-4911-4880 [also the critical resistances] These are levels where one can open shorts (via October Futures) and hedge with a long position in  Nov futures with a 25 point stop loss on both ends. VIX has remained calmer as expected for the last couple of days. A sharp fall will trigger the VIX to higher levels whilst moderately flat sessions on either side will calm this down [seems a remote possibility for the short term]

Low margin players should avoid the temptation to make a quick buck on expiry as the game of bigger players can make Nifty gyrate either ways. Even for a short term upside momentum, I hold the view that Buying should only be initiated around the 4690-4720 zone and it is better to wait for confirmation of weakness and go short from higher resistance levels.

Stay tuned to our blogs and enjoy the low quantity high quality trade setups shared from time to time.

Tuesday, September 27, 2011

EOD Analysis for 27th September 2011 and Outlook For 28th September

So Puts bought with high premium got crushed as expected and so many shorts in the system invited this trouble. The upside still remains capped at 5032 IMHO and the larger trend is down. Nifty melts much faster than it rises so there is nothing to be excited about at this point of time. Expiry is expected to continue the trend of close below open. Whilst it is difficult to tame expiry due to the inherent manipulations of the market, one should see stock and sector specific action. IT rising is no big deal as it will be one the prime sectors for a sell-off further to Banking and RIL. Interest rate sensitives that are temporarily showing signs of excitement will also fizzle out but as I pointed out yesterday as well, one should not blindly go short or go Put shopping.

Sell levels continue to be 4944-4911-4880 and the same strategy of hedging with a futures position in the opposite direction with a 25 point stop loss may continue to prove beneficial. With 2 days to go for expiry, there is a high probable chance of a repeat of Feb series action this month and/or August series i.e. when the markets most expect the downside, the expiry may be calm followed by a sell-off on Friday/Saturday [to milk the Sep options premium]. Larger trend is down and these relief rallies in between are good opportunities to short.

The upside can get bolstered through with a close over 5032 and cause some pain to bears.

Monday, September 26, 2011

EOD Analysis for 26th September 2011 and Outlook For 27th September

A flat open and immediately followed by a sharp sell off and just when things looked calmer, the open of Europe session and subsequent pull-back was followed on Nifty as well. 3 days to go into expiry and the upside seems capped at 4944 for now. There are too many shorts in the system and the Put Writing has been aggressive; one can expect the Puts to be crushed well tomorrow IMHO and after a brief short-covering upside, we should be able to see some more shorts and downside.

As of now, It seems like the market is intent on making a doji for the monthly candle i.e. we should be able to see expiry more or less at the same levels we saw on 26th Aug. Volumes as usual are high on the downside and retail participants are staying out of the upside momentum. For tomorrow, 4944, 4911, 4880 will be the sell levels on Nifty and each short should be opened with a corresponding long in the next series futures with a 25 point stop loss on both legs. The major pull back after expiry if it indeed comes through should not go beyond 5032 IMHO and only a close above 5032 can bolster the bull side. Low margin players may prefer to wait on sidelines till expiry manipulations manifest and a clearer picture emerges.

Always remember at the back of your mind that 16th-22nd Nov is the most likely timeline when we should see extreme panic on the bourses and a break down of most crucial levels - it is a Sell on Rise market (in tranches though) till this bottom is not completely taken out (3800-4400 is what I am expecting) The reason to highlight the timeline is to ensure that followers don't go on Put shopping blindly only to see options premiums erode out. Stick to futures as they seem to be far more rewarding in such trending markets.