Tuesday, January 24, 2012

EOD Analysis for 24th January 2012 and Outlook For 25th January 2012

OI in Nifty futures surged to 36 odd million today with the dovish RBI stance [and surged another 1.6 million towards close] and BNF from the lows of the day gained almost 400 points at one stage. VIX well below 23 and that is respite for bulls. The stellar performance from LnT in the last one month is mind-blowing [almost 35% upside from the recent lows!]

Must put in a word of caution here that the euphoria in BNF can subside anytime and the longer it takes to correct, the sharper will be the correction; credit growth is still not very good and the impact of NPAs is only increasing with passage of time, especially with all the restructuring of loans that are due. IMHO, markets certainly have not discounted this factor yet.

Critical Levels and outlook remain unchanged from yesterday. One session away from expiry and bears definitely have been mauled by the bulls big time [considering the fact that the series started at almost 4700 odd levels on spot] After a high volume session tomorrow as well, one can expect a sudden drop of 20% to 25% volumes for a few sessions into Feb series.

As mentioned earlier, the longer it takes to correct, the sharper will be the subsequent correction. Unless we see significant correction in BNF and bell weather stocks, steep cuts on Nifty will have to wait.

IMHO, we are now on the verge of a turning point to the downside though initial signs of weakness only after a close below 4994

I use pictures very rarely, being the verbose motley fool that I am;

For a change some pictures:

Illustration1: Nifty Weekly Chart

Zooming into Daily Charts To examine recent moves

I still maintain that closing above 5150 is a very low probable outcome for now. However, with the way shorts are being chopped, the market won't cease to surprise.

Panic will only enter the system with a close below 4690!

Illustration 3
Banknifty Daily Charts

This one definitely is going through a frennzzie phase and will be a major culprit once again for subsequent corrections

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