Tuesday, January 31, 2012

EOD Anlaysis For 31st January 2012 and Outlook For 1st February 2012

A good start to the day but volumes were lower with OI in Nifty futures hovering around 24.5 odd million in the morning session and another 1.5 million added after Europe opened. Sectoral churns were happening as usual with banks, IT, Reliance leading the rise whilst LnT, Infra saw some short-covering in the last hour adding to the gains. Bell weather stock Tata Motors once again extending gains [hats off to some seniors on mmb and our group who were quite confident of this upside even when the counter was at sub-180 levels]
Another stock that has gained good traction in the recent past is Sesa Goa. The momentum exhibited by these 2 counters in the last 4 weeks is over-whelming. Yesterday's gap-down has already been plugged

Critical levels and outlook remain unchanged. To sustain the upside, more volumes are needed which again seems like have a chance to surface basis shorts entering the system! Thanks to one of our team members Abhay Dubeyji for pointing this out- a strange jinx seems to have entered on Tuesdays since the beginning of 2012; every Tuesday, Nifty maiya tends to hit a century to the upside [how far it will happen, GOD alone knows]

Today's close is also significant due to the monthly close and the verdict for 2012 seems to be very clear IMHO- Nifty will gain a lot of traction as we progress through 2012 and from an investment perspective, now all falls must be utilized to accumulate.

The only factor for which my opinion is different from some seniors / experts is that at a minimum, the recent lows need to be backtested to plug the gaps; however, 2 consecutive weekly closes over 5250 and we have to accept that sub-4550 was the bottom. My personal concern with the meteoric rise from 20th Dec lows are the volumes

Options Data Noise (Some air cleared today):
On the options data front, the 2 deeply ITM options mentioned yesterday 5000 Feb CE / 5300 Feb PE still displayed same traits as yesterday initially; the 5000 CE has an additional time value of about 60 points over intrinsic value whilst the 5300 PE had 25 points over intrinsic value until the last hour where it gained another 25 points of time value. Now it seems realistic on both sides compared to yesterday. Lot of demand / supply coming in for the 5300 PE in the last 30 minutes.


vishal said...

dear nag bhai

do we fill gaps down side by this month end or need to wait for next month. it seems that bulls for now are too aggressive

please advise


reachnagraj / theknight16 said...

@vishalji: well as per historical data from Aug '11, we have not left any gap unplugged for more than 5 weeks with the kind of volumes we have had.

The rise beyond 5150 on Nifty and strength on BNF beyonf 8650 has foxed me also big time as I have acknowledged personally also to our near and dear ones.

A close below 4880 will be the first hint that Nifty is on its way to plug the downside gaps. Until then, there is no point fighting with the bulls and better to sit on their bullock cart and enjoy the ride.

IMHO Nifty should be able to plug downside gaps by 22nd Feb or so [I may be wrong also as it happens often]. Need to consult Sarmaji on the timing aspect. He mentioned the importance of 7th February in his notes so let us see if that fructifies.....