Thursday, March 15, 2012

EOD Analysis For 15th March 2012 and Outlook For 16th March 2012

OI in Nifty futures remained unchanged from yesterday and the premium on Nifty futures is still pretty high despite a negative session in the morning. VIX a shade above 25

Critical levels and outlook remain unchanged; BNF could not latch on to 10800 levels and hence that will be a major resistance point. Critical support at 10400-10500 band which if breached, the next support goes to 10150 levels

Volatility will continue until Tuesday; a definite direction will be assumed between 21st March and 23rd March [corresponding to Summer Solastice] that trend will stay for 2 weeks or so. 2 consecutive closes above 5408 was a pre-cursor and that has happened yesterday; now on downside, 5348 [give or take a few points] has to be observed carefully; IMHO, safe traders should trade light and wait for a definite pattern to emerge till all headwinds are cleared.

As tempting as it seems to go for OTM Pair Trades, tomorrow is the last trading session of the week and by Monday, the premium on options will go down further - so OTM options should ideally be avoided or if holding any, better to square off tomorrow regardless of gains/losses

[In 2011, the period from 21st March to 6th April saw Nifty rise from sub 5400 levels to 5944 levels! Will history repeat itself or we are going to see a major down move? Time will tell]

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