Wednesday, March 28, 2012

EOD Analysis For 28th March 2012 and Outlook For 29th March 2012

OI in Nifty futures @ open was about 34 million but soon came to 37 million within 2 hours. VIX hovering around the 25 level mark and there were some sectoral churns observed on stock specific basis.

Critical levels and outlook remain unchanged for both Nifty and BankNifty. Barring expiry whipsaws, we may see some lower volumes for the next 2 sessions as institutional fund houses will be looking to close the books for the fiscal year.

Starting 2nd April, volumes are expected to go down by about 20-25% and in all likelihood, the pending leg to the upside may begin [to be confirmed only after a close above 5348 and then 2 consecutive closes above 5408]

General Updates:

Rollar: Rollar is in a corrective bounce and seems unlikely to weaken beyond 52 levels; in the next leg of strengthening, it should be able to pierce through 48 with conviction to be confirmed after 2 consecutive closes below 50. By the end of this calendar year, we should be able to see Rollar well below 46.25 if not more IMHO

Dollar Index: Dollar Index is slated to go to 82-83 and falls will be arrested in the 78 zone in all likelihood

Gold: The fall of gold is hinting towards margin calls being triggered at hedge funds and upside seems capped at USD 1740 per ounce and should be able to find a bottom in the USD 1350-USD 1450 zone [at all dips below 1550 an ounce, one may add a few units in the portfolio through ETFs in a staggered manner to the extent its not excessively leveraged. After finding this bottom, gold in all likelihood will prepare for the next phase of upside to the north of USD 2200 / ounce [some experts are calling for 2200 before a correction but at least on the charts, it seems improbable though not impossible :D]

Silver: Upside in silver in all likelihood will be capped at USD 35-36 an ounce whilst a bottom in all likelihood will be formed in the USD 22-25 band. There are a lot of articles floating on the web talking about a paradigm shift in the way silver is valued and there will be a sudden meteoric rise in the price of silver etc etc etc; now hot money does flow into precious metals with money printing policies of fiat currencies but such a paradigm shift is very unlikely in the next couple of years at least IMHO. Debt monetization basically brings in a need to honor monetary commitments be it on the sovereign side or punters betting on fluctuations. Silver is a higher beta metal and has more industrial use - the way technologies are changing in this digital world, that paradigm shift is very unlikely! However, it is as useful as gold as a hedge against inflation and at sub-30 values per ounce, it remains a good buy in the portfolio [unfortunately, Im not aware as to whether we have Silver ETFs / MFs in India]

Euro-Zone Crisis: Unlike what is being published in the media, nothing has changed in the Euro-Zone and the crisis will come back to hit harder in the coming weeks/months once the election phase is done with in core Euro zone countries

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