Tuesday, May 15, 2012

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

No change in OI as far as Nifty futures are concerned whilst some increase in OI seen in BankNifty futures over the last 2 sessions; VIX is certainly not reflecting true price action.

Critical levels and outlook remain unchanged from previous posts; safe to assume that we will not close above 5032 before Thursday EOD. We had indicated that a close below 5032 would take us upto 144 points on the downside and that has happened. Whether the carnage stops at that or goes further lower remains to be seen. 4800-4840 is perhaps the last hope for bulls to stem the carnage that started from 5629, moved in a grinding fashion and accelerated over the last 5 sessions with a couple of relief rallies via short covering in between.

As long as the lows of Dec / Jan hold, we may see a positive surprise coming up on the bourses and the Diwali target of 5740 remains intact [this is for investments] closing below 4800 would increase the odds that the relief rally for 2012 was over @ 5629 and Nifty is heading for new lows this year itself [the odds seem low for that but caution is advised as going below 4994 on closing basis was also a low probability event that took place]

The reason why this aspect is being constantly repeated is that apart from the index heavy components, a lot of front line names are suddenly trading @ prices closer to the earlier lows of this year when spot Nifty levels were much lower; technical indicators are in oversold condition but no major reversal has been seen yet; first sign of strength will be 2 consecutive closes around the 5032-5092 levels or higher

Delivery based buying in installments won't do any harm because if one takes a longer term outlook, a lot of names are available at attractive prices - upsides will be led by Banks and Infrastructure IMHO 

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