Wednesday, May 9, 2012

EOD Analysis For 9th May 2012 and Outlook For 10th May 2012

OI in Nifty futures still hovering around the 21-22 million mark [have already factored May, June, July futures] and significant premium erosion in both Nifty and BankNifty futures [with BNF futures still going at significant discounts] VIX slowly marching up but definitely not reflecting true price action [it was swinging between 26-28 earlier this year at the same price levels!]

Critical levels and outlook remain unchanged for both Nifty and BankNifty from previous posts.

Today was the 2nd consecutive close below 5032; if Nifty does not manage to close above this level tomorrow, safe to assume that this level won't be surpassed this week.

On the stocks and sectors front, Reliance needs to take out 725, LnT 1225, Tata Steel 450 and of course my barometer BankNifty has to take out 9550 on closing basis to revive hopes for bulls IMHO

As far as investments are concerned, I hope the shopping carts are open now; the pending upside target of 5740 for 2012 is still intact as long as we do not breach the lows of Dec '11 IMHO. In fact a lot of counters are trading at levels closer to the lower levels earlier this year

Personal Clarification:
Time and again, I keep getting queries that my posts are confusing; one one hand I point out to potential downside on Nifty / BankNifty but still keep advocating buying

Again repeating myself that trading and investments are 2 different aspects all together;
I can switch between a bull and a bear as far as shorter time frames are concerned for futures that I trade - that is just for a 2-3 day time frame; as far as equities and index linked ETFs are concerned, I am bullish not just for the short term but longer term as well. When it comes to front-line equities, there is no doubt that falls are welcome opportunities. These are taken with 2-3 year time frames [minimum holding period is 1 year anyways to reduce the tax burden on gains, if any] So when I say good buying opportunity, it is purely in equities, against cash and not against margin that stays in the demat account. It needs a lot of patience and the right mindset to ignore the short term fluctuations.

I really find it surprising that there are instances when people were more than willing to pour in savings when front line counters were at highs [LnT at 1600+, JP Associates at 100+, IFCI at 65+, Hindalco at 170+ etc etc and now when these are available at much lower levels, people are reluctant to buy whilst still look to average positions in Punj Lloyd, KS Oils, Shri AshtaVinayak etc etc] - closing with Guruji's mantra To Each His Own - HHHHHH

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