EOD Analysis For 16th March 2012 and Outlook For 19th March 2012

OI in Nifty futures was unchanged;

The budget day volatility is similar to 2011; Will be closely watching how markets react to this in the initial 3 sessions next week.

I have no access to any of the Indian channels and hence clueless as to what is happening in the Great Circus in Delhi [today's ring master is Pranab da :D] except for some news bytes on the web. I simply try to analyse the charts and this is what my seniors keep telling me; ignore the news and study the charts. IMHO most of the positives/negatives have been discounted by markets [today's volatility seems typical of a budget day to confuse people].

Markets are also aware of how good politicians all over the world are with budget projections and actuals; President Obama had promised to bring down the fiscal deficit to half when he assumed power; if anything, the budget deficit has widened by over 40% courtesy QE1, QE2, TWIST etc and has been consistently over 1.5 Trillion Dollars PA; Euro-zone Merkozy kept harping that things in control after bail-outs and no Europe QE [pleeeze spare us the smoke and fog mirrors - LTRO is nothing but QE!!] but we can see where and how things are and the contagion is still not showing any signs of cooling off; adding to the woes are that the risks have suddenly shifted from banks to tax payers in Euro-zone!

Bottom-line: we the mango people of India need to assess what best we can get for our hard earned money considering a CPI inflation of over 20% PA and real estate prices ballooning like hell. The IT exemption limit increasing marginally is a good sign.

Back to Nifty / BankNifty, critical levels and outlook remain unchanged. Current volumes are good for about 80 points to the upside and 150 points to the downside. We need at least 5% more volumes to go north of 5480-5532 levels. For 2 days in a row now, lack of volumes are ensuring that upsides do not sustain; However, it seems unlikely to go below 5177-5196 band at least for the next 1 week on closing basis IMHO


Erratta: March 21st marks Spring Equinox and not Summer Solastice as I had mentioned earlier [Summer Solastice is on 21st June]

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]

EOD Analysis For 14th March 2012 and Outlook For 15th March 2012

Yet another positive start to the day [and a gap-up] aided by positive global cues; VIX a shade below 25 and significant premium restored on Mar Nifty futures [was expecting a drop in premium as mentioned on Friday which happened for a brief while today but in the last hour, the premium was significantly high]

OI in Nifty futures hovering around 30 million at open today and another million added after Europe open; Nifty made 2nd consecutive close above the 5408 and the odds of Nifty 5532-5580-5608-5690 are high before the end of March series

The run up in infra/capital goods pack has been tremendous, especially LnT that added almost 100 points in the last 3 trading sessions. BNF has closed above the critical resistance of 10800!

Would just like to add here that with 2 more sessions to go before the Union Budget, we may see some wild swings and a round of profit booking before the end of this week. As long as 5177-5196 holds out on closing basis, March series is stacked in favor of bulls IMHO.

Just adding another parallel trendline to the image portrayed on 28th Feb '12

PS: 5850 is NOT the target for March series! [W1-W3 took 2 months so W4-W5 can be expected to go through the same time frame] If the middle trendline is not breached on upside, the last leg up may face truncation......truncation will reverse the upside and retest 5032-5092 levels at a minimum

Last but not the least, there are times when views amongst blog contributors are divergent and that does not affect our relationship in any way; it is also not our intention to confuse readers but to present our own interpretations of charts [sometimes we are right, other times not]; readers are encouraged to exercise their own discretion and adhere to SLs and Hedges;

As Raghuji always says, 'To Each His Own'.........

EOD Analysis For 13th March 2012 and Outlook For 14th March 2012

Positive start to the day aided by global cues and OI in Nifty futures was around 29 million in the morning itself; VIX cooled off below 25 as well and this is respite for bulls.

Critical Levels and outlook remain unchanged:

Recap:
2 consecutive closes above 5408 and Nifty opens for 5532-5580-5608 on the upside
2 consecutive closes below 5325-5348 band and we are likely to see a retest of 5177-5196 band [and this should be considered as floor for another 12 odd sessions unless some extremely bad news crops up]

Current volumes are good to sustain upside upto 5440-5480 levels and we need at least 5% more volume to sustain another 100 points on the upside. For downside, these volumes are good enough for 150 points fall :D

BNF has managed to pull off the upside targets so far; 10800 will be a strong resistance which if taken out on closing basis will open BNF for another 350-400 points. It would be prudent to trade light until Friday considering volatility and some headwinds

Dow/SnP 500 seem to be in a topping process and one round of correction is expected in the next 2-3 sessions. IMHO the odds of this is very high as the Advance/Decline ratio has been negative and volumes traded also have been quite low in the last few sessions. All these point to negative divergence and potential profit-booking. Dollar Index is expected to start scaling up towards 81 and all of these high probable events  co-incide with our budget session.

[I agree with Raghuji that we should let the charts guide us] but in these turbulent sessions, only experienced and/or disciplined traders can do well. So will end this post with a simple mantra given by Raghuji 'To Each His Own' - HHHHHHHH

EOD Analysis For 12th March 2012 and Outlook For 13th March 2012

OI in Nifty futures hovering around 30 million today and the gap-up @ open was plugged in about 2 hours of trading. There is one more gap [created last Friday] pending to be filled and we need to see how things pan out. Current volumes are good enough to trigger a 100-150 point move on either side. VIX is a shade below 27 and that should keep bulls a bit alert.

Critical levels and outlook remain unchanged from previous posts.

5177-5196 band survived yet another day on expected lines and to the extent that holds out, the odds are marginally stacked in favor of bulls but they need to take out 5408 on closing basis and sustain that.
Likewise, as long as 10400 holds out for BNF, there is room for this index to again try for 10800 [though closing above that can bring some more upside of about 300-350 points] 2 consecutive closes below 10150 and BNF opens for retest of 9800.

Again repeating what I had mentioned last week that March series will be volatile till 21st; Between 21st and 23rd March, markets will assume one direction and then Nifty in all likelihood will follow that direction for 2 weeks into April. Will be interesting to observe what happens around 16th/17th April as that will be 377 days from the 6th Apr '11 Swing Top of 5944 :D