EOD Analysis for 30th March 2012 and Outlook For 2nd April 2012

OI in Nifty futures dropped to 26 million on expected lines, today being the first session of the new series. VIX cooled off significantly; over the next 8 to 10 trading sessions, we may observe call premiums[the extrinsic value part of it] dropping faster than put premiums as prices gyrate

Premiums on futures are pretty high at this point of time
Critical levels and outlook remain unchanged for both Nifty and BankNifty;

Recap For Nifty:
For Upside:
Initial sign of strength above 5348 and then 2 consecutive closes above 5408. Once this is achieved, there will be resistance at 5532 which if taken out with conviction opens Nifty for 5580-5608-5655-5690-5740 [the upsides will need to be supported with strong volumes]

For Downside:
Initial signs of weakness with a close below the 5177-5196 band after which 5032-5092 band will be the critical support; if this is also broken on closing basis, the corrections will be much deeper and the outlook given in the illustration below will get invalidated.

Recap For BankNifty:
For Upside: 2 consecutive closes above 10200 and BNF opens for 10400+ and 2 consecutive closes above 10400 opens BNF for retest of 10800 [very strong resistance level]

For Downside: 2 consecutive closes below 10150 and BNF opens for another 150-200 points to the downside [already happened prior to expiry once and tested 9900 levels]


Updating the Nifty EOD chart

The only other aspect of price action has been that for the last 3 weeks, the resistance offered by the red trendlines [to the downside from 5630] have not been taken out with conviction yet; if volumes and momentum favor Nifty next week we should be able to see a breakout to the upside

One leg down is due but whether that happens from here or from further up depends [50% retracement can be expected and if it is from here, that would mean {5306-5136}/2 + 5136 i.e. 5221; else whatever is the high created next week] Today's close is also significant as it is the monthly close for March as well and the closing has been strong on all 3 time frames i.e. Daily/Weekly/Monthly

Sensitive Dates for April series as follows

2nd April [Direction uncertain :(]
5th April  [Direction to be determined later]


16-18April - Very Very Important as this period coincides with 377 days from the 6th April '11 high of 5944 [My personal bias is negative for this period but will revisit as we come closer to this date]


23rd April [Direction to be determined later]

EOD Analysis For 29th March 2012 and Outlook For 30th March 2012

OI in Nifty futures @ 38 million on open itself and then another 4 million added during the day [roll overs and premiums are quite healthy for April and May futures] VIX hovering around the 25 mark;

Critical levels and outlook remain unchanged for both Nifty and BankNifty; these corrections are very healthy for the market and dips should be used to buy on delivery basis i.e. investment purposes.

In all likelihood we are in the last leg of the corrective phase and a short term bottom can be expected to be formed around 200 DMA [5032-5092 band in worst case scenario] Only a close below 5032 will have to be observed carefully in terms of volumes and sectoral rotations; Since tomorrow is the last trading day and 1st day of April series, volumes will drop and it would be prudent to wait until Monday before taking fresh guard for April series trading.

Spring Equinox did not have much of an impact this year as compared to last year :( April will be quite volatile with upside bias in the first half and downside bias in the second half of the month [As usual, highly sensitive dates will be updated in tomorrow's post]

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

EOD Analysis For 27th March 2012 and Outlook for 28th March 2012

OI in Nifty futures at 38 million in the first half of the day itself and VIX hovering around the 26 mark; 1 more session prior to expiry day and market seems to be generating opportunities/whipsaws depending on how one looks at it :D

Critical levels and outlook remain unchanged from yesterday for both Nifty and BankNifty

EOD Analysis For 26th March 2012 and Outlook For 27th March 2012

OI in Nifty futures hovering around 34 million on opening itself [37 million at close on expected lines as we move towards expiry] and rationalization on Nifty premiums continued today as well; BNF also had some strong corrections within the first 20 minutes of trade. 2 more days to go prior to expiry and such volatility will continue; fortunately VIX values in the morning were realistic for a change and compensated for the erroneous values last week IMHO.

Critical levels and outlook remain unchanged for both Nifty and BankNifty; to the extent 5150 holds out [worst case scenario 5032-5092 hold out, medium term trend is on the upside IMHO] However strength to be confirmed only after taking out 5348 [most important is 5408 for 2 consecutive sessions] Full throttle weakness with a close below 5032!!]

From an investment perspective, dips can be good buying opportunities especially in the infrastructure and banking themes. [IMHO best bets continue to be NiftyBees, BankBees, InfraBees for a major portion of the capital as they automatically capture at least the systemic risks - most of the experienced investors will advise the same thing and I am just following their footsteps.]

Last but not the least, an alternate price/time possibility with the condition for invalidation specified considering that normal Rate of Change for Nifty on EOD basis evens out to apprx 10 points per trading  day over a longer period of time