As indicated yesterday, expiry day was bound to be filled with a lot of manipulations as far as Nifty spot was concerned. All the gyrations were taking place simply to cause maximum pain to Put Writers and yet again we had an expiry close well below open. Banknifty saw further corrections and markets are now deeply oversold. Some recovery is expected but that will happen next week. Volatility is expected to cool down next week. Volumes were extremely high today and Nifty futures OI for Aug + Sep series put together was about 38 million as we progressed through the day. Banknifty's badgering is particularly noteworthy as the high of Banknifty futures for the day was 9400 levels on futures prices and tanked all the way down to 9180 levels which is an indication of the level of selling we are witnessing on the bourses.
Unless market takes out 5092 on EOD basis on the upside, the upsides can only be considered as short-covering. Gold has corrected about 6% overnight yet equities are low. As I have mentioned, the Rate of Change has been very rapid for the last 12 weeks on both upside and downside. So a relief rally is likely to retrace about 50% of the fall from 5532 levels to 4800 levels i.e. about 5150 levels on Nifty spot. However, pure short-covering won't help and we need some fresh long positions created to attain these levels.
The last standing support level now is the 4780 levels below which we open for a retest of the panic bottom of 4675 that was seen in Feb '10. VIX is expected to cool down and options premium will fall from next week. The major concern with a lot of hot money now is margin requirements across asset classes. Average traders seem to have not learnt their lessons yet with the crash of Silver witnessed in June [over 30% value lost in 5 straight sessions]. Of course silver is a higher beta commodity and CBOT has had to continually raise the margin requirements for the speculative longs that were being created. Gold being a safe haven currency (or asset) may not correct so much so soon but a 6% fall overnight is trying to send a clear message from the big boys of asset management; Cash is minimal and hence sell-offs can be suddenly triggered to meet margin requirements.
Fresh positions should be taken from Monday to avoid carrying forward any risk over the weekend. While resk-reward ratio is in favor of Buy on dips for tomorrow, better to wait a little more till smart money digests all the news and reflects its intentions on the charts. As far as DP accounts are concerned, one can slowly accumulate mid-cap banks, FMCG and counters like LnT.
Detailed updates will be given tomorrow after the weekly EOD.
Unless market takes out 5092 on EOD basis on the upside, the upsides can only be considered as short-covering. Gold has corrected about 6% overnight yet equities are low. As I have mentioned, the Rate of Change has been very rapid for the last 12 weeks on both upside and downside. So a relief rally is likely to retrace about 50% of the fall from 5532 levels to 4800 levels i.e. about 5150 levels on Nifty spot. However, pure short-covering won't help and we need some fresh long positions created to attain these levels.
The last standing support level now is the 4780 levels below which we open for a retest of the panic bottom of 4675 that was seen in Feb '10. VIX is expected to cool down and options premium will fall from next week. The major concern with a lot of hot money now is margin requirements across asset classes. Average traders seem to have not learnt their lessons yet with the crash of Silver witnessed in June [over 30% value lost in 5 straight sessions]. Of course silver is a higher beta commodity and CBOT has had to continually raise the margin requirements for the speculative longs that were being created. Gold being a safe haven currency (or asset) may not correct so much so soon but a 6% fall overnight is trying to send a clear message from the big boys of asset management; Cash is minimal and hence sell-offs can be suddenly triggered to meet margin requirements.
Fresh positions should be taken from Monday to avoid carrying forward any risk over the weekend. While resk-reward ratio is in favor of Buy on dips for tomorrow, better to wait a little more till smart money digests all the news and reflects its intentions on the charts. As far as DP accounts are concerned, one can slowly accumulate mid-cap banks, FMCG and counters like LnT.
Detailed updates will be given tomorrow after the weekly EOD.
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