Nifty opened with a gap-down courtesy weak global cues and went back to test the support of 4950-4960 zone as expected. However, with OI of over 28.6 million in Nifty Futures, the falls were quickly bought into which represented a gain of more than 60 odd points which is indeed remarkable. VIX shot up today and crossed over 27 yet again. Banknifty took steep cuts and so did some of the major counters like Reliance.
Short covering was seen in Banknifty that helped the rise but the rise could not be sustained for long. What is critical though is that the Nifty is still maintaining the psychological figure of 5k levels on closing basis. Banknifty is marginally above 9600 levels and can do another 150-200 points to the upside from here and if Reliance, LnT support then we should be able to see 5100+ levels on Nifty within a couple of trading sessions.
The crucial levels for this week remain as follows
For Downside: 4950 - 4880 - 4840
For Upside: 5020 - 5092 - 5120 - 5177
Unless Nifty gets a close above 5092, weakness will continue but most falls should be ideally arrested within the 4940-4960 zone for this week.
On the Upside, a close above 5092 will bring a retest of 5140 and 2 consecutive closes above 5092 will open Nifty for retest of 5177-5225 and if this zone is crossed over with volume and momentum, all gaps upto 5348 may be filled before Nifty resumes a downward journey.
On the Downside, a close below 4940 will make Nifty vulnerable to a retest of 4800 and 2 consecutive closes below 4940 will bring a retest of 4720 within 5 to 8 trading sessions from 2nd close below 4940.
Still difficult to recommend a Long / Short without a hedge. Long Positions in Nifty should be hedged with a Short Call and vice versa for Shorts i.e. Short Position should be hedged with Short Put. The covered Call/Put option is being suggested to protect the risk of losing time value in the options premium. Strict Stop Loss of 20 points to be applied to the losing leg and continue with the winning leg via Trailing Stop Losses.
For tomorrow, 4950-4960 zone will be the Buy Zone and 5092-5110 will be the Sell Zone on Nifty spot.
Hedge For Long will be Short 5000 CE 1:1 ratio and Hedge For Short will be Short 5100 PE 1:1 ratio
Gold prices are still high and may retest highs created in 1912 zone before correcting. Silver spot tried a crossover of 43.3 but has not been able to hold on to it. If crisis like situation prevails, this divergence between Silver and Gold price will continue. A close above 1912 on Comex gold will usher 2000 on spot price but eventual target of gold is 1450-1500 on spot price and this is a counter-trend rally led by fear.
Corrective counter-trend rallies do have a tendency to register new highs and in such cases, the ensuing correction is even more sharp. Rise in silver can be used to short outright via 3 month forward contracts. For Gold, better not to trade for sometime as the risks are tremendous on either side.
Short covering was seen in Banknifty that helped the rise but the rise could not be sustained for long. What is critical though is that the Nifty is still maintaining the psychological figure of 5k levels on closing basis. Banknifty is marginally above 9600 levels and can do another 150-200 points to the upside from here and if Reliance, LnT support then we should be able to see 5100+ levels on Nifty within a couple of trading sessions.
The crucial levels for this week remain as follows
For Downside: 4950 - 4880 - 4840
For Upside: 5020 - 5092 - 5120 - 5177
Unless Nifty gets a close above 5092, weakness will continue but most falls should be ideally arrested within the 4940-4960 zone for this week.
On the Upside, a close above 5092 will bring a retest of 5140 and 2 consecutive closes above 5092 will open Nifty for retest of 5177-5225 and if this zone is crossed over with volume and momentum, all gaps upto 5348 may be filled before Nifty resumes a downward journey.
On the Downside, a close below 4940 will make Nifty vulnerable to a retest of 4800 and 2 consecutive closes below 4940 will bring a retest of 4720 within 5 to 8 trading sessions from 2nd close below 4940.
Still difficult to recommend a Long / Short without a hedge. Long Positions in Nifty should be hedged with a Short Call and vice versa for Shorts i.e. Short Position should be hedged with Short Put. The covered Call/Put option is being suggested to protect the risk of losing time value in the options premium. Strict Stop Loss of 20 points to be applied to the losing leg and continue with the winning leg via Trailing Stop Losses.
For tomorrow, 4950-4960 zone will be the Buy Zone and 5092-5110 will be the Sell Zone on Nifty spot.
Hedge For Long will be Short 5000 CE 1:1 ratio and Hedge For Short will be Short 5100 PE 1:1 ratio
Gold prices are still high and may retest highs created in 1912 zone before correcting. Silver spot tried a crossover of 43.3 but has not been able to hold on to it. If crisis like situation prevails, this divergence between Silver and Gold price will continue. A close above 1912 on Comex gold will usher 2000 on spot price but eventual target of gold is 1450-1500 on spot price and this is a counter-trend rally led by fear.
Corrective counter-trend rallies do have a tendency to register new highs and in such cases, the ensuing correction is even more sharp. Rise in silver can be used to short outright via 3 month forward contracts. For Gold, better not to trade for sometime as the risks are tremendous on either side.
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