EOD Analysis For 18th May 2012 and Outlook For 21st May 2012

After a long time, today Nifty futures witnessed a huge surge in OI 25 million+ but the other side of the story is that it came with the falls....VIX catching up with reality a bit [ideally it should be around 27-28 levels right now]

Critical Levels  remain unchanged for both Nifty and BankNifty from previous posts

EOD Analysis For 17th May 2012 and Outlook For 18th May 2012

My apologies at the outset as I could not update the blog yesterday. Such sporadic breaks can be expected for the next 3 weeks as I'm on vacation to enjoy which is my first priority :D

Critical levels and Outlook remain unchanged from previous posts; neither is OI seeing any major difference despite these price changes. Today was the 8th consecutive close below 5032 and hence this may act as the ceiling on closing basis until next Wednesday unless bulls manage to spring a very positive surprise.

Positive divergence seen in front line stocks like LnT but BankNifty has broken a crucial support level from the lows of Dec over the last 2 sessions. So until BNF does not take out 9600 with conviction, upsides may be used by seasoned hands to short.

EOD Analysis For 15th May 2012 and Outlook For 16th May 2012

No change in OI as far as Nifty futures are concerned whilst some increase in OI seen in BankNifty futures over the last 2 sessions; VIX is certainly not reflecting true price action.

Critical levels and outlook remain unchanged from previous posts; safe to assume that we will not close above 5032 before Thursday EOD. We had indicated that a close below 5032 would take us upto 144 points on the downside and that has happened. Whether the carnage stops at that or goes further lower remains to be seen. 4800-4840 is perhaps the last hope for bulls to stem the carnage that started from 5629, moved in a grinding fashion and accelerated over the last 5 sessions with a couple of relief rallies via short covering in between.

As long as the lows of Dec / Jan hold, we may see a positive surprise coming up on the bourses and the Diwali target of 5740 remains intact [this is for investments] closing below 4800 would increase the odds that the relief rally for 2012 was over @ 5629 and Nifty is heading for new lows this year itself [the odds seem low for that but caution is advised as going below 4994 on closing basis was also a low probability event that took place]

The reason why this aspect is being constantly repeated is that apart from the index heavy components, a lot of front line names are suddenly trading @ prices closer to the earlier lows of this year when spot Nifty levels were much lower; technical indicators are in oversold condition but no major reversal has been seen yet; first sign of strength will be 2 consecutive closes around the 5032-5092 levels or higher

Delivery based buying in installments won't do any harm because if one takes a longer term outlook, a lot of names are available at attractive prices - upsides will be led by Banks and Infrastructure IMHO 

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

OI in Nifty futures still hovering around the 22 million mark which makes it difficult to sustain upsides; for sustained upsides, we need at least 10% more volumes on the bourses

Critical levels and outlook remain unchanged for both Nifty and BankNifty

Nifty did not manage to take out 5032 today, making it the 5th consecutive close below 5032 levels; if it manages to take out 5032 on closing basis tomorrow, well and good for bulls else we can expect that to be the ceiling until Thursday EOD [following the sequence 2-3-5-8; intraday rises may go higher but closing above 5032 is the key - investment perspective remains buy the dips on delivery basis sans leverage. Trading of course depends on how much risk appetite one has and drop the losing leg @ predetermined exit points and ride the winning leg]

EOD Analysis For 11th May 2012 and Outlook For 14th May 2012

OI in Nifty futures still moving around the 22 million mark and VIX is notching up but certainly not reflecting reality of prices!

Today was the 4th consecutive close below the crucial 5032 support and it also marks the weekly close; we may not close above 5032 on Monday also; bulls need to stage a close above 5032 by Tuesday's close or else we can be below 5032 until next Thursday [following the 2-3-5-8 sequence]

Critical Levels and Outlook remain unchanged from previous posts; [the updated charts in yesterday's post should be self explanatory]

Enjoy the weekend and I will catch up with you on Monday EOD. Hope the shopping carts are active for delivery based buying - all seasoned hands always keep harping 'Buy Fear, Sell Greed and adhere to Stop Losses' but we fail to pull the trigger on all 3 signals most often than not :D

EOD Analysis For 10th May 2012 and Outlook For 11th May 2012

OI in Nifty futures marginally up by 1 million to 23 million and VIX still not reflecting the correct price action
Critical levels and outlook for both Nifty and BankNifty remain unchanged from previous post.

The deep discounts in BNF futures are a bit disturbing; we may have to wait till the middle of next week to see the regular 30-50 point premium and that too if spot prices start moving up significantly forcing shorts to cover

Will update 2 charts later in the day tonight with EOD price action on Nifty and BankNifty

Updated Charts [was excited with the IPL matches last night and didn't post these charts - lazy me....]

Nifty Daily Chart

BankNifty Daily Chart

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