Outlook for Friday

"Markets opened with positive gap, based on overseas cues, and traded firm throughout the session, and closed positive on the settlement day, since much roll was completed on wednesday itself. Nifty has closed at 4412.30 and touched intraday 4422.30. Though the indices closed verywell on the average price adjustment which takes place based on the last 15 minutes average traded prices, the last 5 minutes sell off indicates that today also there may be selling to book profits. Nifty last quote was 4389; Further the discount on Nifty September futures to spot closing is whopping 59 points; this points to the roll over of short positions, a head of some important data from US today on economy etc., by FIIs.

 

However, Nifty finally closed above june settlement price of 4282 but below July settlement price of 4619.80. Today being the last day of the  week and month the closing will indicate the completion of correction. There will be volatility today and for two more weeks till 15 Sept (by which date advance tax payment figures will be known) & 18th Sept (FOMC meet to decide on interest rates). RBI report released after trading hours, indicate that the effect of US subprime, though may not be felt in our economy, the volatility in exchange and financial markets and systems in US shall affect our corporate performance and economy too. For the present Indo-US nuke deal issue is kept on hold by forming a committee by UPA and left parties, to ease the threat on the stability of central government. Crude is trding around $74 and inflation data to be released at 12 noon may play on sentiments on weak end considerations.

 

Strategy on Nifty: One can go long on October Futures which trade at 72 points discount, and hedge it by going long on Sept 4400 puts at Rs.170 and sell October 4500 call at Rs.106 shall give substantial returns for medium term investors.

 

The day's range for Nifty shall be 4320(Support) and 4444 (Resistance); Sensex shall be 14725 (Support) and 15293 (Resistance).

Outlook for Thursday

"Our markets opened with a gap following global cues, and found support at 100DSMA immediately, and rallied to fill the gaps same day, defying the mood of all other markets. US markets rallied overnight on the hope that Fed would start cutting rates from 18th sept onwards, and recovered all losses posted on monday. The volatility was at its best yesterday, and shall continue today and tomorrow too, as markets are reacting to positive and negative news/whispers excessively on either side.

 

With our indices firmly closing above June settlement price of 4282, the party might continue on bear squeeze today too, Nifty might attempt 4400 today in the initial hours itself, and nifty is likely to settle above 4318.30 June closing, which augurs well for our markets, confirming the ending of correction.

 

Strategy for the Day:

 

Markets will be highly volatile, as observed and nimble day traders can go long on 4350 calls of Nifty in August Series on weakness and 4400 puts on rallies and book profits, intra day quickly, without waiting for settlement price.

 

The day's range for Nifty shall be 4282(Support) and 4404 (Resistance); Sensex shall be 14725 (Support) and 15293 (Resistance).

Outlook for Wednesday

"Markets were volatile as expected, due to alternate bouts of rollover of short and long positions to the next series. Analysis of Nifty futures data and the discount point out that the relief rally is over; and once again down move is on cards. Surprisingly the discount for August series which are expiring tomorrow also have huge discount of 18 points, with open interest addition point to the negative bias for today and this settlement. September discount is at whopping 45 points and Ocotber 57 points.

 

US markets tanked overnight on various concerns facing their economy, financial system etc., as investors dumped the equities and preferred to stay in cash; Both Dow and Nasdaq are on the verge of re-testing the 200DSMA once again and whether they offer support this time is anybody's guess. Our markets shall have gapdown opening and 4282 is june settlement closing, once breached it can be a field day for bears. Markets will be highly volatile today and tomorrow and day after so one needs to be very cautious, if trading to book profits and exit quickly.

 

The day's range for Nifty shall be 4200(Support) and 4365 (Resistance); Sensex shall be 14425 (Support) and 15080 (Resistance).

Out look for Tuesday

"Our Markets opened with positive gap and went up continuously through out the session, due to short covering in heavies, closed firmly above 20DSMA which was offering stiff resistance for the past few weeks. The next major hurdle comes at 50DSMA placed at 4360.88 (Nifty) & 14893.63 (Sensex) for today. The up move in the derivatives settlement week is no confirmation of any trend reversal as the roll over of short positions give such relief rallies.Nifty futures discount is just 5 points for August series wheras the same is 26 points for September and 39 points for October series. Thus, one should be cautious in taking longterm veiw as we approach the 4360 & 14900 levels on Nifty and Sensex today.

 

US markets were subdued yesterday on surfacing of negative cues relating to home sales data and its effect on economy etc., and closed negative. Our markets will be volatile today, as alternate bouts of roll over of short and long positions takes place today to next series. Traders can consider going long on 4200 calls on weakness and 4000 puts on rallies for quick returns today.

 

The day's range for Nifty shall be 4200(Support) and 4360 (Resistance); Sensex shall be 14425 (Support) and 14980 (Resistance)

Outlook for Today and This week

"After extreme volatility during the last week, the indices have closed positive on friday, and also week on week basis breaking 4 week successive negative closing. 5 being fabonacci number the closing gives hope that the correction might be over; the confirmation of which will be known during this week, which is quite crucial for determining the medium and long term trend of our markets.

 

The events poised for the week are many; Derivatives settlement on 30th; August monthly closing whether it would be, above June closing? Response of Congress Party/UPA to the concerns raised by Left parties on Indo-Us nuke deal; GDP data; over seas cues etc., The sad incident of twin bomb blasts in Hyderabad, on Saturday where 40 innocent civilians are killed and about 100 injured brought the focus on law and order situation, vulnerability of the civil life which naturally effect the sentiment of visitor (Tourists) and investors from abroad raising concerns on safety; Open interest postions outstanding more than 80000 crores are to be rolled over to the next series in the coming 4 days; nifty futures discount of 12 point for August and 29 points for September point to the negative bias in the markets. The small purchases made by funds around 200 DSMA are saving the markets from going into long term bear phase.

 

Undoubtedly, volatility will be at its best during this week, though we can expect positive openings and two way movement today and in the coming days, as shorts are to be rolled over to the next month series. In our view, it appears that nifty might settle around 4200 level on the settlement day; Buying 4100 calls on weakness in Nifty and 4300 puts on rallies can give good returns to the traders, who have the professional approach.

 

The day's range for Nifty shall be 4100(Support) and 4255 (Resistance); Sensex shall be 14080 (Support) and 14780 (Resistance)

Outlook for Friday

"Markets are volatile this week too, though global markets had stability, with the intervention of central banks to pump in liquidity to calm down the markets which were affected by subprime lending defaults by leading financial institutions, we are caught in a domestic political crisis of instability of central government on the Indo-US nuke deal.

Left parties stand on the issue of support to the government, in view of the hard postions taken by both PM and Mr.Karat on Indo-US nuke deal pursuation, came yesterday after market hours at 4p.m. from Mr.Karat himself: In his own words, he expressed that their stand on the pausing further progress / pursuation by government until the issues raised by them on Hyde Act, are clarified to the best satisfaction of all concerned, in National Interest, they are not going to destabilize the government, immediately. They await the response from UPA chairperson Ms.Sonia Gandhi, and toning down by PM that there exists an amicable solution to the issue, should calm the worry of investors throwing the nation into an unwanted mid term poll immediately, which of course no political party including left wish it at the moment.

Our markets underperformed asian peers during the last weeks, on these domestic concerns, domestic funds are appearing to be picking of stocks at lower levels and offering support at 200DSMA, which is giving a bounce, and 100DSMA is becoming supply zone from the worried, cautious investors and FIIs. Today our markets will have a relief rally, and the inflation data to be released at 12 noon may not be given much credence since, all eyes are on pricing the political risk from now on. Today markets will be volatile and finally close positive ending the 4 weeks of negative closing. Buying blue chip stocks in and around 200DSMA and exiting the same arond 100DSMA could be the best strategy for intra day/ week traders during this month.

The day's range for Nifty shall be 4000(Support) and 4255 (Resistance); Sensex shall be 13780 (Support) and 14780 (Resistance)

Outlook for Tuesday

"Following overseas cues, our indices opened with a gap and traded in positive territory through out the session, and closed positive at the end of the session; However, the performance of our markets is not euphoric as compared to asian peers, chiefly on domestic political situation, turning murky hour by hour. Nifty futures discount vanished during the trading and stands at just 4 points at the end of the session. The open interest position has not changed much, and flat to small discount on Nifty futures, suggests lack of confidence on the upmove.

 

Markets shall be volatile till expiry, depending on the positive / negative news flow in the coming days, as there is no dearth of the news domestically or from outside the country. Left parties core meeting is scheduled on 22 and 23rd, to decide on support to the UPA, in view of the firm ness stated by PM on the pursuation of nuke deal. Bank of Japan meets on 23rd to decide on rates. Mr.Pranab Mukherjee, External Affairs Minister makes statement and explains the Government position on 29th in Parliament are the events known as of now.

 

On rallies June closings Nifty (4318.30) & Sensex (14640.86) will offer stiff resistance, and the recent lows of this month made on last friday offer support, thus resulting in sideways consolidation - cum - distribution pattern for this month.

 

The day's range for Nifty shall be 4070(Support) and 4320 (Resistance); Sensex shall be 14040 (Support) and 14872 (Resistance)

Out look for Monday and Week

"The week gone by presented the most vulnerable situation of markets world over, the much awaited correction has set in and must have shattered the confidence of all players since one by one all technical supports got breached on the indices, and most of the analysts are writing off the bull run story of most of the markets including India. That is what happens in the markets, excesses on either direction, undue exhuberance or pessimism, which confuse the traders, where as long term investors who concentrate on the fundamentals of the stocks, economy are less disturbed and would be utilizing such panic situations to add to their portfolio.

 

For fourth week in succession the indices have posted negative closings on weekly basis, the surprise news of US Fed cutting the discount rate by 50 points came after close of our markets and before the close of European markets and opening of US markets on friday, changed the sentiment immediately and all markets closed positive with 2% gains over thursday. Our indices too found support around 200DSMA, though breached intraday, due to margin calls and triggering of stop losses, closed at the end of the trading above 200 DSMA  but below 100 DSMA. Nifty futures discount stands at 17 points as at the end of the trading on friday, gives indication of intraday squaring up of short positions, however the open interest still staying around 80000 crores, points to continuation of volatility for some more time.

 

In our view, the lows posted on friday Nifty(4002.20) & Sensex(13779.88) are excellent technical levels, which should not be breached during the next week, to gain confidence by market players. No doubt that our markets will open with a huge gap on monday initially, on the overseas cues and post gains, but the sentiment being shattered investors who stuck shall resort to selling on rallies from now on. Gap down opening and Gap up openings are not providing any opportunity for traders, and only people with right postions overnight are benefitted. Inflation data released showed that is moderated to 4.05% since the prices of petrol and diesel are not touched so far.

 

The Week's range for Nifty shall be 4000(Support) and 4405 (Resistance); Sensex shall be 13780 (Support) and 15100 (Resistance)

 

 

Outlook for Tuesday

"Markets opened positive and traded with lesser volatility than being experienced for the past 3 weeks, and closed positive at the higher end of the trading range of the day. As observed in yesterday's posting, this being the truncated week, tomorrow being market holiday on account of "Indian Independence Day" markets will trade in narrow range and might close flat to negative today, on profit booking strategy whenever there is a rally, this week. Nifty futures discount to the futures came down to 18 points from 34 points; shows that some of the shorts are out of the system. Caution to be exercised in adding positions on long side on rallies.

 

Immediate resistance is seen at 4388 to 4420 on Nifty for the day, and if this range is cleared with volumes and participation of all sectors and categories of stocks, then there will be confidence in the players that stability returned. Passing of Independence day celebrations peacefully, and the Left stand on support to Congress lead UPA government at Centre, since Indo - US nuke deal is becoming bitter between both the constituents of the government shall clear the fear on political risk.

 

Though the left have the track record of never withdrawing support and thus, allowing a government to fall, the risk is potential, as how and when political risk hits can never be anticipated / predicted. Such developments, if any, when happen definitely effect the sentiment and result in panic selling, which will be a golden oportunity to build portfolio of blue chip, growth stocks.

 

 

The day's range for Nifty shall be 4280(Support) and 4465 (Resistance); Sensex shall be 14720 (Support) and 15298 (Resistance)

Outlook for Today and Week

"Markets were volatile world over, with lot of confusion and pessimism doing rounds, on the sub prime concerns facing US economy and its spreading to other economies such as Europe etc., Our indices have closed negative for the 3rd straight week in succession, and some buying support emerged around 100DSMA on Nifty lead to recovery on the last day of the trading finally closed around 50DSMA . As observed by us, certainly index funds have seen to it that June closings are protected on closing basis for the day and week. So far in this correction, a pattern is emerging that July closings on indices ( Nifty4528.85 & Sensex 15550.99) have become supply zone on rallies where as June closings on indices(Nifty 4318.30 & 14640.86) are inviting buying or support from long term funds & investors.

 

Today our markets shall open positive and might trade positive in small range since it is a truncated week, 15th being holiday on account of Independence day, and volatility should come down during this week, so that some consolidation - base formation takes place, from where from next week on, clear direction will emerge. Nifty futures discount stands at 34 points as at the end of the trading on friday, clearly indicates that lot of shorts exists in the system, the fight between bulls and bears to continue for few more weeks until indices clear 4620 (Nifty) & 15777 (Sensex) which may not happen by August Settlement. Excepting Chinese index almost all indices in the world are forming similar pattern and currently 20DSMA is offering stiff resistance, as the sentiment is battered very badly in the last 2 weeks.

 

We feel that buying 4200 calls on weekness in the markets and 4500 puts on rallies in current series certainly is offering good returns for intra day / week trading. August Settlement might be negative over July settlement is the assumption.

 

The day's range for Nifty shall be 4320(Support) and 4475 (Resistance); Sensex shall be 14725 (Support) and 15313 (Resistance)

 

 

Out look for Friday

"Our markets opened with bull gap and traded firm in the initial hours of trade, and were giving the confidence that the worst seems to be over, However, technically July closings offered stiff resistance, as advocated in yesterday's posting, with the overseas news on spreading of US subprime woes to other areas and sectors, markets witnessed volatility once again. When European markets opened in the after noon, the news that BNP paribas has freezed the assets of 3 hedge funds has sent jitters to all markets which are open and trading. While US premarket futures showed heavy negative outlook, European markets opened and traded down 2 to 2.5% in opening trades itself, this forced our indices to give away all the gains of the day, and also slipped into negative territory quickly.

Our indices have closed negative for the day, which is unexpected by many, the triggering of stop losses around 4420 -4430 being suggested by many technical analysts, aggravated the fall in the vee hours of trading. Our suggestion to buy 4500 puts on rallies must have given the needed hedge, and if followed as intra day strategy also would have given substantial returns.

Those who are still long can hold till next week, since Nifty is in no hurry to climb 4500 till 15th August. Bearish cross over of 20DSMA over 5DSMA is still intact; currently indices are resting around 5DSMA placed at 4392.54(Nifty) & 15076.51(Sensex). Today being the last day of the week, and since indices have posted losses for two weeks in succession, an attempt shall be made by bulls and index funds to close the week on positive to flat note. Every thing depends on the inflation data to be released in the noon, and the pep talk that may come from RBI, FM and SEBI etc., before or during the market hours, as the authorities of EU and US FED taken steps to calm the markets yesterday on knowing the potential problem.

One important point to be remembered is that both India and China which are fast growing economies in the world are mostly insulated from direct impact of the US subprime vows; though indirect impact can be there, as is being witnessed, since major investors and players are FIIs in both markets. Contrarian view is, in case of serious problem in US and Europe on growth, corporate performance,

India is the safe destination, where the corporates are performing well, and the currency is also stable, and being an internal looking economy, with vast domestic consumption, which is also growing at rapid pace, any sudden falls like one we are witnessing is a gold opportunity to pick up Blue Chip Stocks, with proven track record of performance. To mention few, Wipro, Tcs, Infosys, Ongc, Reliance, Bharati, Reliance Communications, Itc etc., Though the construction sector, and engineering sector are favourites of all during this year bull run, the valuations look overpriced on current earnings.

Markets are likely to open in negative territory, based on overseas cues, but might get support at the lows posted during this week on 6th, which is the monthly low too, in case of steep fall. Trades can go long on 4200 calls in this series for quick returns, in case of nifty opening and trading below 4300 and can book profits on 4500 puts purchased yesterday.

The day's range for Nifty shall be 4364 (Support) and 4484 (Resistance); Sensex shall be 14845 (Support) and 15333 (Resistance)

Out look for Thursday

"Both indices opened with positive gap and traded in positive territory throughout the day, due to short squeeze, and closed positive for the day. One positive feature is indices have closed above 5DSMA and also above previous week closing. However, 20DSMA placed at 4485(Nifty) and 15332 (Sensex) offer stiff resistance in this bounce back rally. The next resistance comes at July closings 4528.85 (nifty) & 15550.99 (Sensex) for this uptrend. Volatility shall become part of trading during this month, as the players are divided on the future of earnings, inflation, exchange risk, GDP growth and Global slow down etc.,

 

Markets are likely to open positive and whether close above 20DSMA mentioned above shall give a clue as to the ending of correction. Portfolios can be hedged by long puts of 4500 in current series, to protect any unforeseen falls.

 

The day's range for Nifty shall be 4384 (Support) and 4482 (Resistance); Sensex shall be 15055 (Support) and 15401 (Resistance)

Outlook for Tuesday

"Our markets followed overseas cues and gap down opening brought the indices closer to sub june closing levels, which immediately attracted fund buying. The indices though traded in negative territory throughout the day and closed negatively at the end of the session, closed above June closing levels, is a comforting factor in the short term. FOMC meeting is scheduled tonight might announce some consoling measures is the expectation which lead to equal recovery of losses suffered on last friday in US markets overnight. What FOMC delivers can be anybody guess, and one has to be cautious on such speculation, in building positions.

 

Our markets looking for a reason for correction, after a spectacular rally has found, one in the US sub-prime issues, and are dancing in tune with US markets and other asian peers, since FIIs are the major players, while retail and domestic institutions are making limited purchases looking for reversal of trend signals. It is now Technicals more than the fundamentals at play, as very good news from a company, or for the sector is not being discounted by players and stocks continue to fall due to selling pressure.

  

We will have a definite gap up opening is a foregone conclusion, but selling might emerge at higher levels in the afternoon, a head of FOMC meet, but stability shall return to the markets for the day. One may liquidate the profitable long positions on rallies and purchase 4500 puts in August series as hedge for the portfolio.

 

The day's range for Nifty shall be 4304 (Support) and 4488 (Resistance); Sensex shall be 14720 (Support) and 15333 (Resistance)

 

 

Out look for today and this week

"Our markets have closed positive on last friday, owing to short covering based on overnight US markets cues, however, week on week basis they have closed negative for the second week in succession. Bearish cross over of indices (5DSMA being lower than 20DSMA) is a clear sign of grip of bears on the markets in India and world wide. The global correction doesnot seem to be over, US markets tanke hefty 2%on friday, though week on week the damage was not that bad.

 

This tuesday FOMC meet holds cue for the US markets performance, as the participants are divided on the assumption, what exactly is the economic scenario of US and the view and stance of US on rate revision. Stability could return to markets once all these turbulance settles. On the last three occasions, buy support emerged in the range of 4320to 4340 range last week and on any capitulation during this week, if this support is held then markets shall have to consolidate till 15th September and rally from there on. Higher implied volatility suggests that participants are expecting higher volatility, and in the worst case scenario of heavy selling 100 DSMA 4157.62 (Nifty) & 14159.26 (Sensex) should hold as valuations become quite attractive at that point.

 

The first sign of weakness can be confirmed on closing of indices below June closings (Nifty 4318.30 & Sensex 14640.86) for two days in succession, which will take the correction much deeper.

 

Strategy for the day: Buy 4200 calls on weakness and 4500 puts on rallies in August series.

 

The day's range for Nifty shall be 4304 (Support) and 4488 (Resistance); Sensex shall be 14720 (Support) and 15333 (Resistance)

 

Outlook for Thursday

"Markets are moving in synchronization with global markets, with a  day difference. July month closing was positive for our indices, but lower than the settlement levels of 26th was a clear indication of bear hold on the markets for August series. Sensex opened with downward gap yesterday, and went on to clear all technical supports throughout the trading day, closing at the lower end of the day. Nifty rested on 50DSMA giving some hope that the major selling is completed. June closing levels of 4318.30 (Nifty) and 14640.80 (Sensex) should invite support from long term institutional interest, since we are in a long term bull market. Bull market corrections are always, sudden, sharp, swift and also short lived. Both indices have corrected more than 5% from the recent life highs, and markets might stabilize and consolidate in a wider range during this month and till 15th September, before making the next upward move.

 

Overnight US markets closed positive after volatile trade till the end of the session, should give some relief to our markets too. Nifty futures discount stands at 58 point to the spot, as at the close of trading, confirms that heavy shorting was done both in nifty and stock futures. Positive opening shall invite short covering and continued buying can insist short squeeze, since our economy and corporate performance is very much on track, un like US, can force recovery in our markets with more vengence, since our markets have higher beta.

 

Strategy for the Day: Buy 4300 calls on any weakness in indices and hold them till expiry. One can construct calender spread by going long on August 4200 call at 185 and sell september 4550 call at 98 for substantial gains. Net out flow of premium will be 87 per contract, which will be the loss if August series settle below 4200 on the settlement day. Margin requirement shall be Rs.30000/- Maximum profit could be Rs.263 per contract which shall be 300 % in premium terms, in real value 38% on the investment for one month.

 

The day's range for Nifty shall be 4304 (Support) and 4445 (Resistance); Sensex shall be 14850 (Support) and 15235 (Resistance)