"Markets have turned volatile on wednesday and finally closed marginally negative on average calculation of indices; There was late sell off on smelling bad news from overseas markets and Nifty futures discount almost touched 60 points in the last minutes of trade, indicating creation of huge short positions. Nifty was unable to clear 4500 firmly though 3 attempts were made in the last 2 days by bulls to keep the momentum. Our view that July closings shall offer stiff resistance is being validated and shall be confirmed today, based on US markets sell off our markets will have gap down opening and how far selling continues, due to distribution and at what level support emerges is a big question.
The first support comes at 4390 on Nifty which 50 DSMA and failing which the correction can deepen upto 4100 which is currently 200DSMA. Traders need to be extremely careful, as news is becoming murky once again from overseas and on domestic front too. RBI has come out with new norms on Asset Liability Management for the banks, which shall tighten the money from the system.
Strategy for the Day: Sell October 4500 calls on rallies and buy Sept 4400 calls on weakness creating a 'calender spread'
The day's range for Nifty shall be 4380(Support) and 4530 (Resistance); Sensex shall be 15055 (Support) and 15599 (Resistance)
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