"Our indices have closed in negative territory for the second consecutive day, after a dream run, and were volatile during the entire trading session. However, the indices have posted gains 'week on week basis' for the 7th consecutive week, and 8 being fibonacci number, this week shall be volatile and might close negative. Political situation is becoming hot once again and increase in prices of petrol and diesel prices is being contemplated during this week as Indian crude basket crossed US $ 75 already. Q2 results of Infosys will be announced on 11th, which will decide the fate of Technology sector, since it is quite an underperformer in 2007, inspite of indices posting new highs and other sectors posting substantial gains.
ECB has left the interest rates unchanged at 4%, and Meryll Lynch declares $5.5 billion losses on account of subprime lending, which shall effect 50 cents of its EPS, number of other financials to declare the position as result season unfolds in US and other parts of the world. Though India is insulated from subprime vows, our domestic political situation, brings in volatility back. Sensex might scale 18K during this week, however, headline supply might halt the rally and markets shall consolidate in a range for at least two weeks from here on, and take the direction depending on the Q2 performance and political situation. Traders and Investors need to be cautious, and book profits at every rise of 100 points on nifty onwards and increase cash levels, for re-entering at lower levels, as and when markets take correction course. Power Grid listed with hepty premium as predicted; traded and closed above 100 giving 100% returns on the investment in a shorter period of less than one month. One can add this stock to the portfolio on dips, it is the leader in market capitalization in the power sector, and a monopoly in the business of power distribution, and infrastructure.
Strategy for the Day: Buy 5300 puts on ralllies and 5000 calls on weakness for quick profits and to capture the volatility premiums.
Since the indices are in an unchartered territory, resistances cannot be predicted, only supports to be observed, whether held or breached to know and ride the trend which is up now on:
Support for Nifty shall be 5100-5000-4940- 4880-4760-4678-4648-4564-4530 and for Sensex shall be17480-17160-16876-16500-16135-15950-15870-15555
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