"As anticipated, our indices had opened gap down, in a minute markets fell 10% over previous day closing, when the trading is halted as circuit filters were on. At 10.30 am FM came live on media to assure confidence, and Sebi Chairman's clarification on the position of roll over of positions to next series, as we are approaching settlement of this month series on 25th October'2007, brought confidence amongst investors, domestic institutions supported the indices, as they are having high cash levels. However, the indices, though recovered most of the losses during the day, finally closed in negative territory with negative breadth, leaving the gaps unfilled. As per provisional data, FIIs were net sellers in cash market and futures market, clearly indicates that our markets might have found a short term top at 19174.45(Sensex) and 5708.35 (nifty) for this month.
The long term trend is still intact, in case there is follow up buying which make these tops cleared with volumes, the rally will continue, unabated, otherwise in view of roll over of derivative positions to next month series, shall keep the indices volatile till expiry, in a broad range which was fixed in yesterday trading. Nifty futures closed almost flat to the spot, October series shed 9% open interest, while November series added 26% open interest at discount of 12 points to the spot point to bearishness in short term. Investors should use rallies to book profit, reduce leveraged long positions, and increase cashlevels, as they would see better prices in future to purchase the stocks of blue chips in the days to come.
Strategy for the Day: Buy 5000 calls on weakness in the market and 5700 puts on rallies for quick return in day trading.
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