"Inspite of positive closing of US markets which bounced from lows on Tuesday night, Our markets turned volatile, due to unwinding of long positions and huge shorts created a head of derivatives settlement on 29.11.2007 ; anticipating down ward break out by majority of players. Nifty broke few important supports in the last hour of trade, due to triggering of stop losses, and closed below 5DSMA, where as Sensex is resting on 5DSMA exactly.
However, the positive feature is both the indices are holding above previous week's closings, the big rally in US & Europen markets on positive indication of another Fed rate cut on the ensuing FOMC meeting on 11.12.2007, and fall of Crude to US 91$, shall give phillip to the bulls, to give a gap up opening on Thursday, is a foregone conclusion. Since our indices, both Nifty and Sensex have completed 61.8% of retracement of previous week's range, they should give an upward break out initiating a fresh rally from today which might take the indices to test previous highs in december, with huge volatility.
Index funds would like to see the closing on friday, 30.11.2007, being the last day of the month, also to clear the October closings, to prop up NAV.
Strategy for the Day: Buy 5600 Straddle of Nifty in December series for substantial returns, intra day too.
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