Outlook for Friday "Relief Rally on cards"

"Our indices have turned quite volatile as was anticipated during the month of November, 2007 in the absence of any domestic cues, totally aping global markets. Nikkie, Dowjones and Nasdaq entered bearish trend in the past few days, the rub off effect is felt on our markets too. Profit booking at higher levels and small buying support at technical levels of our indices, by long only funds are making our markets look resilient, though clear distribution cum consolidation pattern is visible on medium term charts. Bearish cross over has resulted in yesterday's trading indicating frim grip of bears on our markets. Since our markets have seen negative closings for 6 days in a row, a relief rally can be expected today. The way indices found support at 50DSMA ( Nifty 5393.99 & Sensex 18258.54) intraday number of times and closed firm in last minute short covering augurs well for bulls today.

 

Nifty spot and futures were at 5600 at the end of the session though on weigted average adjustment came down to 5519.35 (spot) & 5536.20 (November futures). We can expect gap up opening taking positive closings of European markets overnight, US markets were closed yesterday on account 'Thanks giving Holiday' and asian markets are indicating positive openinig after recent carnage. US futures after market hours point to positive opening today, however, volatility shall continue, as we are heading into settlement week, where huge outstanding positions are to be rolled over to December series. Inflation data shall be released at 12 noon shall be watched by players very closely, to guage the policy stance of regulators and policy makers.

 

Strategy for the Day: We expect Nifty to settle around 5850 on settlement day, as per the trading pattern observed till date, in derivatives; hence, one can buy 5400 calls on weakness and 5750 puts on rallies for quick returns today.