US Fed has done what it could do Finally! What else could be done to revive its economy?

I am just out of markets for a while concentrating on some project work, since only trading helps. US Fed has brought the rates to 0.25% the lowest and almost the next step could be follow Japan's way, of charging interest for keeping funds with Fed! Interest rate is a tool of monetary measures, which alone cannot stop recession, or revive economy, which I advocated some time back, now the prognosis has proved to be right.

 

US economy is suffering from excesses of past decades, and the protectionist approach it had to tourism after 9/11 incidents. Over leveraging by individuals and institutions, have spurred growth for some time, when defaults started haunting, every thing is collapsing like 'pack of cards'.

 

The real problem can be solved by prudence in spending and creating congenial atmosphere for growth, employment, productivity etc., which can revive US economy and inturn the world economy too, as it is the major part of global economy. US dollar being the defacto currency of the world trade, will influence the balance of payments of other countries to a large account.

 

Whether Indian markets especially Sensex closes above 10000 level at the year end will be crucial for knowing the trend for next year, corresponding level on Nifty shall be 3000!

 

Indian rupee has formed a tripple top at 50.50-50.70, which might bring some inflow of dollars in to indian economy and markets. Watch for the exchange rate movement for clues of our markets revival too.

 

Happy Trading!

Global recession is confirmed and the question is how long it lasts!

All markets are in strong bear grip, and every one is clear that the bull phase of 2003 to 2007 ended with indices giving away 65% of gains from all time peaks. All happened in much quicker time than every one expected, inlcuding me, though I predicted that 2008 is a tough year for equities and economies in January'08. US, UK and Japan are in clear recession as per the economic data revealed. The after shocks of financial crisis and credit crisis also is hitting indian economy and growth is slowing down here. The fall in commodity prices, weakenig of US dollar are offsetting the positive / negative effect mutually. No one thought Crude will trade below 60$ in the same year when it touched 148$ in 2008. Rupee moving from 39/$ to 50.50/$ has hurt FIIs badly this year. This is the problem with 'hot money'. it will evaporate in quick time.

 

Though crude came below 60$ Government of India is not considering the reduction in petroleum product prices, as they fear that demand shall inrease, putting strain on forex reserves as rupee is weak against US $. Oil marketing companies shall earn sizeable profits this year, and the burden on government to issue oil bonds or even pay interest is reduced which is good for balance sheet of GOI. Weakening of rupee is good news to Exporters to some extent, but there is no increase in profitability, as the finished product prices or billing rates in case of services are adjusted to the devaluation of currency. The major problem that industry and banking shall face will be meeting import obligations, with rupee not coming below 47/$. Certainly all the expansion programmes and import of Capital Goods etc., shall be deferred and put on hold as the project cost increased by 20% on the depreciation of rupee count itself.

 

Whether our markets have bottomed out? or when they will bottom out is the question looming in the minds of all investors, fund managers and analysts. The measures initiated by G-20 group and our own government, might arrest further fall below lows made during last month, Nifty(2252.75) & Sensex(7697.39) on 27-10-2008. For any reason if these levels are tested or breached, it will be good time to build longterm portfolio of blue chip stocks like, Reliance, Ongc, Infosys etc., Volatility has become part of life and markets which one has to live with for another 6 months atleast, until the stability of economies and recovery is visible. It will be traders with professional expertise who can make money now. Long term investors have to buy and hold for minimum 2 years for substantial returns.

 

Happy trading!

Nifty recovered 900 points from low of 2252.75 from Diwali onwards! Are we out of woods finally?

After hitting a low of 2252.75 on 27.10.2008, before Diwali, Nifty made a spectacular recovery of 900 points to reach 3142.10 yesterday. Similar pattern happened with Sensex too. All global markets have recovered in same fashion. What contributed to it suddenly? The rate cut by Fed, followed by JCB, RBI and now Australia all measures suggest that the global slow down and may be recession is being feared and anticipated. European banks too follow the rate cut move shortly. US economy is facing one of its worst crisis, and the Presidential Election results which should be known by today's evening, will set the tone for the measures that would be unleashed by new President. The markets will be reacting to the outcome of the result from today onwards, as the approach will be different if Obama wins.

 

Nifty has taken support at 5DSMA and faced resistance at 20DSMA yesterday, however, closed around 20DSMA level which is currently placed at 3131.03. When the indices have made 'V' shape recovery in equal number of days, we can expect a 'pause' from now, for some consolidation to happen in a range of 2800 to 3200, which would pave the way for next major either down or up move. Thus, investors and traders need to be cautious from now on, as the macro economic fundamentals have not changed in just 5 days. The bearish ness will continue till 31.03.2009 for certain till entire PN outstandings of unregistered FIIs are cleaned from the system as far as our markets are concerned, which I have been harping for the past one year.

 

Indian banking will face a new problem from now on, as loan defaults will increase due to volatility in exchange rates, commodity prices, and crash in realty and housing sector prices. The CRR cut, Repo rate cut of RBI though eased the liquidity problem temporarily, banks having mobilised long term deposits (more than two years) at 10% + levels, shall find it difficult to reduce lending rates, and there will be shrinkage in Net Interest Income from next quarter onwads, once they are forced to reduce PLR.

 

For now, 2008 has seen high of Crude and other commodity prices, Inflation, Equity indices, Rupee Depreciation etc., however, whether there will be reversal of trend in immediate near term? the answer according to me is a big 'NO'. Castles are built for years where as they can be destroyed in no time! The next bull rally can, if any, shall be from 2010 only!

 

Range for the Day: Nifty might trade in the range of 2800 to 3200 today. 

US Fed lowers rates by another 50 basis points along with discount rates, to ease credit crunch! October series end with huge losses!

Derivatives settlement on 29th saw some volatility, however, ultimately Nifty ended around 2700 levels as against previous settlement at 4110 levels, thus, posting huge losses for the month. 30.10.2008 was a trading holiday for our markets on account of 'Bhai Dhuj' and today is the last day for the month. US Fed has lowered the interest rates from 1% to 0.50% another cut of 50 basis points to ease the credit crunch, and they have just another 50 basis points left in their arms for future rate cut action. The indication though anticipated by many analysts, it alone cannot solve the economic and financial mess the country is facing right now. US recession is confirmed now, and UK Prime Minister too have made a similar statement recently. Dr.D.Subba rao, the RBI Governor who succeeded Dr.Y.V.Reddy too have hinted at slowing of growth of our Indian Economy and inflation target pegged at 7% level for the financial year ending 31.03.2009.

 

Though major Indian Companies are still posting better performance during this year, the sentiment factor from investors and the double whammy being faced by FIIs ...one fall in stock prices..coupled with weakening of rupee against US dollar, made them to unwind long positions and press for sales. So far it is estimated that FIIs have withdrawn about 12$ Billion dollars from our equity markets itself, shows the reason for damage of fall in prices. While ECB Norms are relaxed by RBI, which help inflow of dollars, still the companies having import obligations prefer to keep dollars abroad, as weakening of rupee make dent on their cost and earnings; Certainly importers are major sufferors during 2008, which puts the expansion plans on hold due to huge depreciation of rupee against US dollar.

 

VIX has closed at 68.35 on 29th and volatility shall continue as new series begin today. Nifty might trade in a band of 2500 to 3000 during the week.

 

Strategy for November: Buy 2700 Call and Put and hold it till the end of series for good returns.

Samvat 2065 brought lots of cheer to all equity investors worldwide!

Well, one of the toughest bearishness finally ended with the bounce back on monday, from the lows, and the gap up opening on diwali day (28.10.2008), posting 5 to 6% gains is good news for indian investors. In its first ever major move by US government to subscribe 125$ billion equity with major US banks and Financial Institutions, enthused the investors due to which US markets have posted around 10% gains overnight. All global markets have thus, found medium term bottom for now, however, the confirmation would come by next week, as US FOMC meets, BOJ decides on interest rates, major event will be the outcome of US Presidential Election result on 04th November'2008, where the mojor policy view will be known to US as well as global economies, once it is Obama or McCain will be the Next President!

 

VIX has closed at 70.27 indicating huge volatility a head, that too today being derivatives settlement day, we can expect two way movement. Better Stay away from trading till 31.10.2008.

 

One need to remember that we are in a strong bear market, and every rally will be sold into, by trapped bulls and investors. Thus, very long time investors, having capacity to hold for at least 2 years can start building portfolios, on every dip from now on.

 

Wish every reader and their family a Happy Samvat 2065!

Happy Diwali! Hope that this diwali onwards markets shall stabilize and give some relief albeit volatility and uncertainity on global front!

At the outset, let me wish all readers a Happy and Prosperous Diwali and New Year for most parts of India, especially North India! I Stopped writing since 21st as the prediction of deep bear market is confirmed in October'2008 once 3000 level on Nifty and 9900 on Sensex also were broken effortlessly, due to panic unwinding of long positions a head of derivatives settlement on 29.10.2008 for this series, and bears who were licking their wounds in the last 4 years bull run were on spree and making merry of the situation. Now that the hardcore optimist and the last strong bull also might have thrown his towel and started looking at the stars and consulting astrologers for respite, and is confused, I feel markets are near the long term bottom. The lows made yesterday i.e., on 27.10.2008 on Nifty (2252.75) & Sensex (7697.39) are very close to the previous 8 year bear cycle tops, which should hold from now on. Though the markets shall witness strong relief rallies as they entered oversold positions, return of bullish ness can be just forgotten for few months. Only professional traders with strict discipline and technical stop losses can benefit from the bearishness cum sideways consolidation which will continue for at least 12 months to 24 months before the highs made in this year are challenged.


VIX has touched an all time high of 90.02 yesterday with markets bouncing from lows of yesterday, indicates that we are near medium to long term bottom. Though other markets work full session, it is a holiday for markets and banks in India. A Special session of Muhurath Trading will be held between 06.15 p.m. to 07.15 p.m. which will certainly see upside initially, and some selling by traders who went long yesterday at bottom, as it is the sentiment which people believe that some gains are to be taken home today which will bring prosperity for the entire year Samvat 2065' Tomorrow being the Derivatives settlement day, we can expect positive closing today and tomorrow.

The range for Nifty: Today Nifty might trade in a narro band of 2400 to 2600 due to short session.

Strategy for the Day: Go long on 2400 calls and book quick profits today or tomorrow, as Nifty might settle tomorrow above 2500!
vrk

VIX touches high of 74.80 and closes at 57.13 amidst volatile moves with small gains!

The technical levels indicated in yesterday's posting seem to be offering some support as indices entered oversold zone, with huge two way volatility, indices have finally closed with small gains, as the global markets too supported such move. RBI has cut Repo rate by 100 basis points, inducting further liquidity in to banking system, ending rate hike for now, and the banks should now pass the benefit to borrowers reducing the lending rates, as CRR also is brought down by 250 basis points from its peak level of 9% during the last one month.PM's statement in Parliament 'suo motto' confirming and assuring the house and people of our country that all bank deposits with Public and Private banks are safe, should calm the nerves of investors and depositors, after seeing series of large banks and financial institutions failure abroad in recent times. The inflation also has cooled off to 11.44% as reported last week, Crude has corrected more than 50% from its all time peak of 147$ suggests that the excesses of the commodity and equity markets are adjusted to maximum extent. US markets have closed with gains over night and asian markets trading positive territory.

 

5DSMA of Nifty is currently placed at 3264.70 will be the first hurdle to be conquered by bulls and it should close above that level on weekly basis, initially, for confirming some base formation. RBI's stance in the ensuing Credit policy meeting on 24th is already indicated with Repo rate cut yesterday, that liquidity management, without hurting growth of the economy shall be the main azenda.  28.10.2008(Diwali...Lakshmi Puja) an important festival for most of the business people especially entire North India, where the new accounts are started, and equity markets too in our country give importance to 'muhurath trading' should give some smiles to the investors and broking community finally, as this year has been torchure for all class of investors and traders so far not only Indldia but also in all markets. It should not be construed that the bear market is over and bull markets have begun where every one makes easy money!

 

Systematic investment periodically, or professional trading with strict discipline shall always give returns in the long as well as short term, irrespective of whether we are into bull market or bear market! Following professional advise, along with self analysis and taking informed decisions on investing in stocks and exiting the same, based on one's own risk perception, always benefits anyone. Buying stocks on gossips, romours, on suggestion from persons who have neither fundamental nor technical knowledge can be disastrous, and indian investor is hurt number of times viz., 1992, 2000 and in 2008, that is the reason why, percentage of households investing in stock markets is the lowest in world even today. Singapore Nifty futures are currently quoting at a premium of 49 points should give positive opening initially for our markets today. The put call ratio of Nifty has touched a low of 0.71 indicates huge shorts in the system, and this level was the bottom of this index on number of occasions, where markets have formed short to medium term bottoms. Thus, derivatives settlement next week, it is to be seen whether some short covering rally will push the indices up in the days.

 

Range for the Day: Nifty might trade in the range of 3100 to 3250 today.

 

Sensex retraces to 61.8% level from its all time peak and closed below 10000 after 28 months! What next?

The ferocity with which all global markets have fallen during last week and in October surprised and shattered the investor's confidence very severely. Stocks have reached such levels which were never imagined by even the hard core bear in a such a short span of time, all this happened while commodities are cooling like crude touched 68$. The correlation that is being drawn by some experts that funds from equities have found their way into commodities also is proved to be wrong in this mayhem, as equities, commodities, currencies everything is seeking lower levels, fearing the 'Global recession'. The short term measures or instant solutions sought by regulators and government in US have compounded the crisis, which is quite deep and serious, and has spread to Europe and other economies too, gradually. However, one need to understand that life does not stop here and markets will not become 'zero' the index stocks will not become 'zero', and these cycles of ups and downs are common in markets, businesses, even for that matter lives of individuals.

The irrational exhuberance is observed in strong bull markets like one which ended with bursting of 'Reliance Power' IPO in January in 2008 for our markets, and the unreasonable pessimism shall come to halt very soon too. Brave hearts who stayed or increased cash levels can pick of quality index heavy weights, which have domestic market share, from now on to build portfolios, however, no one has any iota of doubt right now that we are into a prolonged bear market, which might take one year to three years from now, before we seek new "high". The illiot wave theory and Dow theory etc., indicate the levels where reversals can happen, based on past historic analysis to near perfection, but base building has to happen before the next bull market begins which will be be much stronger than what we witnessed in the last 4 years, as Indian economy is going to make strong strides to post double digit growth in the coming years, where investments would follow once the political situation, regulatory mechanism are in place. RBI's Credit Policy on 24th October'2008, which will reveal the mind of New Governor Dr.Subbarao, will be watched for clues on monetary situation, currency and inflows strategies, apart from how the indian banking will be geared to be insulated from the perils being faced abroad etc.,

Senex touched a low of 9911.31 on friday, the 61.8% retracement from all time peak being 9914.20 indicates completion of correction, and markets should now move in a band to build base. However, Nifty's corresponding level 61.8% is currently placed at 3006.67, shall be the last support or hope for reversal of bearish trend and some relief rally that can be expected, as markets entered oversold territory on all indicators. Absence of buyers rather than selling is depressing the markets more than anything, and calmness should return before 'Diwali' but we will be in tradeable markets only, or one should have long term horizon of at least 2 years to get good returns. Volatility will be high, as the bears will press for sales at every rally, since bulls have completely vanished for now.

Nifty has firmly settled in 3000 to 3500 band, as observed last week, and this range should hold this week and for some time now, thus, any weakness should be used as a buying opportunity for intraday trading.

Range for the Nifty: Nifty might trade in the range of 3000 to 3200 today.

Strategy for the Day: Buy 3000 calls on weakness and hold for 2 days or till derivavtives settlement with suitable stoploss as per the risk perception of the trader/investor.

RBI cuts another 100 basis points of CRR yesterday after market hours to infuse liquidity!

After touching 3648 on Nifty, selling emerged, supported by weak global cues, markets had a down tick day due to huge cut in Larsen & Toubro shares. Nifty closed below 3500 yesterday, indicating that the relief rally might be over; bear grip has tightened and bulls are totally absent, in these extreme pessimistic situation all around the world on all parameters. Now, it appears that Nifty would settle in 3000 to 3500 band from now on. 3178.55 is the 50% retracement level, once gone, then the next level of support can come at 3000 psychological level, or at 2630 level where the first raising gap left unfilled since 14.06.2006. VIX has closed at 46.07 indicating higher volatility, Singapore Nifty futures are currently quoting at 225 points discount suggests gap down opening, as US markets tanked last night on Bernarke testimony that there shall be 'no quick recovery' possible inspite of US government coming forward to major banks by infusing capital directly. Asian markets are in dumps and trading with huge losses. Crude cooled to 75$ is no relief since the fall in price is being attributed to demand slowdown (destruction) as global recession fears strengthening.

RBI has reduced another 100 basis points of CRR yesterday after market hours, thus finally bringing CRR to 6.5% to provide liquidity with banks in India, may not have any positive effect in immediate short term on the sentiment for our markets. Markets ignore positive news in bear markets and over react for any negative news and vice versa in bull markets. 5DSMA of Nifty is currently placed at 3428.31 itself could not be held even yesterday, suggest further weakness.

Range for the Nifty: Nifty might trade in the range of 3180 to 3520 today.

Strategy for the Day: Buy Nifty futures at the opening with a stoploss of 50 points below the purhcase price for intra day gains, if one is a very high risk trader.

Week has begun on strong note, as global markets entered oversold zone! Crude cooling to 80$ also helped the recovery!

All markets have posted gains on the first day of this week, after a historic mayhem week. Crude is hovering around 80$ and with US markets posting one of the largest gains in percentage terms overnight, is already having its rub off effect on asian markets. VIX has closed at 46.49, and Singapore Nifty futures are currently quoting at a premium of 162 points, suggests strong gap up opening for Nifty & Sensex, where short covering can push above 3500 zone, which I was referring yesterday. 3700 to 3800 area which offered strong support on 4 occasions earlier shall be the supply zone for this relief rally. Volatility levels are  high, once again, so trading with leveraged funds will hurt severely, if caught on the wrong foot.

 

5DSMA of Nifty currently placed at 3498.49 shall be comfortably overcome today, and 20DSMA is currently placed at 3915.38 will be far away to reach. Nifty might trade in the range fo 3500 to 3715 today, with an upward bias. Buying at the opening may not give any gains, when such huge gap up openings occur. However, investors who entered at lower levels on friday, with courage, can book 50% profits around 3700 levels on Nifty, as the bear grip will not be let loose in near term.

 

One should watch the Rupee : US dollar exchange rate, vs indices movement, to understand the FII flows and their activity, who are literally dictating the fate of all emerging markets. If indices go up with buying from FIIs rupee will strengthen from 48.10 to say 47.40 , 47.10 in the days to come. Naturally with 5% gain on exchange rate and 15 to 20% gains on indices, once again they will off load the trapped PN holding positions, as we near 31.03.2009 dead line set by SEBI. Thus, one need to understand and look from all these various permutations and combinations.

 

Range for the Nifty: Nifty might trade in the range of 3520 to 3720 today,

Global financial tsunami hits Indian shores (equity and currency markets)

At the outset let me inform all viewers that I was away for the past one week on some important project work, due to which could not post daily views. The week passed was historic, all global indices touching new lows in 2008, rupee's breaching 49 level, due to heavy rush for dollars as FIIs continued to press sales from Indian markets. RBI has cut CRR by 150 points in total during the week to ease the liquidty. Crude crashed below 80$ is a good news for our economy, but the advantage is offset by weakening rupee, thus, the strain on Balance of Payments stands as it is. The Infosys disappointing performance for the last quarter and lowering of dollar guidance for 2009, naturally sent shock waves, confirming global slowdown, amongst investors. The valuations look quite mouth watering, but in deep and prolonged bear market, valuations does not attract any investment, until some stability on macro picture emerges.

 

CBOE index has shot up to 70 an all time high, suggesting more weakness and volatility for US markets, which had free fall last week, surprising all technical analysts. Fed action to reduce the rates by 50 basis points to 1.5% did not help to bring any calmness, as the financial mess in US is spreading now to European economies, since some skeletons are coming out of cup boards.

 

VIX closed at 44.70 on friday. Asian markets are trading in positive territory in positive territory, Singapore Nifty futures are at a premium of  115 points currently, might give positive opening for our markets today. Last week I have written that the Nifty has shifted to 3500 to 4000 band, after so many months, and expected it to hold 3600 hold on any weakness. However, once 3700 to 3800 band is broken which offered support more than 4 times, hell was loose on Nifty, which made a new low of 3198.95 on friday(11.10.2008) which almost completes 50% retracement from the all time high of 2008 made at 6357.10.

 

Consolidation cum base building should happen which gives prolonged sideways movement for the markets, with a long term bias clearly being down, sell on rallies always gives an opportunity pick up the same stocks at much lower levels, as this bear phase is not going to wither away at least before one year from now. It is to be seen whether Nifty will bounce back above 3500 during this week or settles in the next lower band of 3000 to 3500, as results from other sectors and companies start trickling in slowly.

 

Range for the Week: Nifty might trade in the range of 3000 to 3500

Inflation at 11.99% but selling continues on Dalal Street which make 2nd weekly closing below 4000 level!

Nervousness on Dalal Street continued a head of passage of Bail out package by US House of Representatives and inspite of inflation taming to 11.99% profit booking cum bearish ness continued which resulted in yet another weekly losses, thus, finally Nifty closing below 4000 levels firmly confirming the trading range shifting to 3500 to 4000 as feared. US markets have closed with losses on friday and later in the week end the package is passed by House of Representatives. CBOE index rose to 48.4. The implementation of the package and how it will help in recovery of the financial system are to be watched. The actual system is 60 trillion $ and the bail out package being 750$ shall be pea-nuts if the problem is deep and wide spread. US president's signature to Indo-US deal cleared by the House Representatives is still to be done, thus, the accord is put on hold by India, though the secretary of state was here on saturday and sunday.

 

VIX has closed at 35.10 and Nifty futures have closed at 20 points premium on friday. This is again a short week of trading for our markets on account of trading holdiday on 09.10.2008, being the Vijaya Dasami. 5DSMA now is currently placed at 3905.11(Nifty) & 12828.07(Sensex) will be the initial resistances on any attempt by bulls to take the indices up, rupee being held around 47 levels against US dollar, SEBI's meet on review of PN guidelines introduced in last October 2007, shall have influence of FII flows and sentiment from tomorrow. Results of tech sector and other export oriented sector, should have naturally been benefitted with depreciation of rupee by 17% in the last 3 months against US dollar, but, most of them have hedged around 41-42 levels, as no body expected this steep fall, inspite of cooling of Crude and other commodities and also fall of US stocks and markets. FIIs are reported to have sold 9$ billions so far in the last 9 months during this year, and might continue to unwind the PNs to meet dead line of 31.03.2009.

 

Asian markets are trading in negative territory, Singapore Nifty futures are currently quoting at a discount of 

115 points suggest weak opening for our markets too initially. 3814.26 is the 40% fall from its all time peak of 6357.10 recorded on 08.01.2008, should be held on closing basis dailly for any base building for expecting reversal of the bearis trend. Failure to sustain this level, shall push the markets into further deeper bear phase in the coming weeks and months to much lower levels like 3646.40 & 3006.67 where the bear market could end.

 

Range for the Week: Nifty might trade in the range of 3600 to 4000 during the week.

US markets close in red and CBOE volatility index shoots upto 45.27! Our markets too may have rough ride!

US markets have closed with losses as the investors were nervous with the revised bail out package approved by US Senate, which will have to be cleared by House Representatives now. The current form of package ensures safety of depositors, small and medium families and businesses, rather than capitalising ailing banks directly. The deposit insurance is raised from $100,000 to $250,000 is good for the above category, but increases the cost of insurance of banks and financial institutions, which are already down with losses on account of heavy provisions. The proposal to clean the balancesheets by purchasing troubled loan assets, which are illiquid, directly by Government, would have helped the financial system, to get fresh lease of life to move on. The administrators though wished this method, in the first instance, the senators are shrewd to protect the depositors and investors rather than the share holders and management. The bad management need not be protected and they have brought this situation troubling the US economy due to reckless practices of misuse of securitisation concept, building castles without any base and adequate capital adequacy norms, and risk management systems in place. Thus, though in the short to medium term there is no perfect remedy or solution to the crisis that is being faced, the measures initiated and approved by Senate are good in the long term for US financial system and economy.

 

As an ex banker, I just wonder, how banks all over the world, including in India, lend at higher rate to a weaker enterprenuer (with lower credit rating), and give concessions even below 'prime lending' rate to a strong and sound businesses. Actually, it should be otherway round. The small and medium sized businesses which have to compete with large players in the market economy, where 'concept of Global village' concept is in vogue, should be encouraged with cheaper credit, thus, every one survives. This shall be in tune to charge or collect the revenue, taxes, interest etc., proportionate to the incomes or returns.

 

Our markets will open weak initially and shall be volatile, as Singpore Nifty futures currently are quoting at a discount of 78 points, and the inflation data to be released in the after noon, if comes below 12% might bring some stability at the end of the session. However, it will be intersting to see whether Nifty closes above 3985.25(previous weekly closing) and able to conquer the 4000 mark today.

 

Range for the Day: Nifty might move in the range of 3840 to 4040.

 

Indo-US Nuke deal cleared and will be signed on 04th October' 2008! Nifty faces 4000 level as a supply zone!

Our markets are closed today on account of Gandhi Jayanthi holiday. Yesterday our markets added some more gains, however, Nifty 4000 level proved to be supply zone, and profit booking on account of a holiday a head, also kept markets subdued. However, both indices have closed around 5DSMA levels at the end of the trading. VIX has closed at 35.54. Indo-US Nuke deal was cleared by House of Representatives paving the way for signing of the agreement between two coountries on 04.10.2008, which makes availability of transfer of technology, availability of fuel etc., helps India to use for Civilian Purposes. The real benefit will come afte few years, but the base is now clear makes our position advantageous solving the infrastructure problem.

 

US Senate has cleared revised bail out package of 700$ Billion today at the early hours (IST), has paved the way to seek House of Representatives clearance today or tomorrow. Asian markets posted losses today, and US futures indicate weak opening, as the bail out package in the revised form shall not straight away solve the problems being faced by the financial sector and that too immediately. Jobless claims data has come at its 7 year peak also will keep the sentiment weak tonight. While our markets open tomorrow for trading after holiday, will certainly follow overnight US cues and being the last day for the week will have lack luster trading. Crude has cooled down to 97$ is welcome news, and rupee also closed at 46.62 against dollar yesterday after breaching 47$ levels. As of now, this 47 level will be defended by RBI and it might trade in the band of 45 to 47 for some time, may be till October 24th Policy meeting and measures if any to be initiated will affect the currency either way. The fall in crude price being offset by depreciation of rupee, thus the fiscal situation in India is not much affected currently. In case of more FII flows from next week, based on results expectation and performance of corporate sector.

 

Inflation data which is due to be released today, is deffered to friday, tomorrow, as today is a central government holiday. It is estimated that inflation might be below 12%, which comes true will improve the sentiment for equities, as RBI might hold monetary tightening for some more time, at least policy meeting.

 

 

Yet another new low of 2008 made and huge short covering lifts indices everywhere ending bearish streak!

Owing to global weakness our indices opened gapdown to register new lows for 2008 on the last day of September 2008, month and quarter, which confirms how bearish the markets have been in the year so far. The sentiment among all class of investors is at its lowest ebb, still capitulation situation is yet to be reached, where equities will be 'no no' to every one, and under such mood generally bear markets bottom out, and consolidate to form a base for reversal of trend. So far indices are making new lower tops and lower bottoms continuously and moving in a downward sloping channel. Nifty registerd 3715.50 low which is not any technical low, though the bounce from this point due to huge short covering lead by banks, rate sensitives and tech sector lifted Nifty to 3960 levels. One interesting feature need to be remembered is so far nifty moved in the band of 4000 to 4500 in the last quarter, and whether the band is shifted lower to 3500 to 4000 is be seen during October month, in which case, the bearishness will continue further, with intermittant relief rallies and bounces. Nifty closed at 3921.20 yesterday, thus, posting month on month losses, more than it posting quarter on quarter on losses for consecutive 3 quarters is most disturbing fact for bulls.

 

The trend is resembling the situation in 2002 when indices have posted 3 consecutive quarterly negative returns, post 9/11 crash world over, and the good news could be the markets consoldiated for one year from there on to rally into a strong bull phase where indices posted 7 times gains in just 4 years. Thus, in my opinion, one year down the line from today by next diwali this bear market cum base building should be completed, from where we should see the 'mother of all bull markets'. Long term investors using every weakness to accumulate quality index heavy weights will have multifold gains in future.

 

VIX has closed at 37.19 with volatility raising once again, put-call ratio is below 1 indicates that bottom formation may be in place. US markets had relief rally as other markets too had yesterday night, on the hopes that some other plan to save the current financial crisis/mess will be taken up by the authorities by this week end. Asian markets are trading with gains, and Singapore Nifty futures are quoting with premium of 48 points currently shall give positive opening today initially, and Nifty shall face selling pressure at 4000-4040 level as our markets are closed for Gandhi Jayanthi holiday tomorrow, (02.10.2008), as traders would like book profits and do not carry overnight positions, in these high uncertain volatile times.

 

Range for the day: Nifty might move in the range of 3820 to 4020 today.

Our indices make new lows in 2008! Fall out of US bail out plan brings melt down of US markets overnight!

On the news of UK financial system also facing similar problems haunting US financial sector, lead to steep sell off in our markets along with asian and european markets, which resulted in Nifty and Sensex making new lows for 2008. Nifty bounced from the new low of 3777.30 in the final hours on short covering, as some hope was there on the possible bail out package passage by US congress to night. Sensex touched new low of 12402.84.Today, as the bail out package is declined by US congress US markets have posted one of the largest cuts in recent history. Asian markets are already trading with huge losses, Singapore Nifty futures are currently quoting with a steep discount of 180 points makes a foregone conclusion of weak opening for our indices at the opening. The question is how steep the cut will be and where and whether any buying support can emerge today, and bounce or relief rally can emerge, as indices and stocks are entering oversold territory. The romours that ICICI bank management was also selling the stock, brought it down below 500 and there was some nervousness among retail investors overnight at ATMs cueing up for withdrawing some cash. This feature has become a common scene for the past few years, though the Indian banking system especially ICICI Bank regulated by  RBI is well capitalised and not having any such serious problem, excepting that the profitability might affect as they have exposure to overseas investments to the extent of 4.5$ Billion across globe. VIX has closed at 34.90. CBOE index has shot up by 35% to 42.72 suggests the higher volatility to continue in US markets, which affect other markets including india.

 

Today is the last day of september month, quarter and halfyear where actually some buying or relief rally is expected by me in the earlier posting, hoping that Nifty would close above June quarter closing of 4040. This hope is now belied due to the turn of events, as pessimism is dominating all around the world; Nifty put-call ratio has come to 0.90 is the first sign of market nearing the bottom. Thus, inspite of weak opening of 150 to 200 points down on Nifty some buying coupled with short covering should see markets recover in the later half. One thing is certain that markets will have wild gyrations, as volatility raises, whether 3800 on Nifty and 12500 on Sensex will be held on closing basis need to be watched. Any closing below these levels, will brew some more trouble and panic among our markets too from tomorrow. Nifty broke the lower band of range suggested in yesterday's posting i.e., 3800 intraday yesterday and closed at 3850.55 yesterday. What is in store today cannot be predicted as things are fast changing every minute across globe!

 

Range for the Day: Nifty might move in the range of 3700 to 4000 today.

 

Strategy for the Day: Buy Nifty futures at the opening with a stoploss of 50 points below the purhcase price for intra day gains, if one is a very high risk trader.

Indo-Nuke Deal cleared by 2/3rds majority by US Congress! 250$ Billion bail out package finalised by US govt!

Friday, our markets experienced selling pressure, due to week end consideration, and uncertainity on the proposed bail out package of 750$ Billion by US authorities to avoid crisis in financial system, though US markets posted gains on thursday. Nifty breached 4000 mark quite efortlessly and closed below it too on weekly basis, indicating the bearishness, and weak sentiment. Investors stayed away, where as FIIs pressed sales in spite of lower prices, as rupee continues to be weakening against US dollar, which is a double whammy for them in Sept '08 throughout. Well the good news came on the week end, in the form of US congress clearing Indo-Nuke deal, dropping clause and reference to Iran, on strong insistence of Indian authorities, with a 2/3rds vote ends the '34 years of nuclear apartheid of India among global arena'. The bill is to be cleared by US senate, which shall be a formality, since the senate committee cleared with 19-2 vote already. The deal might be signed on 3rd as reports stand now, is a clear positive news for power sector, capital goods sector and manfucaturing sector too. The other suspense on the bail out package of 750$ billion also is discussed and now finalised first tranche to be 250$ keeping another 100$ billion at the disposal of President, to meet any contingency is also welcome news for rate sensitives in US and world over. Friday night US markets though traded in negative territory finally posted gains.

VIX has closed at 33.96 and Singapore Nifty futures are currently quoting at a premium of 36 points should give positive opening initially for our markets. Nifty will face initial resistance at 4040 and 4100 later today. August closing of Nifty was at 4360, which is a tall order at this point for nifty to climb and close above it in two days left for the month. However, 4040.55 being June quarter closing should be conquered on closing basis tomorrow, to save the quarterly charts in tact, for some solace next quarter, as we move into Q-2 results season and 'Diwali' during October' 2008. 30th September is a non-banking holiday on account of Half yearly closing of Accounts by banks in India, and 02nd October 2008, is a trading holiday on account of 'Gandhi Jayanthi' makes this a truncated week, thus markets will be confined to a narrow range.

Range for the Week: Nifty might trade in the range of 3800 to 4200 during this week.

Strategy for the Day: Buy Nifty futures at the opening with a stoploss of 50 points below the purhcase price for intra day gains, if one is a high risk trader.

Inflation flat at 12.14% but rupee weakens against US dollar as FIIs continue to exit Indian Equities!

Derivatives settlement of September series is behind now, where Nifty has closed 114 points down from august settlement closing. Nifty futures of October series have closed at 48 points hefty premium is positive for markets today, which might add from today till month end. US markets have closed with gains overnight, on the assurance from Govt quarters of getting the bail out package passed by congress smoothly. Asian markets are trading flat to negative and Singapore Nifty futures are also flat right now. Nifty closed well below 5DSMA yesteday, amidst volatility, however, the price adjustment on settlement day cannot be considered for technical analysis, as funds will try to ensure the closing price to suit their outstanding positions of the series. The first hurdle for the markets today shall be 5DSMA placed at 5173.40, and then previous week's closing 4245.25, once the psychological mark of 4200 is cleared with volumes. It will be interesting to see how and where nifty closes today at the end of the session.

 

Inflation figures came flat at 12.14% suggests that the head line inflation might be stabilizing and in the coming weeks it might come down, is comforting news for RBI, which need not take any further measures on monetary tightening. Q-2 performance and results season commence from first week of October which will be priced into by market players from today. Some fund buying to prop up NAVs in index heavy weights cannot be ruled out till 30th Sept'2008. Though US dollar is weak against Euro and other currencies, rupee instead of strengthening is becoming weak is a cause of concern for our economy. This is mainly because FIIs are continuing to exit equities and are pressing for sales at every raise in prices, as Participatory Notes unwinding continues. As indicated earlier All outstanding PNs which are not registered with SEBI need to be wound up or register with SEBI by 31.03.2009. Thus, the bearishness shall invariably continues till such time in our markets. Another irony of rupee weakning is hurting soft ware exporters too, as they have not forecast this much of depreciation, almost 15% over previous quarter, and have taken hedge around 40 to 41 against dollar, are loosing an opportunity of profit. The fear that they might post huge forex losses also putting pressure on tech stocks, which are under performing.

 

Range for the day: Nifty might move in the range of 4040 to 4240 today.

5DSMA is being held as bulls fight back to break the range! Settlement & Inflation shall bring in higher volatility today!

Uncertainity over bail out package from US Government to help the current financial crisis, brought nervousness in US markets, which have become directionless. The economic data on housing, consumption, etc., are indicating clear indication of recession setting in US, making dollar weakening against other currencies, should be actually good news for emerging economies like India, which should receive good dollar flows. Contrary to this expectation, Indian rupee is also weakening inspite of strong fundamentals, as RBI and Govt pursuing weak rupee policy to encourage exports and exporters and discourage imports, since our oil import bill is quite large and cannot be funded by 'hot money'. This observation is strengthened by the fact that when dollar is weak against Euro, rupee should strengthen, but rupee : dollar exchange is moving independent of this cross currency exchange movement. Our indices especially, Nifty tried to climb 4214 level yesterday, a head of expiry today, but selling did not allow to close above 4200 level. VIX has closed at 35.61. 5DSMA is currently placed at 4158.92 and 20DSMA stands at 4266.97 could be the boundaries for today.

Singapore Nifty futures are currently quoting at a discount of 30 points indicate weak opening as asian markets are also trading in negative territory. Inflation might look up marginally when the data is released at 5.30 p.m. after closure of market hours. Trading on NSE is having halt and extended hours since 24.09.2008 due to sun outage and shall continue till 08.10.2008. The trading ends at 04.15 p.m. all these days. This also brings in some additional volatility to our markets, as observed in the past too. The range of Nifty could be 4100 to 4300 today.

Nifty found support at 5DSMA so far this week, if held will bounce to clear the 4400 mark!

Our markets have faced selling pressure on monday, after touching crucial level of 4300 being the 50DSMA and closed negative. The nervousness continued on tuesday, as global cues were weak, and nifty found support at 5DSMA level and closed around it on closing basis. US markets were volatile overnight and ended with losses as the bail out plan of 700$ billions from Government details are not yet clear. However, Warren Buffette deciding to invest 5 $ billion with Goldman Sachs and US senate committee clearing the Indo-US Nuke Deal with 19-2 vote, are positive for our markets. Today being the penultimate day, short squeeze cum long roll over to next series can be expected, as PM Dr.Manmohan Singh meets George Bush tomorrow to finalise the deal. Tomorrow is the settlement day for current series, and inflation data will be known after market hours, which might be around 12% levels, with which markets have learnt to live. Crude and Indian currency also have become too volatile which is reflecting in equity and bond markets too. VIX has closed at 38.74 and Singapore Nifty futures are currently quoting mildly positive.

Watch 4250 to 4300 levels for resistance in case of any rally today, and markets will be volatile having two way movement as the roll over to next month series is still to pick up. Once the derivatives settlement is over tomorrow, market players will concentrate on next month results, some fund buying til 30th can be expected to push up the indices, as they would like to show better NAV performance, for the month, quarter and halfyear!

Range for the Day: Nifty might trade in the range of 4100 to 4250 today.

Strategy for October: Buy 4100 call and put option of October series and hold them till 15th October for good returns as the markets are likely have wild gyrations.

Whether markets have found bottom last week amidst higher volatility? Confirmation will come this week or month end!

Last week was one of the highest volatile moves in all markets including ours. If one watches week on week performance the indices have posted marginal gains to almost flat, however, intra week swings were more than 5% daily and on particular days like thursday intraday swing is almost 10%. Russian markets have seen 40% swings. Dow though broke the multi year support at 10700 and closed below it, with the bail out package announced for AIG and Government considering serious long term measures to protect the financial system lead to huge short covering on friday, the tripple witching day for US markets. Does this mean that markets have found bottom? We can say that bottom formation is in progress. Whether the lows touched last week are bottoms for the medium term trend or reversal of bearishness to bullishness is a big million dollar question. The global economic concerns which have surfaced during 2008 prominently cannot wither away, in hurry in a week's time. Just as bull markets have corrections or bear phases, deep bear markets too will have vicious relief rallies and dead cat bounce, to trap the bulls. Thus, one cannot jump to conclusion that the bearish ness has ended, or bull market has begun. One need to remember that markets cannot go up continuously for ever, similarly the markets or all stocks cannot become zero, it is the over reaction on either ends of the markets which represent the sentiment of majority of players, indicating the general trend.

 

Well coming to this week, we have derivatives settlement on 25.09.2008(Thursday) and the next month settlement will have the Q2 performance of corporates, and H1 performance of the economy in place, some adjustment and pricing in the profitability based on the advance tax payments, exchange rate etc., shall take place, where volatility can be high, though may not be at the level witnessed in the last week. In my view the derivatives settlement should be above August settlement price of 4214, where the indices are resting now. It is also to be seen whether the September monthly closing will be above 4360(August closing), which confirms the bottom formation. In my opinion our markets have seen lows for this year 2008, around 3800 on Nifty & 12500 on Sensex. VIX has closed at 39.12. Nifty futures have closed with a premium of 27 points invites long roll over and some short build up today/ tomorrow, as indices have already posted more thatn 10% gains from the lows touched on thursday. Asian markets are mixed and Singapore Nifty Futures are currently quoting at a premium of 12 points might give slight positive opening and two way movement for our markets today as roll overs pick up to next month series.

 

Range of for the Day: Nifty might move in the range of 4100 to 4400 during this week.

Spectacular recovery from 2008 lows puts an end to bear run of 7 days! Inflation shows uptick to 12.14% again!

Both indices have opened gapdown following global cues and almost hit 2008 lows, from where fund buying in index heavy weights coupled with huge short covering, lead the markets close with gains at the end of the trading. The news that US Fed granted 2 year bridge loan of 85$ billions to AIG to bail it out, and major central banks deciding and acting to pump in liquidity of 180$ billion helped all markets to recover yesterday at the end of the session. The 7 day bear run is thus arrested, and some relief rally can be expected from now on, ofcourse with huge gyrations and volatility as we enter the settlement period next week. Inflation data showed small uptick to 12.14%, suggests that it is not going to fall below 12% as anticipated in hurry. VIX closed at 39.56, intra day high touching 68.33 indicates volatility to stay higher for some time. US markets oscillated between positive and negative territory till mid session, Dow registering new low for 2008 at 10459.44 almost touching 52 weeks low, staged a strong recovery on the news that US government is seriously considering a long term solution to the current credit crisis. Tripple witching, the settlement of options and futures of indices and stocks scheduled for friday(19.09.2008) also lead to huge short covering, which lifted all US indices to post 4% gains over previous day's closing. The strong US markets rally might give some rub off effect on asian markets and our markets too, but, selling pressure can be expected in our markets, at higher levels, thus, going long at the opening should be avoided.

 

Singapore Nifty futures are currently quoting at a premium of 183 points and asian markets are trading with gains, shall give positive gap up opening for our markets today. Nifty shall face resistance at previous week's closings 4228.45, which needs to be watched with care. The exposure of ICICI Bank to Lehman Brothers investments might force the bank to post MTM loss provisions to the extent of 40$ million during the quarter is putting pressure on the stock, which is an index heavy weight, though the management is putting brave face to dismiss the issue saying the provision is of miniscule when compared to the size of the balance sheet. The PSU banks are finding favor with funds and investors, which have less or no exposure to these interenational institutions which are under going turmoil. The current credit crisis coupled with slowdown of global economy, cannot be solved with short term solutions like injecting liquidity, which is being resorted by all central banks, until the mess is cleaned up with proper systems in place, recovery of financial sector will be a long process. The britain's financial services authority(FSA) banning the short selling in financial stocks till the end of January, 2009 helped european markets, and the hope of such a move by US too helped stability and recovery of financial stocks yesterday, a head of tripple witching settlement.

 

Range for the Day: Nifty might move in the range of 4040 to 4240 today.

 

Strategy for the Day: Short Nifty futures at the opening with a stop loss of 50 points above the purchase price for intra day gains, if one is a high risk trader.

Dow breaks crucial support 10700 in panic selling over night! Troubles compound for our markets from now on!

The initial positive opening was sold into yesterday, and the late hour selling by FIIs brought the Nifty to sub 4000 levels at the end of the trading. On adjustment Nifty managed to close at 4008.25. The mayhem in US markets on the panic selling by investors fearing the spreading of credit crisis to other institutions. The news that Morgan Stanley also likely to be in trouble is now pointing to greater trouble to equity markets world over, which is the reason why the investors are flying to safety...Crude and Gold have raised overnight. Dow which was holding 10700 multi year support during this year so far, which is observed by all technical analysts, has gone yesterday, is very disturbing news for US markets and world markets too.

 

Singapore Nifty futures are currently quoting at steep discount of 154 points will give a straight cut of 4 to 5 % straight away for our indices at the opening itself. The mute question will be whether 2008 lows will be tested or breached today/tomorrow. While the valuations of our markets are not that high. the sentiment is worst and complete risk aversion, makes buyers to stay away from equities. VIX has closed at 33.99 yesterday. June quarter closing of 4040.55 (Nifty) & 13461.60 (Sensex) are breached yesterday on closing basis too, in any possible relief rally which might come tomorrow or monday onwards, whether these levels will be cleared need to be watched. In case these levels are cleared in the next 3 trading sessions, our markets will breach the 2008 lows and the trading band of Nifty will shift downwards to 3500 to 4000, making things worse for the next quarter. Traders and investors should for calmness to return to the markets, as we may be near a bottom, if 2008 lows are held today/tomorrow! Inflation data is likely to be sub 12% levels which will be released after market hours, will not be of any significance, as the sentiment to equities is completely negative.

 

Range for the Day: Nifty might move in the range of 3840 to 4040 today.

 

Strategy for the Day: Buy Nifty futures at the opening with a stop loss of 50 points from the purchase price for intraday gains, if one is high risk trader.

US Fed leaves rates unchanged, however looks at bailing out AIG lifts sentiment in US markets!

Yesterday ahead of US FOMC meet all markets turned volatile and our markets opened with negative gap to register new lows for the month of september breaching August lows, threatening worst day for equity.. Late in the afternoon once some calmness returned as domestic funds lent support to PSU Banking stocks, lead by SBI huge short covering helped the indices to close flat at the end. US Fed overnight has left the rates unchanged at 2% but considered taking up bail out of AIG, the leading insurer of USA  which also is facing bankruptacy situation, due to heavy losses booked so far. Dow has hit 10740 a multi year trend line support and bounced from there to register substantial gains at the end of the session. Singapore Nifty Futures are currently quoting at a premium of 44 points and asian markets are trading in positive territory shall give gap up opening today at the beginning. VIX has closed at 34.90 after hitting a day high 53.62 suggests higher volatility to continue today and for few more days.

 

Advance Tax Payments from Banks are encouraging, whereas Tata steel & ACC have paid less than previous quarter suggest that all is not well with our economy. Rupee is depreciating everyday due to tight money conditions, on account of advance tax out flows is a cause of concern, which is addressed by RBI by encouraging FCNR and NRE inflows, a decision announced after market hours. This alone in my view shall not help as demand for dollars continue for oil imports and FII capital out flows. Much stronger and quicker measures are required like reduction in CRR or Repo rate too, in line with China. The New Governor's mind and policy is yet to be understood by markets and corporates. Though Dr.Y.V.Reddy was always unpredictable, this type of one sided slide of rupee might not have been allowed by him, hurting the economy. The confidence of FIIs and FDI flows also will be hurt if the currency is not stable and moves in wide range. Already Rupee has depreciated by 16% in the last one month, by any standards, is not conducive for long term business planning. USFDA has banned 30 drugs produced by Ranbaxy shall be a setback to the stock at the opening today.

 

Nifty found support in the band of 3920 to 3950 in the last two days in the sell off and bounced back to close above 4040 is a good technical level to watch today. Nifty shall try to rally to 4180 to 4220 band today and might face selling pressure there. If support emerges in the band of 4000 to 4020 it is good time to go long for intraday or intra week gains, with suitable stop loss as per the risk appetite of individuals. Until Nifty closes above 4360 bearishness coupled with huge volaility shall continue in extreme short term.

 

Range for the day: Nifty might move in the range of 3980 to 4180 today.

 

Strategy for the Day: Buy 4200 puts on rallies and 4000 calls on weakness for intraday trading.

Crude crashed to 94$ and global markets too! Global economic slow down is confirmed now! Where to go from here???

At the outset let me say that I was on vacation from 12th and back to work, due to which updates are missing in the intervening period.

Nifty 4200 to 4555 range is finally broken yesterday, at the opening of markets itself, on the news of Chapter 11 bankruptacy filed by Lehman Bros, in USA, which was doing rounds for some time. The reaction in our markets is overdone, as the beta is high for our markets, it would be higher movement on either side, which we are observing since 2003. Confirmation of prolonged bear markets has come yesterday, with global economic slowdown in place. Generally equities have rallied when ever crude cooled or fallen when it rallied. One can observe that Crude breaching 100$ level also had no positive impact in the past few days. This is because the fall in crude price is assumed to two reasons: 1. Strengthening of US dollar and 2. Demand destruction for the commodity, as inflation is high, which is evidenced from lower consumption from US highways data. Thus, the correlation between Crude ends for some time. China has reduced interest rate by 27 basis points and Cash reserve requirement by 1% confirms the cooling of its economy. US fed meet today to decide on interest rates in a very highly volatile disturbing financial crisis situation, as one after other major institutions show poor performance and complete failure too. CBOE rose to 31.70 indicating higher volatile times for US markets.

While coming to Indian economy, cooling of crude to 94$ is offset by weakening of rupee to 46 against US dollar, which is 15% depreciation, net - net does not help the fiscal situation. Advance tax payment for this quarter pressure on corporates has ended by yesterday. The information received so far from Reliance and HDFC Bank etc., show almost flat to marginally higher tax payment, does not give any enthusiasm on this front. VIX has close at 33.12 amidst high volatility after the day high being 63.32. While leading heavy weights like Reliance and Bharti etc., already broke 6 months lows, indices are holding, however, with so much of negative news flowing around, equities will not attract fresh investment for some time, may be till diwali!!

Now it is to be seen whether July lows Nifty(3790.20) & Senex(12514.02) which are lows for 2008 will hold and some stability returns to the markets, as indices have breached August lows Nifty(4201.85) & Sensex(14002.23) and closed below it too. US markets have fallen steeply overnight and Singapore Nifty Futures are currently quoting at discount of 117 points, suggests weak opening for our markets at the opening for sure. Trading also is not advisable as the range is quite wide, and stoplosses will trigger on either side.

Range for the Day: Nifty might trade in the range of 3900 to 4100 today.

Crude Falls but does not help the Sentiment!

As expected, our Indices opened mildly weak yesterday and the level of 4427 was held during the morning session. However, the Indices broke down in the afternoon session due to heavy selling by FIIs and closed at the psychological support of 4400. Today, our markets will open weak as the Asian markets are currently trading weak. 4363 being August'08 close should be held for today, in which case, one can go long on Nifty futures with an appropriate stop loss of 25 points.

 

Crude has weakened to $102 whilst Indian crude basket is below the $100 mark. Every $1 fall in the crude price helps the under-recoveries of Indian Oil firms by Rs.3000 Crores. But, Rupee weakening to Rs.45/$ and further signs of weakening to Rs.46/$ offsets the gains for the Oil firms mentioned above. Advance tax payments on 15th Sep'08 will continue to put pressure on the markets and the next directional trend will be clear once the advance tax payment numbers are out for the ensuing quarter.

 

SGX Nifty is currently trading at a discount of 90 points, which shows that our opening will also be weak. However, 4300 to 4320 is a strong support for Nifty where one can expect signs of reversal.

 

Range for the day: 4200 to 4420.

 

Strategy for the day: Go long on Sept Nifty futures with a 25 point stop loss at the opening.

Mildly Weak Opening expected!

Markets opened gap down due to the global weakness yesterday, but a flurry of short covering coupled with positive sentiment due to the NSG deal pulled the markets in to the positive territory momentarily before closing flat. Lehman brothers couldn't shore up enough capital yesterday in a failed deal with Korean Development Bank; Lehman's shares slumped a whopping 45% in yesterday's trade on NYSE. This should dent some of the positive developments in India and put the focus light back on the credit crunch.

SGX Nifty Futures are currently trading at 38 points discount, which would indicate a weak opening for our markets too. Any gap down opening should find the first support near the 5 DSMA (4427) and the upward move should encounter a stiff resistance near the 100 DSMA (4553).

Range for the day: 4360 to 4553

Strategy for the day: Buy 4300 CE on weakness for Intraday trading

NSG clears the Indo-Nuclear deal by consensus shall boost sentiment of our markets today!

Last week saw a volatile market, finally closing flat in the end on week on week basis. The inflation holding sub 12.5% levels, and the week end historic decision by NSG group to allow India to use the Nuclear technology, supply etc., unanimously, ends the 34 year embargo on our country's access to fuel and latest technology for civil purposes too. This paves way for US congress to consider the Indo-US nuclear deal during this month's congress session itslef, and might clear the process to initiate the process for transfer of technology to India will solve long term power requirements of the country to some extent. Though, critics argue that the 123 agreement and Hyde Act, have some clauses which might zeopardise our country's interest anytime, if testing is done or whether the fuel and technology is diverted to other than civil purposes, generally believed, military purposes.

However, the Government of India is sincerely committed to self proclaimed non-proliferation, and its policy not to 'first use' in any agression too, will not pose any threat to continuous seeking of the technology transfer and future in the years to come. It is a clear victory for Dr.Manmohan Singh, Prime Minister of India who has put his complete weight behind achieving it, inspite of strong opposition from left and some of his men too, though privately; US markets have closed flat to marginally positive on friday, as the two troubled mortgage lending institutions are being bailed out by US Government, was welcome news for the investors there. US futures indicate huge gap up opening to night(IST), will certainly induce asian and european markets to rally today. Crude is hovering below 107$ and might bounce once it touches psychological level of 100$, in case of weakenig further.

VIX has closed at 32.65 on friday. Singapore Nifty futures are currently quoting at a whopping premium of 202 points gives a thumping opening for our markets, but profit booking in the band of 4500 to 4550 can be expected, as corporates plan for advance tax payments by 15.09.2008. Technically Nifty finds support at 4320 for the day on any weakness and shall face strong resistance at 4555 (100 DSMA). Stocks relating to power sector, and capital goods sector shall rally from now on.

Range for the Week: Nifty might move in the range of 4300 to 4600 during the week.

Strategy for the Day: Buy 4550 puts on rallies for intra day trading.

Rally halted at 4520 on profit booking! Inflation is down at 12.34%. Weak global cues and political turmoil may keep markets volatile!

Profit booking has set in at the opening of trading itself and continued till the end of the session after a spectacular rally on 02.09.2008, since the issue of political turmoil once again cropping up due to Indo-Nuke deal stance of our government is questioned by opposition parties severely once again. Crude bounced from 105$ levels and the inflation has cooled down to 12.34% as against 12.40% previous week, might not influence the markets today much on the upside. The jobless claims increasing as per US unemployment data, spooked the markets overnight as concerns of recession and slowing down surfaced. European markets too posted losses on the ECB statment that slowing of economy spreading to its region. Asian markets are already trading weak and Singapore Nifty Futures are currently quoting at a discount of 120 points which indicate gap down opening for our markets. 50DSMA currently placed at 4265 should offer good buying opportunity today at the opening, for intraday traders. It is to be seen what will be the closing today, if Nifty continuously trades below 4360 today, expect weakness continue next week, as corporates will be pressing for sales for meeting advance tax payments by 15.09.2008. VIX has closed at 31.23.

 

Range for the Day: Nifty might move in the range of 4250 to 4400 today.

 

Strategy for the Day: 1.Buy 4200 calls on weakness for intraday trading.

                               2.Buy Nifty futures at the opening with a stop loss of 25 points below purchase price for intraday swing.

Stunning rally as Crude crashes to 105$ after 'Gustav' hits Gulf of Mexico! Will it sustain and move up further?

After weak to flat opening on tueday, the indices had moved strongly due to huge short covering coupled with long build up as Crude has fallen to 105$ after a long gap of 5 months. Falling of crude prices will help in reduction of stress on fiscal situation domestically, apart from helps Oil marketing companies to post better performance. The news that the hurricane 'Gustav' has crossed the coast and there was no damage to oil rigging and refining areas also is cheered by markets, though the resumption of production in that area shall take some time. Nifty has close above 20DSMA levels which was offering some resistance for the past two weeks and now its way to challenge 100DSMA currently placed at 4560.29. US markets were just flat to negative on 2nd and 3rd being concerned about the domestic problems, cannot offer any clues to our markets today. VIX has closed at 30.45 on tuesday. On wednesday our markets are closed on account of Ganesh Chathurthi holiday! Today when they open few domestic developments might influence the trading pattern.

 

Tatamotors has decided to shift the Nano plant from Singur, along with ancillary units. West Bengal Governor took initiative to sort out the dead lock between Trinamool Congress, Government and Tatas in a meeting scheduled tomorrow 05.09.2008. Indian Industry leaders like Mukesh Ambani, Sunil Mittal and N.R.Narayana Murthy, have expressed support to Tata's concerns. FDI and Investment into mega projects in India will receive a set back if Tatas are forced to close the unit. Though the protest from Trinamool Congress to protect the 400 acres of Agricultural land is genuine, in the larger and long term interest of food security of our country, W.B.Government and other stat governments acquire or allocate fertile Agricultural lands is against national interest. Industrialisation is desired, but not at the cost of Agriculture which is the main stay of 70% of population of India. It is forecasted that in the coming decade there will be shortage of food, with rapid industrialisation in emerging economies.

 

The news that Indo-US nuke deal which is before NSG, is in geopardy, as some of the members are against giving blanket approval to India, in the absence of our country signing NPT and CTBT. There is a news item from US which leaks information that US reserves the right to stop supply of fuel anytime, if India goes for test, is causing political ripples in New Delhi. The outcome of this issue and any possible fall out at Centre etc., are to be watched carefully. The intraday swings on either side are hazardous for traders too, and now that Crude corrected more than 25% from its peak, the volatility has set in its price. The inflation data will be released today after market hours will have their effect tomorrow, However, some profit booking can be expected today initially or at the end of the session.

 

Range for the Day: Nifty might trade in the range of 4420 to 4620 today.

Crude falls to 110$ as hurricane 'Gustav' hits the coast and weakens! RBI will have Dr.D.Subbarao as full time Governor from 05.09.08.

US markets were closed yesterday on account of labour holiday. Our markets opened weak and traded in negative terriotory for most part of the day, but on the news that hurricane 'Gustav' weakened to level 2 category and has hit the coast of Gulf of Mexico, has brought the Crude prices sharply to 110$ intraday, which pushed shorts to cover in the last hour of trading, as a result, indices recovered most of the losses at the end of the day. The effect of the Gustav will be known after some time, as refineries have to re start production. Cooling of Crude is good news for equities in general and our markets in particular. There will be an initial enthusiasm today, to pull the markets up, which will be sold into as our markets shall be closed for 'Ganesh Chathurthi" holiday tomorrow (03.09.2008). Dr.D.Subba Rao, currently Finance Secretary has been appointed as Governor of RBI for a period of 3 years from 05.09.2008, as Dr.Y.V.Reddy the present Governor lays his office on attaining super annuation. The illustrious and one of the most effective Governors of RBI, who has seen the greatest raise of stock markets, GDP growth, Fall in interest rates. inflation and raise of the same in recent times, comes to an end by 05.09.2008. Markets, FIIs would have loved to see Dr.Y.V.Reddy to continue till the uncertainities on the global arena settle, by 2009 end or so., at least, would be missing him, his actions and punches while answering intriguing questions on various aspects of Indian Economy! However, let us hope that Dr.D.Subba Rao, who has varied experience since 1972, will continue the legacy of good governance and see that Indian GDP breaks into double digit growth during his tenure, leaving his own mark too.

Nifty futures have closed flat with 2 points premium, indicating indecisiveness on the trend. VIX has closed at 31.28 indicating lower volatility, as the volumes fell a head of a holiday. Markets shall trade in a narrow band today. Automobile sales numbers for the month ended are mixed, Cement figures will be known today. Both Exports and Imports are up substantially, which show the business environment is still encouraging. Rupee is firm around 44/- against dollar helps tech sector to post gains. Nifty faces resistance at 4414 today which is 20DSMA on any rally and support might come at 4255.20 (50DSMA). Asian markets have opened with gains and Singapore Nifty futures are currently quoting at a premium of 29 points should give positive opening for our markets inititally. It is to be seen whether nifty can close above August closing today at the end of the session, giving scope for further gains from 04.09.2008?

Range for the Day: Nifty might trade in a narrow range of 4300 to 4400 today.

August month ends on positive note on the last day due to short covering! How September series fare?

The last day of trading of our markets after a collapse on the settlement day, in the last one hour, proved to be anti climax, due to heavy short covering in rate sensitives along with some long build up in tech sector, as rupee weakened against dollar. Both the indices have closed with gains, week on week basis in the first instance and also above July closing levels, which I have been advocating during the last few days regularly. Nifty futures have closed with a premium of 10 points with addition of open interest is encouraging too. VIX closed at 33.31 but intraday high stood at 73.29 suggesting higher intra day swings to continue further.

 

GDP data releaed on friday has shown a down tick to 7.9%, below 8% after 9 quarters, is the first sign of moderation of growth. The components once analysed show that this will unfold further down in the coming months, as inflation is at double digit levels, interest rates are almost double from their lows registered in 2005-2007 period. The fiscal situation shows stress due to unbudegeted loan write off, pay commision arrears payment, raise in oil, food and fertilizer subsidies. RBI is concerned about the M3 raise, and might use CRR or Repo rate any time, as rupee is weakening due to demand for dollar raising. Though crude corrected from its peak levels of 148$ still the pass through effect of actual price is half done by PSU oil companies, which continue to bleed under current pricing mechanism.

 

US markets became nervous on friday, as the hurrican 'Gustav' intensifying in Gulf of mexico, likely to hit 40% of crude production and supplies and 25% of gas production, which might again push demand for crude in the near future. September Nifty series have begun on positive note, but this week 03.09.2008, is a trading holiday for our markets on account of 'Ganesh Chathurthi' thus, investors and traders might resort only to trading intraday. Nifty 4360 level will be a reference level for this week as it was the August month closing too. Our markets might open weak today, following weak global cues and the first indication will come from Singapore Nifty futures which shall start trading fro 07.00 a.m. (IST) will confirm the mood of FIIs, who are mostly operating on Singapore Exchange now a days, as volumes have shifted from NSE to SGX.

 

Range for the Week: Nifty might trade in the range of 4200 to 4400 during this week.

 

Strategy for the Day: Buy 4400 puts on rallies for intra day trading.

Crude cools to 115$ overnight on strengthening of dollar and US markets rallied!

Well August series settlement is behind us. US markets rallied overnight on the strengthening of dollar, as jobless claims data showed down tick, and crude cooled from 120$ levels to 114$ intraday finally closing at 115$. Asian markets are trading with gains and Singapore Nifty futures are currently quoting at 67 points premium, shall augur well for our markets at the opening. Market wide rollover was 80% where as Nifty roll over was 68% only being the lowest in 2008. Thus, scope for long build up in the new series will be there at the beginning of series, as Nifty futures too closed at a premium of 9 points yesterday. Howver, the mute point is upto what extent the indices especially Nifty can recover the losses of yesterday and this week are to be watched carefully, for signs of trend reversal, since the indices have closed at the lowest point of August month on pernultimate day.

 

In my view, 4200 on Nifty and 14000 on Sensex, would hold today and a relief rally can be expected, which will face resistance and supply from trapped investors as the sentiment too pessimistic for equities, which is evident from high intraday volatility. Higher volatility is some times a sign of bottoming out or topping out of indices. This time around since we are long term down trend with interemediate trend on assault, by bears, I feel that there shall be a bounce today, which anyone can guess and closing above July closing levels Nifty(4332.95) & Sensex(14355.75) today, will strengthen the bulls to push further next week. Some fund buying also can be expected today to prop up NAVs too. September is generally good month for equities in general as the Q2 results will be priced in, tech sector should do well since dollar is strengthening.

 

Insurance Regulatory Authority has revised the premium tarriff down wards on long term insurance policies, which in some cases result in fall of premium by 40% is good news in the hands of policy holders, who can buy higher insurance for the same amount of premia they were paying, or they will be left with some cash in their hands, which also encourages them to look at other avenues.

Inflation is down to 12.40%! Lower roll overs bring long unwinding on Settlement Day!

As feared the indices have cracked in the last one hour on long unwinding, which was quite evident from the difference in premium of August over September. Both indices have breached all support levels. especially, 20DSMA and made new lows for August'08 on the penultimate day of the month, on the fears of further raise in inflation. The good news is that the inflation data has shown down tick to 12.40% over previous week figure of 12.63% for the first time in the last 10 weeks should cheer up rate sensitives tomorrow. US markets opened in positive territory and are currently trading with gains on reduction in jobless claims data and should give some phillip tomorrow, once they close with gains. Crude is hovering around 120$ levels, and further fall in price from here coupled with fall in inflation will improve macroeconomic situation of our economy. GDP data is expected to be released tomorrow, which will decide the trend from there on. VIX has closed at 33.31 but the day's high was at 73.29 suggests wild gyrations. Tomorrow being the last day of the month and week, closing of indices would give the possible trend for the next month.

 

Nifty September futures have closed with premium of 9 points today, as outstanding contracts are lowest for the next month series, with indices having closed at the lowest point of the month, a bounce and long build up can be expected in beaten down stocks like ICICI BANK, RELIANCE etc., A gap up opening can be expected too, and the direction after announcement of GDP data, might strengthen further gains, if the data is flat to positive over previous months.

 

Range for the Day: Nifty might trade in the range of 4180 to 4380 tomorrow.

 

Strategies for September:

 

1. One can go long on Nifty futures at opening price, with a stop loss of 25 points below the purchase price for intraday trading.

2. Buy Straddle of 4200 and hold till expiry.

 

Where will the Nifty close today! Inflation data to be released after market hours hold the key for medium term trend!

Our markets were volatile a head of derivatives settlement today, as European markets opened in negative territory, selling emerged pushing markets to close in negative territory below crucial level of 4300 on Nifty. Roll over of Nifty to September series and other active stocks was muted, as indices have no clear direction for the past few weeks and moving side ways. Global as well as domestic news is unable to give necessary thrust for neither bulls nor bears in a big way. The mood of the market is showing apathy to equities from retailers and traders too. PSU banks offering 10% interest on one year term deposit appears to be a safe bet for most of the investors in such an uncertain environment, which might continue in to next year too, as being assessed many analysts, where capital protection is guaranteed. 

 

BSNL has postponed the discussion on the proposed IPO in recent board meeting. Tatamotors being frustrated with the political troubles being faced at Singur plant of Nano, have decided to shift the factory to other location (states) if West Bengal Government cannot protect its employees working there. The vendors too expressed solidarity with Tatas and decided to move even if they have to suffer losses on their existing investment of 1500 crores. Dollar started strengthening against Euro as European economies faulter on growth, with raising inflation, crude prices. Infosys has bid for acquiring AXON of UK in all cash deal of 737$ millions, shows that indian tech sector's confidence of better performance even in these turbulent times. Inflation data will be released after market hours being expected to  be 12.79% though moderating not showing signs of peaking out. Crude touched 119$ on supply concerns is in sideways band after it has hit 148$ in 2008. Rupee has touched 44 against $ is bad news for FIIs, who are net sellers in 2008 so far, and for indian economy, though it is sweet news for Tech sector and Export oriented industries and business.

 

US markets have posted gains overnight, and asian markets are trading with gains currently. VIX closed at 32.80, but the day's high shot up once again to 76.52, indicating higher volatility. Nifty futures premium has turned into 2 points discount for September, indicating shifting of short positions to next month series. Rollover of Nifty has completed 43% by yesterday, thus, huge positions need to be rolled over today or might be allowed to expire as generally 75% rollovers take place at the end of the settlement. Thus, one can expect wild gyrations today, intra day or in the last one hour of trading, which should be kept in mind by intraday traders. Singapore Nifty futures are currently quoting at 20 points premium should give positive opening for our markets initially. 50DSMA currently placed at 4265.43 should offer support in case of weakness and resistances are at 4315.25(5DSMA); 4327.45(Previous week's closing); 4332.95(July Settlement Price) and 4365 yesterday's high and finally 4398.80 this week's high. The settlement price could be anywhere between 4265 to 4420.

 

Range for the Day: Nifty might trade in the range of 4250 to 4450 today.

 

 

Nifty is range bound between 20DSMA and 50DSMA in volatile trade due to pick up of roll overs!

Taking global cues in their stride, our indices opened in negative territory, and were volatile with two way movement, finally closed with marginal gains due to short covering. The roll overs picked up but lower than previous month, suggesting less enthusiasm for the next month, as there are no important triggeres in the near term, till 15th September'2008, when the advance tax payment numbers from corporates indicate the corporate performance for this quarter, and inturn the fiscal position of the government too. VIX has closed at 33.90 suggests lesser volatility. US markets have closed flat and with marginal gains, as dollar and crude become volatile. Investors are unable to decide the trend of the markets world over, as side ways consolidation phase has set in everywhere.

After a strong bull market and volatile and vicious bear phase, this type of sideways movement is witnessed where consolidation and base building happens for change of trend. Since we are in down trend, if the lows made during this year are held commencement of bull phase may be on cards. Alternatively, this wide range of sideways movement, might bring in further weakness extending the bear phase or turning the markets in to deeper bear markets for prolonged periods. However, a strong clue or an event is required for break out in either direction. The inflation peaking out, interest peaking out, or crash in crude prices below 100$ should happen for an upward break out.

In my view, crude falling below 100$ appears to be remote possibility, as the cost of production with raise in inflation and weakening of dollar, raising demand in emerging economies, which are on growth path, inspite of moderation, will not allow the prices to breach this level. Thus, crude might consolidate between 110$ and 140$ for some months, and break out in upper direction breaching 150$ levels and shoot upto 170$ or even 190$ sometime next year, on some external event which cannot be predicted. Asian markets are trading in positive territory, and Singapore Nifty futures are quoting at 9 points premium which might give positive opening for our markets initially.

Range for the Day: Nifty might trade in the range of 4250 to 4450 today.

Strategy for the Day: Buy 4400 Puts on rallies for intraday trading

Market is range bound as roll overs begun! Expect weakness today as Nifty futures are at discount!

Our indices have opened in positive territory and traded with gains for most part of the day. As roll over to next series began volatility has set in, at one time, Nifty has turned marginally negative but finally both indices have closed with marginal gains. UK markets were closed yesterday, and US markets have tanked once again over night, as dollar weakened and the fears of credit crisis and recession fears daunt the investors. Nifty has held July closing yesterday too, which will be a reference level for this settlement which is to be watched for clues intra day till 28.08.2008. VIX has closed at 45.11 indicating higher volatile times. 50DSMA level of Nifty currently placed at 4277.35 should offer support on weakness where as 20DSMA 4415.36 will offer resistance for today.

Asian markets are trading in negative territory following global cues and Singapore Nifty futures are currently quoting at 49 points discount, indicate weak to negative opening for our markets today.

Range for the Day: Nifty might trade in the range of 4250 to 4450 today.

Strategy for the Day: Buy 4200 Calls on weakness for intraday trading.

Market is range bound as roll overs begun! Expect weakness today as Nifty futures are at discount!

Our indices have opened in positive territory and traded with gains for most part of the day. As roll over to next series began volatility has set in, at one time, Nifty has turned marginally negative but finally both indices have closed with marginal gains. UK markets were closed yesterday, and US markets have tanked once again over night, as dollar weakened and the fears of credit crisis and recession fears daunt the investors. Nifty has held July closing yesterday too, which will be a reference level for this settlement which is to be watched for clues intra day till 28.08.2008. VIX has closed at 45.11 indicating higher volatile times. 50DSMA level of Nifty currently placed at 4277.35 should offer support on weakness where as 20DSMA 4415.36 will offer resistance for today.

 

Asian markets are trading in negative territory following global cues and Singapore Nifty futures are currently quoting at 49 points discount, indicate weak to negative opening for our markets today.

 

Range for the Day: Nifty might trade in the range of 4250 to 4450 today.

 

Strategy for the Day: Buy 4200 Calls on weakness for intraday trading.

Settlement Week might see higher volatility as crude prices also became volatile now!

On friday though the markets have posted gains at the end of the session, week on week indices have posted losses for the second week in a row, amidst volatilitly due to raise in inflation fiigures domestically. However, bulls ensured that July closing levels are held in margin. With US markets rallying on friday, as crude cooled to 114$ our markets will open in positive territory, which is indicated by 80 points premium on Singapore Nifty Futures currently. VIX closed at 35.76, and the day's 79.77 is the highest once again, to be viewed as an indication of return of higher volatile times, that too this being settlement week. Roll overs have to pick up from now on which also causes two way movement. As far as Nifty technical levels concerned 50DSMA was held last week, is the immediate support to be watched in case of weakness. The resistance can come this week at 20DSMA levels currently placed at 4414.19(Nifty) & 14685.06(Sensex) initially. However, 100DSMA level of 4587.55(Nifty) might not be cleared.

Asian markets are trading with gains. The range of Nifty for this week might be 4200 to 4600.

Strategy for the Day: Buy 4500 puts on rallies for intra day trading.

Note: Written on 25.08.2008 at 09.25 a.m.

Crude at 122$ and Inflation at 12.63% all make our markets to crash yesterday steeply!

Our markets have opened week and selling intensified in the later half on long unwinding a head of inflation data, as it was feared to be higher than previous week figure of 12.44%. All technical supports were breached and once indices broke July closing levels, stoplosses must have triggered further fall on indices. Finally, Nifty breached 4300 crucial level and closed below it. In finality both indices broke and closed below 50DSMA levels currently placed at Nifty(4285.22) & Sensex(14292.66). The inflation data came at 12.63%, after market hours, where as crude broke the upper band of 117$ yesterday on New York Mercantile Exchange and reached 122$ lead to weakness in US markets too. The job less claims data shown some improvement, which helped US indices to recover from lows at the end of the session. VIX closed at 36.55, however the day's high reached 73.22 the highest so far after introduction of this index. It points to huge volatility, as roll overs too will pick up from today. Rate sensitives were beaten blue yesterday on the fears that inflation might touch 13% inviting RBI action. The reaction was overdone, as bulls were on back foot to lend support before an event. Nifty futures have closed with a premium of just 3 points on adjustment basis. Actually, they went into 9 points discount if last traded price is to be considered.

Asian markets are trading mixed and Singapore Nifty Futures are currently quoting at a discount of 20 points, which might induce further weakness initially for our markets. Now it is to be watched whether August lows made on 01.08.2008 Nifty(4235.70) & Sensex(14036.57) would offer support for our markets today, on any weakness. However, gains may be made today, on some short covering, a close above previous week's closing Nifty(4430.70) & Sensex(14724.18) today appears to be distant possibility. But markets do have their own mind, thus, if positive closing happens over previous week, then bulls will gain command next week. Today's trading pattern and closing shall offer clues for the next week settlement and the intermediate trend too.

Range for the Day: Nifty might trade in the range of 4240 to 4440 today.

Strategy for the Day: Buy Nifty futures at the opening in case of weak opening, keeping a stop loss of 25 points from the purchase price for intra day trading.

Bounce happened as anticipated! Where to go from here on? Inflation data to hold key!

Our markets opened gap up and traded in the positive territory on long build up coupled with short squeeze, finally closed with gains after 5 days continuous fall. Technically, 5DSMA & 20DSMA are converging around 4430 on Nifty, which offered resistance yesterday, where as bulls ensured that July closing of 4330 is held so far. What happens from now on depends on inflation data to be released after market hours today, which is expected by analysts to show further uptick to 12.62% or so., Last two days trading pattern suggests that the raise in the indices was on account of short covering only. VIX closed at 33.95 registering 11.10 as lowest, suggests lower volatility. Nifty futures closed with a premium of 20 points, will invite creation of shorts once again on any rally today. Since derivatives settlement is close by, roll over of positions too shall commence which will give two way movement from now on. While support on any weakness can be expected at 50DSMA level currently placed at 4290.02(Nifty) and resistance on rallies can be expected at 4450-4480-4500-4540 levels. US markets posted gains yesterday, on account of good results posted by HP, however, crude started raising once again to 115$. It is oscillating between 112$ to 117$ for the past few days. What ever raise or rally happens today / tomorrow should be used as an opportunity to liquidate weak long positions, and portfolio churning, as I presume the August settlement may not be above 4600 from the outstanding positions data as of now.

Asian markets are trading mixed, Singapore Nifty futures are currently quoting with 30 points discount might give negative opening for our markets initially, may be long roll over shall take place from today onwards to next month series. Fertilizer Minister announced release of further subsidy to Fertilizer companies, will keep interest in fertilizer stocks, however, the subsidy burden of Rs.1,19,000 crores will certainly hit the fiscal deficit target, to be noted as negative for the overall economy.


Range for the Day: Nifty might trade in the range of 4320 to 4520 today.

Strategy for the Day: Buy 4500 puts on rallies for intra day trading.

Bounce happened as anticipated! Where to go from here on? Inflation data to hold key!

Our markets opened gap up and traded in the positive territory on long build up coupled with short squeeze, finally closed with gains after 5 days continuous fall. Technically, 5DSMA & 20DSMA are converging around 4430 on Nifty, which offered resistance yesterday, where as bulls ensured that July closing of 4330 is held so far. What happens from now on depends on inflation data to be released after market hours today, which is expected by analysts to show further uptick to 12.62% or so., Last two days trading pattern suggests that the raise in the indices was on account of short covering only. VIX closed at 33.95 registering 11.10 as lowest, suggests lower volatility. Nifty futures closed with a premium of 20 points, will invite creation of shorts once again on any rally today. Since derivatives settlement is close by, roll over of positions too shall commence which will give two way movement from now on. While support on any weakness can be expected at 50DSMA level currently placed at 4290.02(Nifty) and resistance on rallies can be expected at 4450-4480-4500-4540 levels. US markets posted gains yesterday, on account of good results posted by HP, however, crude started raising once again to 115$. It is oscillating between 112$ to 117$ for the past few days. What ever raise or rally happens today / tomorrow should be used as an opportunity to liquidate weak long positions, and portfolio churning, as I presume the August settlement may not be above 4600 from the outstanding positions data as of now.

Asian markets are trading mixed, Singapore Nifty futures are currently quoting with 30 points discount might give negative opening for our markets initially, may be long roll over shall take place from today onwards to next month series. Fertilizer Minister announced release of further subsidy to Fertilizer companies, will keep interest in fertilizer stocks, however, the subsidy burden of Rs.1,19,000 crores will certainly hit the fiscal deficit target, to be noted as negative for the overall economy.


Range for the Day: Nifty might trade in the range of 4320 to 4520 today.

Strategy for the Day: Buy 4500 puts on rallies for intra day trading.

Indices have corrected 5 days in a row! Expect a bounce back as July closing levels held!

Volatility has increased in our markets during the current week, as bears are pressing sales taking advantage of global cues, and bulls are on back foot for valuations to become attractive. After touching July closing levels fund buying emerged around 2 p.m. which lead to short covering by intraday traders, which was quite visible as the premium on Nifty futures rose to 42 points in the last minutes of trading. Nifty futures finally closed with a premium of   points to the spot even on adjustment basis, indicates some positive build up and further short covering can take the indices today higher levels, as the correction is already 5 days old, and indices have closed around technical level 4365 on Nifty is important to watch. VIX has closed at 34.92 finally but the day's high was 61.99 indicates huge volatility in store. Higher volatility is one indication of formation of a top in case the markets are in uptrend and in the present case as markets are correcting it may be an indication of temporary bottom, if held today then bull charge can push for short squeeze in the days to come. US markets witnessed further sell off yesterday, as the economic data was negative, and fears of recession linger in the minds of investors. Crude is trading in a range of 112$ to 117$ currently. Higher crude prices have pushed for lesser demand even in emerging economies like China and India too, thus, it might seek further lower levels, as inflation raises in developed economies too. Japan Central Bank has left interest rate unchanged at 0.5% as the slowdown in exports was hurting the growth.

 

Oil ministry has reviewed the recommendations of the Chaturvedi committee on pricing of petroleum products, and dicided not to implement any recommendation for the present. Since the inflation has already reached 12.44% by last week, any raise in petroleum products will push it further and affect growth of manaufacturing sector. Singapore Nifty futures are currently quoting flat to previous day settlement price and asian markets are trading mixed. 5DSMA placed at 4454.66(Nifty) might offer resistance, as sentiment is weak on any rally, support can be expected at 50DSMA currently placed at 4290.70(Nifty) today.

 

Range for the Day: Nifty might trade in the range of 4300 to 4450 today.

 

Strategies for the Day: 1.Buy 4500 puts on rallies for intraday trading. 2. Go long on Nifty futures at the opening with a stop loss at 4310.