Week begun well whether follow up buying emerges or Weakness creeps in again as usual!

On set of Telugu New Year "Ugadi" and Gudipadava (New year for Maharashtrians) augured well for investors, and all markets had surprisingly strong rally, due to short covering, and buying at lower levels in index heavy weights. The mood is same everywhere, however, Nifty encountered the resistance at 4800 specified by me yesterday, and profit booking cum short initiation resulted in reduction in premium of Nifty futures in the last half an hour trading. Nifty futures are at meagre 2.80 points premium to spot closing of yesterday, on adjusted basis, indicate lack of confidence of bulls and market players to carry the long positions overnight, because every day and night shocks are received from overseas and domestically too. US markets opened quite firm, and traded strong through out the session, and gave away all gains at the end of the session, finally closing flat to marginally negative, as investors await unfolding of results season during this week.

Commodity prices are showing their ugly raise, due to weak dollar and on supply concerns, Crude reached 109$ and the news that the coke prices will raise by 200 to 250% during this year, on supply shortages, is not at all good news to Indian Steel majors, who import 80% of the requirement, puts pressure on input cost, hurting the margins, while they are under tremendous pressure from users and government to contain prices of end products. The price of steel is important component for many industries viz., infrastructure, automobiles, construction, tranformers and electrical equipments, whole lot of consumer goods too, which pushes the prices, keeping consumers away. Inflation showing its ugly head above 7% levels shall have its effect too, with the raise in commodities prices, and the government is in catch 22 situation; as they want the growth to continue, this being the election year, do not like prices to spoil the chances of re-election comfortably.

Singapore Nifty futures are trading at a discount of 45 points, and a weak, gap down opening, can be expected, as asian indices too, are trading in negative territory right now, whether Nifty gets follow up buying support at 4740-4700 levels is the key point to watch for the day. The 5DSMA & 20DSMA are placed around 4735-4740; should be held, if bulls wish to take the advantage of yesterday's gains; failing which Nifty will fall by 100 points to retest 4677 level, during the day.

Range for the Day: Nifty might trade in the range of 4600 to 4850.

Strategy for the Day: Buy 4600 calls on weakness and 4900 puts on rallies, for intraday trading.