Will Nifty Clear 200DSMA placed at 5150 and move up?

Settlement of April Series is behind us, The settlement of May series being on 29.05.2008, shall be one of the longest period involving 23 days of trading, with important rate sensitive decisions poised during the week, and almost Q4 results season will be completed, where companies performance for the previous financial year are known and digested by the market analysts, apart from reading into the challenges thrown due to raising commodity prices and inflation, which will effect the corporate performance both directly and indirectly. Generally May has been an eventful month for our markets, where markets have received jolts, unexpectedly (one in 2004 and the other 2006) where bottoms were formed after markets made new highs in January of respective years, and they moved on from strength to strength. Coming to 2008, our indices have made an all time high in January around 10th and then went into 30% correction by march, and also have been trading below 200DSMA till now.

Now, Will May 2004 & 2006 pattern repeats! by markets finding a bottom or forming a bottom, and move up later this time too, or continue to reel under bear grip due to uncertainity, and negative news flow floating around all over the world, sentiment too being bruised badly, is being watched by many analysts and fund managers. 200DSMA of Nifty is placed currently at 5150, and whether the same shall be cleared today or during the week shall depend on the pronouncements by RBI tomorrow and FOMC on 30.04.2008, which can be known by our markets on 02.05.2008 only, (as 01.05.2008 being a holiday due to 'May Day') for our markets. Thus, one can expect higher volatility as the indices approach crucial technical levels, many HNIs, Funds are sitting on sidelines, for the clear trend to emerge, and then take a view on the markets, instead of taking any guess which might catch them on the wrong foot.

Asian markets opened positive and Singapore Nifty futures are trading at 17 points premium currently, should help our markets to open flat to positive initially. Nifty futures closed at 14 points premium on friday, due to short covering in the last one hour, shall invite profit booking before the two events scheduled this week on every raise, and some short build up also can be expected to hedge the portfolios by funds/FIIs, which may keep markets under pressure. Anyweakness below 5100 shall invite bull unloading, and short build up, hence investors are better advised to follow the under mentioned strategy:

Strategy for the Day: Buy 5150 puts on rallies and 5000 calls on weakness for intra day trading and quick returns.