Settlement jitters - Nifty closes at 4835.30 after huge volatililty!

May series settlement is behind us now, where Nifty has finally made the lowest point for the month too, at 4801.90 in the last hour of trade, due to long unwinding by tired bulls, as most of the rollover to next month series took place on 'short side'. In the process, nifty closing yesterday was the lowest in May 2008, so far, with only one day to spare... i.e., today! My prognosis that Nifty final price will settle between march settlement 4830.25 and april settlement 4999.85 came true almost perfectly, of course at the lower end.

 

Crude cooled further down to US $ 127 overnight, as US GDP data has shown uptick, which strengthened US $ against other currencies. US markets raised overnight, and closed in positive territory, due to surprising good performance from tech sector. CBOE has cooled down to 18 and VIX back home too was down by 14% and closed at 28.08, which suggests some lessened volatility for today. Singapore Nifty futures are currently quoting at a premium of 22 points premium will give positive opening for our markets initially.

 

Today at 12 noon inflation data shall be released which is estimated to be at around 7.92%, will influence our markets there on, based on the actual data. RBI has initiated few measures like, removing curbs on bringing back ECB funds, raising limit on ECB borrowing, raising limit of FII limit on investment in Corporate Bonds etc., overnight, should strengthen the rupee if not ensure stability of the currency, against raising US $ and Crude prices.

 

Government is seriously considering various options to help the PSU oil companies to tide over the risk of running out of working capital to import crude, and suffering from losses on increased sales at less than market/cost prices indigenously. RBI has permitted banks to lend to PSU oil companies upto 25% of working funds(earlier limit was 15%) and also gave green shoe option to lend another 5% in case of urgency and seek ratification later, will ensure availability of comfortable working capital.

 

This is the last day of the week as well as month, since our markets are witnessing heavy selling for the past few days, inspite of stability around global markets, some positive closing can be expected at the end of the session, on NAV prop up by funds, However, it is to be seen whether the closing will be positive week on week too, on any positive development intra day, can force huge short covering, as indices are resting on strong technical levels.

 

Range for the Day: Nifty might trade in the range of 4800 to 5000.

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Nifty closes above 50DSMA after volatile trade due to 'short squeeze'!

Both the indices opened in positive territory initially, and oscillated between positive and negative terrain till afternoon, further fall in crude below US $127 comforted bulls to fight back, which forced bears to run for cover, and in the process 50DSMA is conquered on closing basis. Our markets have outperformed asian peers yesterday. Intraday 5DSMA was tested, rollovers improved, resulting in higher turnover, however, still large part of positions are outstanding to be rolled over today, which is the settlement day, for current series. VIX rose whopping 14% and closed at 32.63, indicating continuation of higher volatility further. May futures closed at 13 points premium to the spot. US markets have advanced further and closed with gains after volatile trade on mixed economic indicators. Singapore Nifty futures are currently quoting at 41 points premium indicate positive opening for our markets initially. Asian markets are trading with gains currently.

IOC has posted Q4 loss of Rs.400 crores, and informed the ministry that they do not have working capital to import crude beyond 15th Sept'08 levels. Already 20 petrol pumps in mumbai are out of stock of diesel, as per latest reports. HPCL also expressed same concern and wants the ministry and government to address the crisis looming urgently. Crude though corrected to 127$ has risen above 131$ on supply concerns, is now almost confirming the "oil shock" to the global economies. Tata motors and M&M have posted results below street expectations, owing to raising input costs. L&T, NTPC,HPCL,POWER GRID,SUN PHARMA, COLGATE and host of others will announce results today. Out of these the index heavy weights will influence market sentiment and movement today.

Settlement of Nifty whether at 4950......5000 or at which price will be interesting to watch after close of markets today. In my opinion it should be above 4830.25(march settlement) and below 4999.85(april settlement); today.

Range for the Day: Nifty might trade in the range of 4850 to 5000.

Indices failed to close above 50DSMA in volatile trade!

Taking cues from asian peers, our indices have opened positive on short covering, both indices traded above 50DSMA till afternoon, heavy unloading of long positions thereafter, brought indices to negative territory, finally closed in negative territory 4th day in succession. US markets closed in positive territory, after volatile trade, on the cooling of crude which corrected by $3.34, finally closed at US$128.95. Surprise upward revision in home sales data of April'08 enthused investors, to go for bargain hunting, as dollar strengthened against Euro and other currencies. CBOE has risen above 20, indicates volatility for US markets. VIX has closed at 28.59 down 13.39% suggests volatility to come down a bit today. Singapore Nifty futures are currently quoting 9 points premium, should give positive opening initially, on short squeeze, as huge short positions were built in the last two days, expecting weakness in US markets to continue.

 

The intermediate trend of our market is down, the initial resistance is placed at 50DSMA 4910.57(Nifty) & 16374.73(Sensex) and unless the indices close above previous week's close Nifty(4946.55) & Sensex(16649.64) with large volumes, the settlement of current series tomorrow will be below the previous settlement (4999.85 on 24.04.2008). Support for Nifty & Sensex can be expected on any weakness at 4830.25 & 16015.56 respectively, which were the settlement closings for march on 27.03.2008. These levels are the final supports for the indices to bounce back, failing which steeper falls can be expected during next month. Markets will be volatile today and tomorrow too, due to roll over positions to next month series.

 

Range for the Day: Nifty might trade in the range of 4830 to 4980.

 

Strategy for the Day: Buy 4800 calls on weakness and 4950 puts on rallies in current series for quick returns.

 

Strategy for June'08: Traders having urge for earning high returns and willing to take higher risk can consider shorting a strangle on June 4800.00 put option and 4950.00 call option at current prices, where one gets a trading range of 4470 to 5280 on Nifty for next month. This strategy remains profitable while the nifty moves within the above range, and one need to protect the breaching of the levels with Nifty futures, otherwise the losses will be unlimited.

 

Both Nifty and Sensex breach 50DSMA on selling pressure!

Markets opened weak and traded in negative territory though out, though several attempts were made by bull camp to keep the indices above crucial 50DSMA support, which was mentioned as last hope, and finally, indices have closed in negative territory, below these levels.One silverlining was, we have out performed asian peers, with lesser losses. US markets were closed yesterday due to 'Memorial Day Holiday". VIX has closed at 33.01 with small fall over previous session. Asian markets are trading positive, Singapore Nifty futures are currently quoting at 5 points discount suggesting flat opening for our markets initially, but since this is settlement week and still large positions are outstanding, which need to be rolled over to next month, or closed before or by settlement date, volatility can be very high.

 

With yesterday's weakness and fall, Sensex has given bearish signal (reversing the medium trend downwards) in Japanese Candle Sticks charts, thus, investors need to hedge their portfolios duly, should devoid picking stocks on declines, as it would be like catching falling knife, which will be quite dangerous. One need to realise that the extraordinary bull run ended in January,2008, and currently we are into bearish trading range, which gives upthrusts as well down falls. This range shall continue at least till October' 2008, by which time, half yearly performance of corporates, GDP and situation on inflation and postion of crude etc., will be clearer where one can expect some stability for the markets. It will be sideways downward trending markets till such time, which gives ample opportunities for trading only, not investing. Thus professional traders, with strict discipline, can make money in these markets.

 

Range for the Day: Nifty might trade in the range of 4830 to 4980.

 

Strategy for the Day: Buy 4800 calls on weakness and 5000 puts on rallies in current series for quick returns.

 

Watch 50DSMA for support on Nifty and Sensex!

50DSMA placed at 4907.31(Nifty) and 16367.27(Sensex) should offer support on any weakenss today at the opening or intra day, which is the last hope for bulls today. Breaching these levels on closing basis today and there on, will push the indices into deeper down trend, as it would result in the breaking of trading range for May'2008.

 

Over weekend, karnataka state assembly election results are announced, where BJP emerged as single largest party, short of 3 seats to reach simple majority. Though congress party improved its tally, over previous poll, seems to have been punihsed, mostly by urban voters, due to raising prices(inflation). Thus, UPA government shall concentrate on inflation management further more seriously, as another round of assembly polls are scheduled for November/December'2008, and then General Elections before March/May'2009.

 

Nikkie opened in negative territory, owing to US weakness on friday, Crude has reached US $ 135.09 on 22.05.2008, and cooled a bit, but quoting above 131 mark currently. Singapore Nifty futures are currently quoting at a discount of 22 points, suggest negative / weak opening for our markets, since this is settlement week, roll overs shall pick up, where two way volatility can be high.

 

Strategy for the Day: Sell Strangle on Nifty 4900 call and 4950 put to capture the high IV and quick returns if you are nimble day trader. This strategy gives a range of 4790 - 5060; within which it is profitable. Beyond these levels, the loss can be unlimited. However, one can go long on Nifty futures above 5000 and  short on Nifty futures below 4900, owing to risk perception, to guard against such unlimited loss. 

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Nifty closed below 5000 level - Bear grip tightens!

Our indices opened in positive territory and traded in narrow range till the inflation data was released which showed flat w-o-w at 7.82%. This being the provisional figure for the week ended 10.05.2008, should have enthused the markets, but the revised figure for week ended 15.03.2008 was at 8.02%(provisional figure was 6.68%) an increase of 134 basis points, spooked the sentiment, where global weakness has already set in. Thus, on adjusted basis the current provisional figure would result in inflation already being at a level of 9.16%(7.82 + 1.34), is not at all good news for equities. Nifty broke 5000 level and even 4950 level which is being watched by many analysts, to close below it at 4946.55. The only solace in the carnage during the week was May low of 4913.80 is held so far, the 50DSMA currently placed at 4907.31 is the last hope for bulls to defend, for carrying on the medium trend up. During next week, once this level is gone, then bears will have upper hand.

 

US markets have closed in negative territory on friday, Dow breaking below12500 level and closed below it, is not a good sign for global markets. US markets are closed on monday. OMCs and Petroleum ministry are pressurising government to consider various alternatives including the price hike, which is not heeded so far, as it would push the inflation further, and also the growth in manufacturing would be hurt, due to spiralling effect. Petrol and diesel prices are increased by 4 paise with effect from today, which is the compensation to OMCs who have to pay to retail pumps.

 

How next week unfolds: Settlement of May series being scheduled on 29.05.2008, the outstanding contracts are at higher levels, higher volatility can be expected, as the fight between two camps intensifies. CBOE index has risen above 19, VIX closed at 34.06 indicate volatile times for the week. Investors should be careful with futures positions, as triggering of stop losses on either side will wipe out the initial margins itself. The news flow from government, RBI and crude price movement will influence the markets.

 

Range for the Week: Nifty might trade in the range of 4800 to 5200.

 

 

 

Nifty 5010 support held in volatile trade amidst global carnage!

Our markets opened weak and traded in negative territory throughout the day amidst huge volatility, and closed in negative territory. Nifty found support at 5010 which is 75% retracement of the range(4913.80 to 5298.95) in which it moved during May' 2008 so far. If it is held on closing basis today, markets shall continue gains next week onwards. VIX raised whopping 25% yesterday and closed at 34.86, indicates greater volatility till the trend is clear. Raise in volatility at critical levels indicates formation of bottom/top in technical parlance. Crude after touching US $135.09 has cooled off yesteray to 131 levels, which has soothened US markets overnight, which closed mildly positive. CBOE index has risen to 18 indicating temporary support for Dow at 12500. Volatililty shall continue to haunt equities until crude finds tolerable levels, and inflation is brought under check by respective governments.

 

Asian markets are trading with small positive gains, Singapore Nifty futures are currently quoting at  3 points premium which should give positive opening for our markets, and roll over to pick up more from now on. Inflation Data to be released at 12 noon today, might show some flattening up and cooling, as the measures initiated in price control, liquidity management by RBI should show their effect. Such an indicator should bring some relief rally to our markets too, as 8% inflation is already priced by our markets for this quarter.

 

Investors can start accumulating beaten down PSU banking stocks which are quoting less than book value, from now on, with a holding time frame of 6 months to 12 months, as they would be compensated for the loan write shortly, and fall in inflation would be good news for this category, which are mainly domestic oriented players.

 

Range for the Day: Nifty might trade between 4980 to 5110.

 

Strategy for the Day: Buy 4900 calls on weakness and 5100 puts on rallies in current series for quick returns intra day.

Volatility sets in again and time to be cautious!

Taking the global cues our indices opened weak, as anticipated, and short covering at lower levels lifted indices back into green by the end of the session, since the european markets opened positive initially. Nifty closed above 5110 critical level at the end of the session, with the help of Reliance Industries, RPL and oil related stocks. Crude cruised to US $133.17, and firmly closed above 132 level, further threatening to raise to 138 level, is no good news for global economies and equities in particular, though few companies like Reliance Industries, Cairn etc., shall be benefitted. FOMC minutes of April, 30th meeting observed that the US economy shall slow down in first half of 2008, the concerns of raise in inflation, unemployment, signal 'close call' on rate pause for a while, made investors nervous and the Dow, Nasdaq and S&P have tanked overnight. CBOE index is showing uptick, indicates return of volatility for US markets.

 

VIX has risen to 27.86 yesterday suggests volatile trade for the day and this week. Singapore Nifty futures are currently quoting at  99 points discount indicate gapdown opening for our markets. Roll over of derivative positions to next series shall bring in two way movement from now on. With every raise of Crude by US $ fiscal deficit of our country widens, since oil imports constitute the largest chunk of our imports bill. PSU Oil Marketing Companies have decided to market premium products of Petrol and Diesel in 18 major cities, will indirectly raise petrol by Rs.3/- and diesel by Rs.2/- which will make urban life difficult, where already inflation is hurting further. Once karnataka assembly polls are concluded, government might look at raising petroleum product prices, since it exhausted the limit of Oil bonds route already. PSU banks are awaiting release of funds from Government, for the amounts written off, as per the Agricultural Loans Write Off scheme announced in budget 2008-2009.

 

Range for the Day: Nifty might trade in the range of 4980 to 5140.

 

Strategy for the Day: Buy 5000 calls on weakness for quick returns.

Crude continues its cruise breaks US 129$ and Global markets correct!

Our indices have opened weak and traded in negative territory through out the day, Nifty finally managed to close above 5100 at the end of the session on adjustment basis. Short build up and long unwinding is seen in stocks and nifty. Indices have encountered resistance around 200DSMA as anticipated, with US markets unable to hold 200DMA in the sell off overnight, asian markets are already trading weak. Singapore Nifty futures are quoting at 70 points discount currently, while VIX moved up by 7.5% to 24.99, indicate gap down opening for our markets today. Bank of Japan has left rates unchanged at 0.5% yesterday. RBI Governor Dr.Y.V.Reddy re affirmed that the current level of inflation is totally unacceptable and medium target should be 3%. How it can be achieved in the current scenario of crude raising continuously and rupee weakening, which shall contribute to expansion of fiscal deficit during the year is the mute point! Whether some more measures are in store from RBI and Government suddenly? One cannot rule out!

 

17200 on Sensex and 5100 on Nifty are crucial technical levels need to be held, if bulls wants to carry the momentum, failing which indices might once again re test 16500 and 4900 respectively before expiry of the current series. Any support around 5000 levels on Nifty today, shall be a good trading opportunity in index heavy weights or nifty itself on long side. Volatility shall once again increase from now on, as roll over of positions to next series shall comence. Retail and small investors should refrain from trading in the current scenario.

 

Range for the Day: Nifty might trade in the range of 5000 to 5150.

 

Strategy for th Day: Buy 5000 calls on weakness for quick returns in intra day trading . 

Nifty closes above January closing inspite of negative news on inflation which rose to 7.83%!

On last friday, Nifty was slightly volatile but finally closed at 5157.70, above January closing of 5137.45, indicating positive momentum for the markets once again, inspite of inflation data(provisional) released for week ended May 3rd, raising to 7.83% highest in the last 180 weeks. Sensex encountered resistance around 200DSMA exactly, and volatile due to profit booking as there is an extended week end. Monday our markets were closed on account of 'Budha Purnima" holiday. US markets closed flat on friday and made some marginal gains yesterday. Both Dow and Nasdaq closed above 200DMA in the process. Whether further gains can be there from here on is anybody guess, due to lack of positive sentiment for equities around the world.

 

Crude touched all time high of US $ 127.82, and analysts expectations that it can touch 142 shortly and 200 in a year's time will definitely be bad news for Global economies and markets too. VIX closed at 23.25 a 20% fall from previous day's close, indicates low volatility for our markets. Singapore Nifty Futures are currently quoting at 15 points discount, might give initial weakness for our markets too. The behaviour of indices around 200DSMA Nifty(5190.79) & Sensex(17581.10) need to be watched for the momentum and trend of our markets. Asian markets which closed positive yesterday are trading weak right now.

 

Range for the Day: Nifty might trade in the range of 5000 to 5200.

 

Strategy for the Day: Buy 5200 puts on rallies to protect the portfolios.

Nifty climbs 5110 on short covering in volatile trade!

Our indices have opened strong on the back of good global cues, short covering coupled with select buying in index heavy weights lifted Nifty above 5087 crucial level, which pushed the Nifty further up above 5110 in the last half an hour. Nifty firmly closed above 5115 finally at the end of the session surprising every analyst, including me. US markets have rallied overnight on the back of cooling of Crude to $122 and Singapore Nifty futures are currently quoting at 54 points premium should give further gains today at the opening of markets. The inflation data to be released at 12 noon, if comes less than last week or around same level, our markets will be out of woods, and further gains can be expected from next week onwards, as most of the negative news is already discounted and priced in the stock prices now. If there is any disappointment from 'inflation' data, which shall invite further strong measures from Government and RBI would invite selling. Monday is a trading holiday for our markets, which also shall invite profit booking today, since the indices have already posted good gains over previous week so far.

 

Sensex under Japanese Candle Sticks charts has given bullish reversal signal, which shall give strength for further upward movement, and holding 17000 level is necessary for such further gains. VIX has closed at 29.02 indicating low volatility yesterday; but investors need to be guarded against any sudden developments which can bring the reversal in the markets, as our markets are more or less inter twined with global markets and global cues would weigh more on either side in our markets, since the conviction levels on the equities is quite low with domestic investors and domestic institutions too, in the current scenario. Watch behaviour of indices around 200DSMA levels of Nifty (5187.23) and Sensex(17572.80) for cues!

 

Range for the Day: Nifty might trade in the range of 5080 to 5180.

 

Strategy for the Day: Buy 5200 puts on rallies to hedge the portfolios.

Nifty climbs back again above 5000 amidst volatile trade!

Our markets opened with negative bias initially and short covering at lower levels, and select buying in Tech stocks an Metals, due to weakening of rupee, prompted inidces to turn positive, though ONGC, an  index heavy weight was down 7% due to concerns on its future profitability as there is no clear cut formula announced by government to compensate its losses on selling crude at subsidised rates to OMCs. Currently the difference between the international crude and actual rate offered is quite wide running to 45$ is eating into its profitabilitty. Nifty found support for the third day in the range of 4910 to 4940 is a positive sign, amidst increase in volatility suggests that markets are trying to find an intermediate bottom around 4900 levels. Both indices have closed above 5DSMA Nifty(5009.3O) & Sensex(16881.97). 20DSMA placed at currently Nifty(5057.21) shall offer some resistance today. Crude cooling a bit to 124.22 $ and milder than expected CPI numbers have induced a rally in US markets overnight, however tech stocks fall in the late hour lead to giving away most of the gains at the end of the session. Both Dow & Nasdaq are trying to pierce 200DSMA and worries about slowing down of US economy are seems dying down, talk that Fed might start raising rates from October to fight inflation, due to raise in commodities prices, lead to strengthening of US dollar against other currencies.

 

VIX has cooled 12% and closed at 29.22 should bring down the volatility today to some extent, which is being experienced since the beginning of the week. Asian markets are trading positive and Singapore Nifty futures currently quoting at 14  points premium, should give positive opening for our indices initially. Government could pursuade Cement Manufactures too to reduce prices by Rs.7/- per bag, and to hold prices for 3 months, should help in containing inflation in the coming months.

 

Range for the Day: Nifty might trade in the range of 4940 to 5080 today.

 

Strategy for the Day: Buy 5100 puts on rallies to protect the portfolios, against any sudden reversal.

Nifty closes below 5000 again in volatile session!

Nifty opened in positive territory and traded firm for some time, and on the news from government that the prices of petroleum products will not be passed, due to fear of raising inflation, and FM reportedly unwilling to raise the limit of compensation through "Oil bonds" above 57% of the losses being suffered by Government Oil Marketing companies, dampened the sentiment and invited selling and bull unloading in Oil sector stocks, which finally resulted in Nifty and Sensex closing in negative territory. Crude touched another record high of 126.98$ yesterday, US markets also were volatile and closed mixed. VIX has increased another 6% and closed a 33.43 indicates that volatility will continue to be high. Singapore Nifty futures are currently trading at 6 point discount and asian markets are mixed.

 

Nifty has closed below 5DSMA which is currently placed at 5034.05, however, 20DSMA placed at 4913.44 should offer support on any weakness today. Below 4900 the bear pressure shall increase further and investors should need to exercise extreme restrain in picking momentum stocks, in such development.

 

Range for the Day: Nifty might trade in the range of 4900 to 5050.

 

Strategy for the Day: Buy 4900 calls on weakness and hold them till the week end. 

Volatility sets in again and Nifty closes above 5000 inspite of weak IIP numbers!

Our markets have opened in negative territory, owing the global cues, and bottom fishing by funds around 4910-4920 levels saw short covering to some extent, however, Nifty gyrated between 4914 and 4994 for large part of the trading, and last half an hour short covering by intra day traders pushed it above 5000 levels, to close at the upper end of the day's range. VIX moved up by 14% to 31.50, as indicated on the weekly review, the volatility increased. Our prognosis that 4900 would find some support this week also came true. IIP numbers March' 08 have shown one of the lowest y-o-y growth at paltry 3% which spooked the markets intra day. The actual analysis shown that month on month they are o.k. and in tune with GDP forecast, have given relief later. However, one thing is for certain that the Manufacturing sector and Capital Goods sector are showing signs of slowing down since January'08, due to high in put costs, and sleuth of the measures already initiated by Government, and further measures in store, would effect these sectors in the months to come. Agriculture which is the main occupation of 70% population living in our country is not showing any growth, for the past several years, though successive governments are targetting growth of 4% in every Five Year Plan document and yearly forecast by Planning Commission. Ground reality is: with increase in population and people's preference changing quickly due to growing incomes, to have quality food products, less than expected performance of 'Agriculture Sector' would push our country also to serious trouble in the years to come.

 

US markets have traded firm and closed strong overnight, ignoring bad performance from insurers etc., since the crude and commodities started cooling a bit, investors went on to cherry picking in battered markets. CBOE index is at its lowest level around 18, indicates stability in US markets. Asian markets are trading positive, Singapore Nifty Futures are currently trading at premium of  3 points, will give positive opening for our markets too initially. Nifty might face resistance at 5DSMA currently placed at 5071.42 and the follow up buying if emerges today can only bring the markets out of the bear grip. Any fall due to bear pressure should find support at 20DSMA placed at 4918.30 today.

 

Range for the Day: Nifty might trade in the range of 4920 to 5080.

 

Strategy for the Day: Buy a straddle of 5000 at the opening and trade on both sides capturing the volatility for quick returns.

Crude crosses US $ 126 and global markets bleed for the week!

Our indices, especially Sensex opened gap down and the continued selling with alternate bouts of small buying continued till 'inlfation' data is released at 12 Noon, which has shown an uptick to 7.61% highest in the past 42 months, induced further selling from there on. Though the figure week on week is a quite a small raise from 7.57%, the corrected figure of past data has shown an unusual upward revision of 110 basis points against the provisional figures released every friday, spoiled the sentiment, suggesting the actual inflation figure should be more than 8.30% or so, at a later date, which naturally cannot be good news, and invites further administrative measures from government and regulators, forced bull unloading on week end consideration too. All markets have posted weekly losses, the crude is having one way journey only that is "up" so the imported inflation for our country shall be at higher levels only. Indian crude basket has crossed US $ 117 now and the last time, government increased the pertol, diesel prices was, when it was at US$ 66 or so.

Nifty has breached an important psychological level of 5000 in the last hour selling and triggering of stop losses, forcing nifty to close at 4982.60 levels finally, below the April settlement price of 4999.85, is certainly indicating further weakness in the markets next week, as every rally will be sold into, since the confidence gained recently, due to crossing of 200DSMA brought some retail participation back, which is evident in raising of trading volumes. Unless the Nifty crosses 5050 level quickly and trades above it this week, the participation levels shall be muted and volatility will increase from now on, as any small buying or selling will bring large movement in inidices. I recall my forewarning that investors need to be cautious, since this could be a bull trap in my posting dated 05.05.2008:

"Investors need to exercise caution, though 200DSMA levels are crossed, any external news or event also can invite selling from FIIs, and markets are not going to rally as they did in the last 4 years.

This is not a bull market and retail investors should not try to catch the momentum on either side, as they run the risk of loosing money, when the tables turn against them suddenly and swiftly."

How the coming week will be?: Crude now touching all time high of US $ 126.20, technically faces resistance around 127-128 levels, and the news from OPEC to consider increase in production to offset the supply setbacks from nigeria etc., might invite profit booking during the coming week. Bank of England and ECB have left the rates unchanged for the present as every government and economy is now concentrating on fighting raising 'inflation'. Strengthening of dollar should bring some stability in commodity markets too, the actual effect of administrative measures initiated by our government and RBI, manufactureres decision to reduce and hold prices, suspension of futures trading etc., in recent times, might bring the provisional 'inflation' figures on coming friday down to 7.30% levels. Nifty is crucially poised at around 5000 levels, if not cleared in the first two days of the week, then there is every possibility for it to falling into 4500 to 5000 band once again. I strongly believe that, though bullishness might not return so soon, nifty might move in a band of 4900 to 5200 during the coming week with increased volatility, and VIX also is showing slow raise.

Strategy for the Week: Buy 5200 puts on rallies to hedge the portfolios.

Crude continues upward journey and touches US $ 124.49; Nifty closes below 5100!

Nifty has breached 5100 level quite easily due to bear pressure and relentless selling through out the day, where as Sensex opened gap down and both finally closed in negative territory. The noises from government that more administrative measures in the coming weeks to control prices of commodities, and raising Crude prices internationally, the 'pass on' effect is yet to be done, which will be very bad news for the equities and inflation containing measures as well as growth of the economy too. The rush for dollars by importers is pushing rupee down to 41.70/$, a one month high, but could not enthuse software stocks, since the guidance from tech majors from US, paint a gloomy outlook down the quarters, due to economic slowdown being already felt there.

 

US markets were slightly volatile overnight and finally closed with gains due to good performance by retail major Wallmart and job less claims falling by 15000, ignoring the raising crude prices. VIX closed at 25.94 yesterday indicating low volatility to continue. Singapore Nifty futures are currently quoting at 3 points discount and asian markets are trading mixed. Sensex has given reversal signal under Japanese Candle charts indicating the termination of the upmove commenced on 18.03.2008 from 14677.24 to 17735.70 achieved on 05.05.2008; However, since the indices have seen a fall for 4 trading sessions continuously, a relief rally can be expected today, which can be strengthened to avert the bearishness, in case the 'inflation' data to be released at 12 noon, shows some respite, and cooling or stabilizing for the present.

 

The week on week closing shall be negative since the distance to be covered by indices is quite large today, but any weakness to 5000 to 5040 levels on Nifty should be utilized as a good buying opportunity, for intraday trading as well as for next week.

 

Range for the Day: Nifty might trade between 5000 to 5200 today.

Strategy for the Day: Buy 5200 puts on rallies and 5000 calls on weakness for intraday trading.

Crude raises further to $123.75 and global markets correct!

Our markets opened slightly positive and traded in negative territory entire day, inspite of few attempts to come into positive territory, due to profit booking and bear pressure.Both indices have fallen below 200DSMA & 5 DSMA levels. Hangseng though opened positive closed with 2% losses at the end of the session. Steel companies came down, owing to government pressure, to reduce the prices by Rs.4000/- per ton and also assured not to raise for 3 months from now. FMC has suspended futures trading in few agri products, to curb speculation. Rupee further weakened due to rush for US dollars by importers since crude is having relentless raise. Crude touched another new high US $ 123.75, and the fear that the government might be forced to raise petroleum prices dampened the sentiment on our bourses. US markets have fallen below 200DSMA and closed with losses due to weak outlook given by Cisco and raising crude prices.

 

Nifty took support at 5101 exactly and bounced, the lower end  predicted in our yesterday's posting, and finally Nifty closed marginally in negative territory, due to short covering. Nifty futures closed at 16 point premium, VIX closed at 25.06 indicating lower volatility. Singapore Nifty futures are currently quoting at 47 points discount, indicating that 5100 level might be breached today, as the indices have closed for 3rd consecutive day, since they rallied from 18.03.2008, where the dips did not last for more than 2 days so far. Nifty has closed well below April Closing of 5165.90 & now January Closing of 5137.45 indicates bear pressure, and further weakness can be expected today, due to absence of any positive triggers for the markets now.

 

Range for the Day: Nifty might trade between 5050 to 5200 today.

Strategy for the Day: Buy 5200 puts on rallies and 5000 calls on weakness for intraday trading.

Crude rallies to $122.35 and markets correct further!

Our markets correted amidst slight volatility, and closed in negative territory for the second consecutive day. Nty took support at 5110.90 exactly, the lower end of the intraday range anticipated by us, yesterday and bounced from there, finally Nifty futures have closed at 30 points premium to the spot, indicating covering of shorts at lower levels and building of long positions too. Both Nifty and Sensex have breached 200DSMA levels in the process and are dangerously poised threatening that the markets might slip into bearish mode once again. Crude touched $122.35 overnight and cooled from there due to profit booking. Goldman Sachs predicts that it might touch 150 to 200 in the coming 6 months, if the weakness in the dollar continues and supply concerns increase in future, as demand is ever increasing. Indian crude basket has touched $112 highest point, and the Oil marketing companies owned by government are loosing Rs.450 crores per day due to control pricing of petroleum products. Reliance Industries major private player has closed 1432 retail pumps all over the country, owned by the company, since they are at disadvantage against govt. controlled OMCs which receive subsidy to some extent. The future outlook paints difficult times for the economy, manufacturing sector and consumers too, due to this one commodity reaching such unprecedented levels.

US markets opened weak initially, and recovered quickly and closed positive at the end of the session. VIX closed at 24.91, indicating low volatility. Singapore Nifty futures are trading at 10 points discount currently, and asian markets are trading mixed, thus our markets should open positive and move up and shall face the first resistance at 200DSMA currently placed at 5171.12(Nifty) & 17521.96(Sensex); and if short covering and buying emerges should close above these levels today to avert deeper correction to set in.

Range for the Day: Nifty might trade between 5100 to 5300 today.

Strategy for the Day: Buy 5300 puts on rallies and 5100 calls on weakness for intraday trading.

Crude touches $120 in just 2 days again and markets correct!

Sensex opened gap up and made positive gains initially and traded in postive territory for quite some time, while Nifty encountered resistance at 5255, which invited profit booking and some short build up too. Both the indices have closed in negative territory at the end of the session. Nifty futures premium is narrowed down to 8 points which began with 18 points, is an indication of tiredness, form bull camp, in the absence of any positive triggers. Crude touched 120 $ once again in just 2 days, on the weakness of dollar, and it is not showing any let off, which hurts most of the economies which import crude, where the demand is ever increasing.

 

Since the inflation is already at its highest levels, our government is not in a position to pass on the price hike on petroleum products, in an election year, apart from the same it will again fuel inflation further. It is being expected that crude can touch US $ 150 too very soon, since there are no increase in supplies from any quarter, where as weakness in US dollar, and raising demand from all countries can push the price to this level. Other commodities also are not showing any let off, due to weakness in dollar, and US regulators are not in a position to see their currency strengthen in the current scenario of slowing down of their economy and the possible recession in this election year there too.

 

US markets went into negative territory on profit booking, and closed negative, might have rub off effect on our markets too today. Singapore Nifty futures are currently trading at 10 points premium, while astralian markets have opened marginally weak already, shall invite further weakness and sideways movement for our markets today. VIX slightly increased to 25.07 at the end of the session yesterday.

 

Range for the Day: Nifty might trade between 5110 to 5320 today.

Strategy for the Day: Buy 5300 puts on rallies and 5100 calls on weakness for intraday trading.

Inflation at 7.57% 42 months high! Sensex too closes above 200DSMA finally!

Taking the strong overnight cues our markets opened with gap up firmly on friday, and traded volatile till the release of inflation data, which was expected to be higher. When the data came as a surprise at 42 months high at 7.57%, initially, there was a sell off in rate sensitives but, owing to firm close of asian markets and strong opening of European markets, our indices have closed in positive territory, posting week on week gains too. In the process, Nifty has closed at 5228.20 crossing February closing of 5223.50, giving indication of bullishness. Sensex which was strugglilng to cross 200DSMA has opened above it with a gap and finally closed above it at the end of the session at17600.12. Now both the indices are well above 200DSMA, as markets look for information from now on during the week and this month, and further gains whether can be there, in view of raising crude prices once again, inflation crossing tolerable levels, is a big question. Investors need to exercise caution, though 200DSMA levels are crossed, any external news or event also can invite selling from FIIs, and markets are not going to rally as they did in the last 4 years. Currently VIX closed at 24.21 on friday, indicates low volatility, and raise in any volatility from now on should be treated as the first sign of reversal of trend.

US markets opened firm on friday and gave away all gains, due to raise in crude prices, and mixed economic data, investors preferred to book profits, while Dow posted marginal gains, Nasdaq has closed with marginal loss at the end of the session. Asian markets are trading mixed and Singapore Nifty futures are currently quoting at 25 points premium, which should give marginal positive opening for our markets. Our markets might consolidate at higher levels for sometime, in case they wish to move up. Professional short term traders can place their first stoploss at 200DSMA on Nifty which is currently placed at 5165, for all long positions, and final stoploss at 5087, in case one wish to take higher risk. This is not a bull market and retail investors should not try to catch the momentum on either side, as they run the risk of loosing money, when the tables turn against them suddenly and swiftly. SBI came with better than expected results and also announced that all its subsidiaries merger with it might be comleted by March 2009, is positive news for the stock, its subsidiaries and a rub off effect on banking sector also can be seen initially.

Range for the Day: Nifty might trade between 5110 to 5320 today.

Strategy for the Day: Buy 5300 puts on rallies and 5100 calls on weakness for intraday trading.

How May month Unfolds for our markets!

After closing with 9% gains for month on month during April'2008, with number of events and most of the corporate performance is being out, we enter in to the month of May'2008, today. May month series is longer than April and already inidces have posted gains after April series settlement, till now. While Nifty firmly closed above 200DSMA, Sensex had an attempt at it in the last trading session(0n 30.04.2008) thrice, but due profit booking on holiday consideration, could not close above it. With US markets rallying over night, due to some signs of positive economic data, and cooling of Crude to 110.90 $ due to profit booking, on strengthening of dollar, as FOMC indicated that rate cutting is done with for some time, and would watch 'inflation', attempt at tightening and controlling from here on which will be the main azenda, as the turmoil in financial markets seems to be calming down. Bank of Japan has left rates unchanged. RBI has left rates unchaned, but increased CRRby another 25 basis points. Chinese Central Bank too has raised CRR last month, also is concentrating on bringing down the 'inflation' even at the cost of moderating the 'growth' in the economy. CBOE index is 19.53 being the lowest, and VIX has hit its lowest point 25.16.

 

Today, there will be a short covering, relief rally at the opening, and the 'inflation' data to be released at 12 noon, shall extend the same till the end of the session, in case it appears easing out below 7.41% highest touched so far few weeks ago, as number of measures are initiated by Government & RBI, which made Industry also to repond to hold prices for 2 to 3 months. Singapore Nifty futures are currently trading with 70 points premium shall give gap up opening for our indices.

 

May month out look: Our indices, both Nifty and Sensex have posted higher highs and higher lows during the month gone by(April'2008) albiet volatility, uncertainity around, and also posted gains over March Closings, which are the lowest in 2008. We have indicated that Nifty shall move in the range of 4300 to 5300 in our 01.04.2008 posting, which proved to be more or less true, as the range of Nifty for April actually was 4628.75 to 5230.75; Now what will happen in may? May month is generally devoid of any market sensitive news, excepting unforeseen external/internal factors in 2004 and 2006, brought indices to bottom out generally. If we consider the statastical trend and pattern year 2008 falls into the same groove, whether a bottom can be formed during this month? and which factor can bring about such sudden fall and volatility is beyond any done's comprehension. The only indicator which bring in panic reaction and wrong policy decisions by regulators could be shooting up of inflation beyond 8%; shall force the equities to suffer most suddenly and swiftly, since the sentiment and risk aversion to this asset class is already bruised with the steep correction in the first quarter. 100DSMA of Nifty is currently placed at 5329.61 should offer stiff resistance, on slaught of bear pressure coupled with bull unloading. The rally from bottom formed in March 2008, is a relief rally in a bear market, and could be a 'bull trap'. Thus investors and traders should exercise caution, take the profits and stay in cash, or alternatively hedge their portfolios duly with ITM put options.

 

Nifty might move in the range of 4500 to 5500 during the month.

 

Strategy for the Day: Buy 5300 puts on rallies and 5100 calls on weakness for quick returns in intraday trading.

April Month ends on positive note after a dip in March'2008

"Today being the last day for April'2008, and since nifty firmly crossed 5137.45(January Closing) and whether it will clear 5223.50(February Closing) also today and close above it, will be watched by technical analysts, for monthly charts to improve the structure. Singapore Nifty futures are trading with 12 points premium currently, but profit booking can be expected in the later half of trading owing to a holiday."

This is what we have indicated in yesterday's posting! After opening with positive gap making new highs for the month, both indices have become volatile, due to profit booking, and bull unloading, a head of an important event(FOMC meeting) and a holiday on 01.05.2008, finally closed in negative territory. Positive feature being Nifty has held the 200DSMA(5160.86) and closed at 5165.90 at the end of the session, clearing Jan-08 closing(5137.45), a raise of 9.11% month on month, is a positive sign for further raise in the markets from here on sustaining 200DSMA levels, ending the bearish sentiment. However, Sensex is yet to clear 200DSMA which is currently placed at 17488.02, though month on month posted similar gains like Nifty.

VIX stands at 25.16 as on yesteday, being the lowest level since its inception, indicates lower volatility. Nifty futures have closed at hefty premium of 23 points with addition of open interest, indicates positive bias for May initially. FOMC has decided to cut the Fed funds rate by 25 basis points to 2.0% in the meeting conlcuded overnight, meeting the expectatons on the street, and observed that going forward 'inflation' will be targeted, since growth indicators are turning positive, and calmness is returning to financial markets. This statement indicated that Fed has done with the rate cut initiative for some time now, sent US markets give away all gains and closing in marginally negative territory, at the end of the session. Asian markets are trading with losses at the moment, with important events behind us, markets around the world shall now try to guage the corporate performance for this quarter and year, based on the current situation, and the month of May might see churning of portfolios, for identifying the winners in these uncertain times.

The outlook for May month will be posted in the next posting!