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.