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.
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