Indices might trade in a band with sideways movement, preparing for next major move!

July series of Derivatives have begun with a negative note, shattering the sentiment of all classes of investors, and expectations on Q-1 results are not being talked or priced into the stock prices. The fact of the life at markets is even in one of the prolonged bear markets too, indices cannot godown daily and every week and become 'zero'. Having fallen 6 weeks in a row, a relief rally is overdue, as markets are extremely oversold, but the question is how much raise can come and where again selling emerges? Nifty has been moving in 500 points band like 5500 to 6000; 5000 to 5500; 4500 to 5000 and now 4000 to 4500 certainly. The long term trend is 'down' for certain, and we are into a prolonged 'bear market' which might last few years before strong bull market begins, when the global and domestic uncertainities vanish, and macro and micro economic environment looks up. Singapore nifty futures are currently quoting 15 points premium, and asian markets are trading with small gains.

Our indices will open flat to positive territory initially, and in the later half of the day, fund buying in index heavies, to prop up 'NAVs", today being the last day of the month and quarter, should press shorts to cover, as nifty closed at a whopping 58 points discount on friday, might give a positive closing for today, in my opinion. Any further follow up buying tomorrow on the expectations of Q-1 results shall result in stock/sector wise performance, as indices struggle in a band, as discussed above, since the tough talk by CPI(M) after its polit beaurow meeting re-iterated its stand off "Indo-Nuke" deal, and warned of withdrawing support to UPA government, if it decides to proceed to pursue in its current form.

Range for the Week: Nifty might trade in the range of 4000 to 4500.

Strategy for the Day: Buy 4000 calls on weakness and 4250 puts on rallies for intraday trading.

Nifty & Sensex lowest weekly close in 2008 confirms prolonged bear market!

Starting from 16.05.2008, both the indices have posted weekly losses for continuous 6 weeks in a row, and have made new lows during June 2008, breaching previous lows of deep cuts in January'2008 & April'2008. All the Nifty heavy weights are in down trend, excepting few stocks like Ranbaxy, and the news flow from abroad and domestically day in and day out is completely negative. While year 2007 seen one of the largest FII flows to emergeing markets including India, this year has seen reverse of flows. The huge support from insurance companies and domestic mutual funds which have invested already 10$ billion dollars, are saving the markets at current levels. Crude crossing US$142 domestic inflation touching 13 year high at 11.42% on 27.06.2008, added to the political instability being felt due to the stand off between UPA and Left parties adding to complete apthy to equities by investors.

 

Technical analysts world over, are predicting deeper cuts in global markets for another year atleast, as crude is suspected to be touching 170$ due to dollar weakness, which is importing infation in all economies including US. US also will have presidential polls this year, where both the ruling party and opposition are trying to comfort investors and public with sops rather than taking tough measures to tackle the inflation. Nifty and Sensex have closed just above 35% correction level from their all time tops made in January 2008, and any further weakness from these levels push indices into prolonged bear market, where preserving cash levels will be the key to sucess. If one wants to invest in stocks, have to look beyond 2 years from now minimum, for good returns. The strategy should be to pick up good dividend yielding stocks gradually, with strong fundamentals, which give some returns, inspite of the stock price movement anytime. VIX has closed at 32.20 suggest continued hightened volatility. Nifty July futures have closed at 58 points discount, indicates huge short positions built up.

 

Monday being the last day of the month and quarter, some fund buying for propping up NAV might be there, which helps indices to post gains. However, closing above May closing (4870.10) or March closing(4734.50) cannot happen in the present circumstances, thus it will be negative closing for the month as well for second quarter. The sentiment in the markets can improve considerably only on cooling of crude sharply below US$120 levels, which is a remote possibility in near future. However, stock specific news flow might invite investor interest, as we enter into Q-1 results as they would be revealed in July, starting with tech sector major "Infosys technologies".

 

Out look for July will be analysed after the close of markets on monday, being the last day of the month and quarter.

Nifty July series discount at whopping 75 points!!! Bears tighten the grip further!

June Series settlement is behind us and the rollover of stock and nifty futures to next month series are mostly on short side only. While the spot nifty manged to close at 4315.85 yesterday, since index mangagement was seen in the last half an hour, for ensuring the index options settle favourable to the funds who have taken a specific view for the month. The july nifty futures closed at whoping 75 points discount, includes some dividend adjustments too, but it clearly indicated negative view by FIIs a head of inflation data to be released today at noon, which shall show further uptick, inspite of several measures initiated by government and RBI. Crude cruised to US $ 140 overnight due to dollar weakness against Euro and Gold advanced by 25$ to breach 900$ mark yesterday. VIX closed at 32.85 yesterday. CBOE index jumped 12% yesterday indicating higher volatility in US markets. Asian markets are trading in negative territory, following US cues. US markets have posted huge losses overnight, as Goldman Sachs has down graded two major banks, and out look from tech majors was bleak for the ensuing quarter, which lead to sell off from investors, who were catching the flight to 'safety'. Singapore nifty futures are currently quoting at a discount of 110 points, gives gap down opening for our indices, for certain.

 

July month settlement takes place on the last day of the month i.e., 31.07.2008, thus, one of the longest period, which naturally gives raise to huge range and volatility for Nifty. Nifty has closed at 4870.10 at the end of the May month & 4734.50 at the end of March month/quarter. The general prop up of NAVs by mutual funds, that could be done has only two days left in this month, where lots of negative news is already out for the markets today. The range if Nifty for next month can be evaluated seeing how the June month closes, however, today being the week end, it will be interesting to see whether nifty can finally close above 4347.55, which will arrest the continuous fall for 5 weeks at a strech. Nifty's inability to clear 4351.15 today after the release of inflation data, and its inability to sustain above 5DSMA currently placed at 4274.71, will invite profit booking on week end consideration.

 

Range for the Day: Nifty might trade in the range of 4150 to 4350.

 

Strategy for the Day: Short Nifty July futures with a stop loss at 4267 for intraday trading!

Has Nifty found bottom for short term! in yesterday's volatile trade?

Yesterday's  trading was a capitulation day, where our indices opened gap down, made new lows, where bargain hunting coupled with short covering lifted the indices to positive territory amidst very high volumes. The total volumes touched 98000 crores on the bourses, was one comforting feature. Well lots of news also is out now....viz., Fed left the rates unchanged, UPA-Left meeting bought time till first week of July, from the stand off on "Indo-Nuke" deal pursuation, thus our markets can concentrate now on fundamentals and technicals of stocks and indices. Today is the Settlement day for current series, and the roll overs are on short side only to next month series which have full 5 weeks, one of the longest settlement. Based on Nifty options roll over to next month series, it appears that the settlement price of Nifty today can be above 4100.

 

FIIs selling appears to be done with, and they also became margin since yesterday, if follow up buying emerges then yesterday's lows on inidces Nifty(4093.20) & Sensex(13731.54) would be confirmed as short term bottom; the confirmation of the same shall be known, how markets unfold today and tomorrow. Be watchful, as the volatility and volumes shall be higher in case of such event. VIX closed at 36.46 indicates higher volatility to continue. Crude closed to US $ 134 after falling to 132$ yesterday. It is consolidating betweeen 132 and 140 for quite some time now, break out of this range will give direction to global markets in the near term.

 

US markets closed in positive territory marginally, Singapore Nifty futures are currently quoting with 16 points premium, might give positive opening for our indices initially, but two way volatile movement can be expected and the last half an hour will decide the settlement price, where volatility can be highest. July futures have closed at steep discount of 47 points that strategy to sell on rallies shall continue for some more time, but HNIs, Funds. 5DSMA placed currently at Nifty(4312.39) and previous closing price of 4347.55 will be the initial resistances to be encountered by Nifty, for further gains.

 

Range for the Day: Nifty might trade in the range of 4150 to 4350

 

Strategy for the Day: Buy Straddle on Nifty strike price 4250 of current series for intraday trading and quick returns. (Buy 4250 Call Option & Put Option)

RBI acts to check inflation! CRR and Repo rates hiked 50bps each!

Our markets have opened in positive territory and traded two way for most part of the day, till noon, when European markets opened in negative territory, once again fund selling brought indices like 9 pins, breaching important levels of 4225 and 14150 too. Indices are making new lows daily and the volatility index VIX touched highest point 67.52 suggests that trouble is not yet over. VIX closed at 34.05. While roll overs on short side are only happening for now, the news flow is completely negative and disturbing for equities.

 

RBI has increased Repo rate by 50 basis points with immediate effect and CRR by 50bps in two tranches effective from 5th July'2008, to tighten the monetary situation. FOMC meet concludes today and the decision on interest rates by Fed along with the statement on the economy, inflation etc., will be known late in the night. Another crucial UPA-Left coordination committe shall meet today, to decide on modalities of proceeding with negotiations on "Indo-Nuke" deal. Markets might bottom out around the current levels, but the volatility will hurt traders and investors very severely, as the range of movement of indices will be very broad. US markets have closed with losses a head of FOMC meet outcome, and asian markets are trading in negative territory. Singapore Nifty futures indicate discount of 42 points currently, thus, gap down opening can be expected.

 

Range for the Day: Nifty might trade in the range of 4135 to 4345.

Volatility becomes part of markets! Bottom formation round the corner!

Both the indices, made new lows for 2008, Nifty(4225) & Sensex(14163.45) yesterday, and Nifty even closed below 4296.97, 50% retracement level indicated while Sensex held 14263.12 on closing basis. June nifty futures turned into premium, indicating shorts are rolled over to July series which currently quote at a discount of 20 points. VIX closed at 31.32 indicates volatility to continue. US markets were volatile but Dow closed flat and Nasdaq with marginal losses. Singapore Nifty futures are currently quoting 25 points premium, and asian markets opened in positive territory. 4200 on Nifty might be held till expiry, as only two more days to go. Dr.Y.V.Reddy, RBI Governor while addressing at NIBM, Pune, tried to convey the message that though we are passing through tough times, due to imported infaltion caused because of abnormal raise in crude prices, growth projections shall be on track, as other indicators are under control. He further said that RBI is well prepared to check the demand side factors for ensuring growth targets are met, as envisaged in April policy. So far roll overs are muted and only short positions are rolled over.

Advance tax numbers from ONGC,RIL,NMDC etc., all have shown good jump and total advance tax collections were quite substantial as per CBDT release. Q-1 numbers will be good, especially from tech sector, Oil refining companies and commodity players, and the valuations have come quite attactive, thus, small quantities of purchases are being made by insurance companies, which are not able to match the selling from FIIs, due to which we have witnessed continuous down fall of 700 points on the Nifty and 2500 points on Sensex during this month. Even long term bear markets will not have continuous down days and shall have bounces and relief rallies intermittantly. Currently indices are in oversold position, and a short term bottom formation has begun, where we will witness large volatility.

Range for the Day: Nifty might trade in the range of 4200 to 4350.

Strategy for the Day: Buy 4200 calls on weakness and 4400 puts on rallies of june series for intra day trading.

Volatility becomes part of markets! Bottom formation round the corner!

Both the indices, made new lows for 2008, Nifty(4225) & Sensex(14163.45) yesterday, and Nifty even closed below 4296.97, 50% retracement level indicated while Sensex held 14263.12 on closing basis. June nifty futures turned into premium, indicating shorts are rolled over to July series which currently quote at a discount of 20 points. VIX closed at 31.32 indicates volatility to continue. US markets were volatile but Dow closed flat and Nasdaq with marginal losses. Singapore Nifty futures are currently quoting 25 points premium, and asian markets opened in positive territory. 4200 on Nifty might be held till expiry, as only two more days to go. Dr.Y.V.Reddy, RBI Governor while addressing at NIBM, Pune, tried to convey the message that though we are passing through tough times, due to imported infaltion caused because of abnormal raise in crude prices, growth projections shall be on track, as other indicators are under control. He further said that RBI is well prepared to check the demand side factors for ensuring growth targets are met, as envisaged in April policy. So far roll overs are muted and only short positions are rolled over.

 

Advance tax numbers from ONGC,RIL,NMDC etc., all have shown good jump and total advance tax collections were quite substantial as per CBDT release. Q-1 numbers will be good, especially from tech sector, Oil refining companies and commodity players, and the valuations have come quite attactive, thus, small quantities of purchases are being made by insurance companies, which are not able to match the selling from FIIs, due to which we have witnessed continuous down fall of 700 points on the Nifty and 2500 points on Sensex during this month. Even long term bear markets will not have continuous down days and shall have bounces and relief rallies intermittantly. Currently indices are in oversold position, and a short term bottom formation has begun, where we will witness large volatility.

 

Range for the Day: Nifty might trade in the range of 4200 to 4350.

 

Strategy for the Day: Buy 4200 calls on weakness and 4400 puts on rallies of june series for intra day trading.

 

 

 

Volatility becomes part of markets! Bottom formation round the corner!

Both the indices, made new lows for 2008, Nifty(4225) & Sensex(14163.45) yesterday, and Nifty even closed below 4296.97, 50% retracement level indicated while Sensex held 14263.12 on closing basis. June nifty futures turned into premium, indicating shorts are rolled over to July series which currently quote at a discount of 20 points. VIX closed at 31.32 indicates volatility to continue. US markets were volatile but Dow closed flat and Nasdaq with marginal losses. Singapore Nifty futures are currently quoting 25 points premium, and asian markets opened in positive territory. 4200 on Nifty might be held till expiry, as only two more days to go. Dr.Y.V.Reddy, RBI Governor while addressing at NIBM, Pune, tried to convey the message that though we are passing through tough times, due to imported infaltion caused because of abnormal raise in crude prices, growth projections shall be on track, as other indicators are under control. He further said that RBI is well prepared to check the demand side factors for ensuring growth targets are met, as envisaged in April policy. So far roll overs are muted and only short positions are rolled over.

 

Advance tax numbers from ONGC,RIL,NMDC etc., all have shown good jump and total advance tax collections were quite substantial as per CBDT release. Q-1 numbers will be good, especially from tech sector, Oil refining companies and commodity players, and the valuations have come quite attactive, thus, small quantities of purchases are being made by insurance companies, which are not able to match the selling from FIIs, due to which we have witnessed continuous down fall of 700 points on the Nifty and 2500 points on Sensex during this month. Even long term bear markets will not have continuous down days and shall have bounces and relief rallies intermittantly. Currently indices are in oversold position, and a short term bottom formation has begun, where we will witness large volatility.

 

Range for the Day: Nifty might trade in the range of 4200 to 4350.

 

Strategy for the Day: Buy 4200 calls on weakness and 4400 puts on rallies of june series for intra day trading.

 

 

 

Nifty and Sensex makes new lows and close at the lowest in 2008!

Inflation at 11.05% spooked the markets from 12 noon onwards, and the indices had only one direction i.e., down ..down and down, shatterting the hopes of some relief or stability for our markets. While bears suffered for 4 years in bull run, they are having last laugh now, as continuous negative news flow helps them to leave the shorts uncovered, even on weekend. All technical supports for both indices are gone, and now they will become strong resistances, as selling emerges from trapped investors and bulls. VIX closed at 28.19, however, highest point of 57.85 was reached after this indicator is introduced. Short roll over to July series are seen so far, this being settlement, with lots of information flowing from overseas and domestically too, volatility can be expected, with downward bias till expiry on 26.06.2008. US markets tanked further on friday day, in qudrupple witching(settlement) day, and Singapore Nifty futures currantely indicte 60 point discount helps short sellers initially.

 

Nifty might find support at 4296.97 being the 50% retracement level of entire bull rally, and on breaching it next support might come at 4190, where it created an upward gap on 27.08.2007. Corresponding level on Sensex shall be 14263.12. If these levels are convincingly broken on closing basis, then there will be hell loose on the indices, indicating deeper and longer bear markets, acording to me. Hence, watch these levels carefully.

 

Range for the Week: Nifty might trade in the range of 4200 to 4650.

 

Strategy-1 for July: Buy 4300 calls of July series on weakness and hold them till expiry(31.07.2008)

 

 

Inflation at 11.05% and markets crash!

To utter surprise of all expectations the inflation expectation data shows that it rose to 11.05% a 13 year high, and immediately entire market crashed. One interesting feature is this level is reached with a "partial pass through of oil price" recently by government. If one recollects petrol price was Rs.50/- while indian crude basket reached US$67 or so., last year. Now, 10% hike in petrol and other products, brought this level of inflation, though indian crude basket touched US$132 recently. if one has to really pass through the hike in crude price, theoretically the petrol should be sold at Rs.100/- unacceptable to any person in the country.

 

Just imagine, if that is done what will be the effect on inflation and what happens to growth??? which the government is boasting yesterday on all channels will be 8.5% this year too. Another important issue is, if pass through is not passed on to the consumers, then actually some body else is paying it!! Oil marketing companies, government through widening of fiscal deficit. This again is bad news for economy and equities in particular.

 

Strategy for the Day: If one has bought 4600 puts in the early morning, as recommended by me,  they can book profits now itself, as markets might recover later.

Bears tighten the grip - All eyes on Inflation expectation data today!

Following weak global cues, our markets opened gap down and traded in negative territory entire day, on unwinding of long positions, and also on fresh short build up too, as political instability fears raise once again, since UPA government and Left parties fail to reach consensus on "Indo-Us nuke deal. Inflation data to be released today at 12 noon, is being expected by most of the analysts  and economists to cross double digit, as the petrol, diesel etc., price hike gets loaded into it now on. Nifty traded around 4500 for most of the session, and finally managed to close above it, was some comfort, though it closed below previous week closing of 4517.10.

 

It will be very interesting to see whether nifty finally closes above this level today or below it and below 4500 too, as the weekly charts get affected. Sensex too closed below previous week's closing of 15189.62. Closing of Sensex above 15333 today is vital for any hope for bulls, for a fight back next week and there on. Thus, watch 4560 on Nifty and 15350 on Sensex today closely, the volatility can be highest as VIX closed at 32.32, and in my opinion, today's closing will determine the short term trend for certain, as both indices have closed below 5DSMA too, yesterday Nifty(4565.85) & Sensex(15357.76).

 

Us markets were volatile overnight, and closed with gains as crude cooled to US $132, as the news from China hints at lower subsidies on fuel prices, which might reduce the demand. Chinese indices were down 6% yesterday, as FIIs are exiting in block due to raise in inflation, CRR, and possible slow down in growth. Chinese indices are the worst performers during this year, what can happen if markets have a bull run based on FII investment alone, is quite evident now. Right now, though lots of mutual funds and DIIs and even High netword individuals are sitting on cash, and make small purchases around technical bottoms, which give some relief rallies, which fizzle much quickly, as the FIIs are seller continuously for the past two months. We are into a bear market right now, and the strategy should be to sell on rallies, till the indices clear 200DSMAs which currently stand at Nifty(5237.25) & Sensex(17704.27)

 

Range for the Day: Nifty might trade between 4400 to 4600.

 

Strategy for the Day: Buy 4600 puts on rallies and hold them till 24th(tuesday)

Nifty corrects as predicted and rests on 5DSMA support now!

Yesterday, I have written that the target of 4650 is achieved for nifty and one should be cautious from here on. Most of the analysts are looking at 4700 and 4735 levels for resistance, for this relief rally, as it was the March monthly closing, and when every one looks at a particular level, smart guys will exit much earlier to it. This is what exactly happened yesterday, while the going was good, FIIs started dumping stocks, in block, irrespective of individual performance, which brought the correction of indices to 5DSMA levels Nifty(4572.87) & Sensex (15390.97), erasing the gains of 17th entirely, the one consoling feature was, indices have made higher high and higher low yesterday. One more observation I wish to reveal is while Nifty has turned back from 4680 level itself, Sensex crossed March closing level of 15644.44 on 17th itself and moved a head to 15789.62 yesterday, which now corrected back to 15422.31 levels finally.

US markets have made new 3 month lows yesterday, due to disappointing results from Morgan Stanley and raising crude prices to 137$ from 132 levels, as supply concerns surface once again. US markets have the options settlement this week, and the volatility there is to be viewed partly as adjustment on that account also. Singapore Nifty futures are currently quoting at a discount of 53 points right now, and asian markets are trading in negative territory. VIX closed at 31.82 indicates continuation of higher volatility. Roll over of derivative contracts to next month series shall pick up from now on, which gives two way movement for the indices. Watch for support at previous week's closing levels on Nifty(4517.10) & Sensex(15189.62), in case of weakness at the opening or intraday today.

Range for the Day: Nifty might trade in the range of 4520 to 4650.

Strategy for the Day: Buy 4500 calls on weakness for quick returns in intra day trading.

Bear Market vs Bull Market!

Big debate is going on all channels, since the jan'2008 fall and correction happened from there on, whether our markets entered bear phase in a bull market or bear market has started already! While markets have their own dynamics and mind too, as some people believe, few observations will indicate the commencement of a bear market:

1.Leading stocks and sectors of bull market fall more than the indices in percentage terms.
2.Stocks and indices trade below 200DSMA/100DSMA/50DSMA etc.,
3.Fall in prices of stocks or value of indices are higher than raises.
4.Defensive stocks and sectors will be outperforming the other sectors and indices...viz., pharma, fmcg, media etc.,
5.Any negative news will have larger impact than positive news, and stocks/indices continue to make new lows.

Well, one can easily observe all the above are already in place, but still investors and analysts, having tasted a strong bull market from 2003 to 2007, are unable to digest the bad news. Further 4 year bull market will have atleast one year bear market or bear phase since 5 is again a fibonacci number, thus, year 2008 having made highs in January'2008, cannot reach those highs during the year. However, the mute question now is whether the 4 year bull market ended in January'2008 and are we into a multi year bear market?

In my opinion, as things stand, on GDP front, inflation, crude prices and interest rate scenario, this year will be a bear dominated one, and it might extend till first half of 2009 too, owing to political situation in our country; The trouble now is indices are trading and consolidating in large band which gives raise to huge volatility on either side. While investors who entered in the beginning of 2008 are already sitting on losses, including mutual funds, trading community are worst sufferers, whose capital is already eroded, due to volatility and uncertainity.

What to do in such a situation? Any investor should increase cash levels by selling into rallies and be satisfied with small profits, intra day or on overnight positions too. Times of making easy money are over for now! Investors can identify good dividend paying stocks with strong fundamentals too and add to their portfolio which will give good returns when the trend turns again to bullishness anytime.

Target of 4650 on Nifty achieved in the first two days! Beware of Road blocks!

Our markets opened flat and traded in negative territory, threatening to go down till 12 noon, once the Advance tax payment numbers from HDFC and HDFC Bank, Union Bank, Dena Bank etc are known, which are quite robust and ecnouraging, the financial sector and real estate stocks have rallied from there on. Huge short covering further lead to indices closing in positive territory at the upper end of the day's range. Nifty and Sensex have filled falling gaps made on 06.06.2008. Nifty has gained 300 points from the low made on 10th while sensex gained 1000 points already. Some correction or sideways movement can be expected as the road a head is full of 'spead breakers' (resistances). This is just a relief rally only, as indices trade far below 200DSMAs. US markets have closed in negative territory due to raise in inflation numbers, expect rate hike by Fed from now on. VIX closed at 28.96 indicates continuation of volatility. Singapore Nifty futures are currently quoting at 21 points discount, indicate weak opening initially. Nifty futures closed at a discount of 18 points to the spot.

5DSMA level of Nifty(4561.11) & Sensex(15343.57) may be tested in case of weakness, where some support can be expected, which will give futher gains later, failing which indices will fall again to retest lows. Thus, one need to exercise caution, as the selling by FIIs continues unabated, only marginal purchases from DIIs are holding the markets right now. Crude is consolidating between 130 and 140 and shall go up only, to break 150 level, as the entire long term money, hot money, hedge funds etc., is all parked in this single commodity. Investment by long term funds, like pension funds, long only funds etc., will not exit in hurry, as traders or speculators do, unless crude cools below 100$ global inflation, slowing of growth would be challenges for equity markets.

Range for the Day: Nifty might trade in the range of 4550 to 4750.

Strategy for the Day: Buy 4700 puts on rallies and 4500 calls on weakness for intra day trading.

Week begins on positive note! Will it continue?

Both Nifty and Sensex have opened with positive gaps, following global cues, and short covering was visible in Nifty futures during the entire day, as the discount on Nifty futures vanished at the end of the session. Nifty encountered resistance at 4618 and Sensex at 15555, where downward gaps are created on 06.06.2008, remain to be covered, thus bears became active once again. Crude movement is now almost deciding the trend of global markets, as it is moving in a band of US $ 130 to 140 for the past few days. Yesterday, crude became volatile, so too US markets, which opened in negative territory, but recovered later. While Dow closed in negative territory, Nasdaq posted gains on closing basis. Asian markets are trading mixed with marginal gains currently. Singapore Nifty futures are currently quoting at 10 point discount indicate marginal flat to negative opening. VIX closed at 29.02 shade lower, but volatility shall continue.

 

Advance Tax payments by financial institutions are known, which indicate that they are in line with market expectations. SBI, ICICI Bank have paid more while Sail has paid same figure, as per the reports known through channels, from sources. Monsoon is actively spreading across the country, Delhi after a long gap of 108 years received monsoon showers, much earlier than usually scheduled, gives hope that it shall help agricultural sector performance and in turn rural incomes is welcome sign for equities. Government has raised excise duty on more than 1500cc vehicles including cars to discourage consumption of petrol/diesel, which hurts automobile sector, which is already languishing due to raise input costs and increase in crude etc., Port folio churning shall be likely, pricing in winners of Q-1 performance based on advanced tax numbers, as they trickle in, and volatility shall be high, due to the same.

 

Range for the Day: Nifty might move in the range of 4500 to 4650.

Strategy for the Day!

Sensex has given short term bullish reversal signal on friday, under Japanese Candle Sticks charts, from the bearishness being experienced for the past four weeks. Singapore Nifty futures are currently quoting at 87 points premium and Asian markets are trading in positive territory, as US markets recovered on friday night. Today the following strategy may be adopted:

 

Strategy for the Day: Buy June futures Nifty above 4520 with a stop loss at 4455 and move the stoploss as the position moves into profit, intraday to maximise gains. The margin required shall be Rs.25,000/-. Watch for resistance at 4620-4650 levels where one can book profit.

Will there be a relief rally this Week?

Our indices have posted the new lows for 2008 during the past week, amidst volatile movement, following global cues, and the domestic news flow, such as raise in repo rate hike by RBI, increased IIP numbers and highest inflation for the week at 8.75%. Nifty has managed to close above 4500 level inspite of breaching it and even 4400 intraday on two occasions, on all days excepting on 10.06.2008 ( the day on which the lows were made on indices) indicates that buying emerged at crucial 4400 levels. Nifty has made all time high on 10.01.2008 (6357.10), also the high for 2008, and now fallen by 31.26% from the top, where support emerged, is an indication that some support, especially, from DIIs like LIC and Domestic mutual funds emerged, though FIIs are net sellers continuously during the month. How much support can hold these levels?, as inflows have dried up is to be seen now. Time wise there is some significance with the date 10th, as the low is made exactly after 5 months from the high made in January' 2008, 5 being fibonacci number, gives hope that the market might has found a bottom at least in the very short term.

 

Advance Tax payments data as on 15.06.2008, will start trickling from tomorrow onwards, which will be watched keenly by market players to guage the profit expectations for Q-1 of this fiscal by corporates. US markets have closed with gains on friday, after testing crucial suports, and Nifty futures having closed at discount of 32  points, indicating huge short positions, will lead to 'short squeeze' on any positive news flow from tomorrow, and there should be a relief rally on the first two days at least.

 

Nifty might trade in a range of 4450 to 4750 during the ensuing week, and the inflation data to be released on 20.03.2008, is being feared to be at least double digit (more than 10%) shall invite some nervousness, as it would force regulators to come up with some more action, which may effect the market sentiment. Volatility will be high during the week and next week too, as june settlement is scheduled on 26.06.2008, since the IVs are very high, but I feel that the lows made on 10.06.2008 shall hold for the month till expiry, as huge number of puts are sold below 4400 in current series. On the upside, trapped bulls/investors will lighten the positions, on rallies, thus resistances are placed at 4600, 4680 and 4740. Until Nifty closes above 4800 with volumes, reversal of long term tend which is currently down, is not possible for now. 5DSMA for Nifty(4506.16) and Sensex(15116.10) should be watched for tomorrow, as indices have closed above them last week.

 

Strategy for the Week: Buy 4500 calls on weakness and 4700 puts on rallies.

Inflation expectation for the week ended 31.05.2008 comes at 8.75%

Inflation expectation data released just now, though higher than market analysts estimates, at 8.75% is already priced in by the markets, it appears. The initial small sell off is abosorbed instantly. Advance tax payments will be completed by 15th june'08 the data will trickle from monday onwards, which will indicate possible profitability and performance projections from companies and sectors, and the markets might move up from here on next week, albiet volatility, and challenge 4620 and 4735 levels initially, as the discount in nifty futures currently stands at 35 points, gives comfort for cushioning on short covering. Any positive news, like cooling of crude below 128$ and higher advance tax payment etc., will result in short squeeze.

 

Reliance Industries have confirmed that Reliance Petroleum commissioning will happen second half of this financial year, is keeping both RPL and RIL in good strength, inspite of weakness in all other stocks. If markets have to go up these two stocks should lead the rally. Keep a watch on them. J&K Bank, of course a small player, announced hike in PLR to 14%, a 100 basis points raise, is the first to react to RBI initiative on repor hike. M3 being at 22.5% RBI might consider another round of CRR hike any time. All the Scheduled commercial banks, covered under recent Agricultural Debt Relief Package shall receive the first tranche of money from Government, before 30.06.2008, which should help in cleaning of PSU Banks Balance Sheets, shall be a positive for PSU Banks. Watch banks like, Andhra Bank, Vijaya Bank etc., some good performance in the coming weeks.

 

 

Better than expected IIP numbers help recovering of Nifty to close with gains!

The weak opening with downward gap of indices due to Repo rate hike by RBI was countered by better than expected IIP numbers released at noon. The adventurous shorts created at the opening trade, by traders at the lowest point of indices, expecting further weakness, forced them to cover from afternoon onwards, as predicted in yesterday's posting, which was quite evident from the 30 point discount in Nifty futures narrowing by the end of the session to just 5 points. Both the indices have closed with gains at the end of the session, at the upper end of the session, based on strength indicated by positive opening of european markets, and premium in US futures.

 

Corporte Developments:

 

Reliance Industries AGM became a non event as investor's hope for an announcement of 'bonus' or split of face value, which was making rounds around every AGM for the past few years, are belied this time too. Ranbaxy promoters selling their entire stake of 35% to Daiichi, Japanese pharma giant, for an  outright cash deal of Rs.10,000 crores surprised the entire pharma sector, other corporates, as well as analysts, as it is the first of its kind in Indian corporate M&A activity. Though Daiichi offered Rs.737/- for Ranbaxy share which is currently quoting at Rs.550/-, investors are sceptical about the prospects of the company, since the promoters are totally exiting from their stake, the shares have closed with losses in yesterday's trading. However, counter offer if any, for the entire block of promoter's stake from GSK pharma or Pfizer now being talked in industry circles will keep interest and two way movement in the stock in the days/weeks to come.

 

Crude cooled to US $132 again, which helped US markets to post gains overnight, inspite of Lehman brothers making another write down of US$2.6 Bn, and announcing to reduce the balance sheet size to avoid raising further capital, exerted pressure on the stock price. The subprime problems doesnot seem to be over, while now the cancer will spread to prime lending, credit cards defaults, and credit failures, is being talked specific to US economy will throw more challenges to the equities in US and world wide. VIX closed at 29.23 amidst huge volatility yesterday. Inflation data to be released at noon being expected to be around 8.34% further raise over previous week, since the raise in petroleum products are yet to be priced in will influence the market movement from there on. Some profit booking can be expected at the end of the session too on weak end consideration. excepting on 10.06.2008 Nifty managed to close above 4500 till now, recovering from lows around 4400 is a good sign, and also heightened volatility around 4400 to 4500 range is one indication of bottom formation, as bulls are fighting hard to defend this level. FIIs are sellers on most of the days during the month, as the macro economic environment is becoming more and more murkier, due to weakening of currency, raising of inflation, fiscal deficit and tightening of monetary policy by RBI. The sentiment has turned quite negative overall and we cannot expect it to turn around immediately, owing to the developments taking place worldwide.

 

Range for the Day: Nifty might trade in the range of 4400 to 4650.

 

Strategy for the Day: Buy 4700 puts on rallies for intra day trading.

RBI raises Repo rate by 25 basis points to check inflation!

Our markets closed with gains yesterday, due to short covering and bargain hunting by funds at lower levels. Nifty futures discount widened to 27 points at the end of the day, indicating building of short positions, confirming bear grip on the markets. RBI raised Repo rate to 8% to check the inflation, which shall show an uptick this week and next week, pricing in the increase in petroleum products. This will certainly force banks to increase deposit rates, as short term deposits are already giving negative returns to investors. The rub off effect will be there on PLR as the banks have to manage the NIMs to maintain profitability. IIP numbers shall be released today, which might show continuancy of growth in the economy around 8%; which must have given RBI to muster strength to raise rates, as growth will not be effected. VIX closed at 30.23 and volatility has become part of the markets world wide now.

 

US markets posted losses overnight, as crude cruised again to US136$. Already our markets have opened gap down now, and trading in negative territory at present, however, previous lows of 2008 are held for now, once IIP numbers come positive there should be some relief in the laster part of the session. Nifty is consolidating between 4300 to 4700 now. This consolidation for few days/ weeks will give base formation for a rally on upside or on breaching 4300 level conclusively our markets will go into deep bear phase lasting for another year or so., Investors are better advised to hedge the portfolios with put options on index or stocks as per the portfolio composition, during these volatile times. It appears that 26.06.2008 setttlement shall be less than may settlement 4835.30(29.05.2008) as per the outstanding positions of current series.

 

Range for the Day: Nifty might trade in the range of 4300 to 4550.

 

Strategy for the Day: Buy 4400 calls of current series and hold them till tomorrow.

 

 

Nifty & Sensex make new lows in 2008 and recover in late trade!

Our markets have opened weak following asian cues, China was down 8% and Hongkong was down 4%, and traded in negative territory for most part of the session, registering new lows in 2008; nifty(4369.80) & Sensex(14645.31), however, due to short covering recovered in the last one hour of trading. Nifty closed at 4449.80 and Sensex managed to close at 14889.25 finally. Nifty futures which were trading at a discount of 35 points for most part of the trading finally closed with 2 points premium, indicates the short covering, as indices have corrected more than 10% in june already. Overnight US markets closed flat and crude cooled to US $131 as dollar strengthened against euro, on the assumption that fed might start raising rates from now on as fighting inflation will be the azenda from now on. VIX has fallen by 6% and closed at 30.23, indicates continuation of volatility. CBOE index too closed at 23 indicating volatility for US markets.

 

Nifty has closed below 4500 for the first time in 2008, thus, it is to be seen whether this level is conquered quickly today/tomorrow and it moves into the 4500 to 5000 range! Failing which, it will test 4296.97 which is 38% retracement of entire bull rally, and should then bounce to give a relief rally upto 4678.56. Our markets are moving in synchronization with global markets as issues such as...raising crude prices, inflation, slowing down of economy are common problems being faced in 2008. We have few more issues to deal with, political instability, growing fiscal deficit, over hang of outstanding ODIs which are forcing FIIs to exit our markets, thus squeezing liquidity. In my view, Nifty might consolidate in the range of 4300 to 4700 for some time and build a base and take a direction depending on how events unfold. Investors need to realise that the bull market started in 2003 ended in January' 2008 and indices cannot reach the highs made during this year at any point of time.

 

Many analysts are suggesting portfolio building in a small way etc., which can be initiated with proper hedge in derivatives, if one is knowledgeable and can afford. Small retail investors should prefer investing through mutual funds route only, rather than burning by direct investing in secondary markets which will continue to be volatile till another 12 months minimum from now on.

 

Range for the Day: Nifty might trade in the range of 4300 to 4600.

 

Strategy for the DAy: Buy 4600 puts on rallies and 4400 calls on weakness for intraday trading.

 

June Strategy-3 suggested: One can construct calender bull spread buy going long on 4400 calls of current month at Rs.153/-  and selling 4700 calls of July series at Rs.103/-, where margin requirement will be Rs.20000/-(approx) also there. The strategy gives maximum profit of Rs.12,500/- on an investment of Rs.2,500/-. The maximum loss if nifty settles below 4400 by expiry of current series on 26.06.2008 shall be Rs.2,500/- only.. Break even level is 4450 on nifty.

Indian markets have overhang of 'ODI' to be wound up before 31.03.2009!

The current weakness in our markets is in tune with the global weakness caused due to raising inflation and crude prices, simultaneously our markets have an in built overhang of "ODIs" which were the participatory notes, issued to unidentifiable clients, which need to be wound up over a period of 18 months commencing from October 2007, as per the permission given by SEBI at that time. These instruments issued by registered FIIs need to insist on disclosure of clients, or otherwise, they can directly register with SEBI also for investing in our markets.

 

Therefore, the option available to investors came through participatory notes issued prior to September 2007, is only to liquidate the underlying equity holdings, in case they do not wish to be registered with SEBI. This overhang of outstanding ODI also is causing more pain for our indices, and at every raise in indices FIIs are liquidating the positions.

 

Nifty is unable to stay above 4500 today till now, and sensex trading below 14800 shall bring more downsides to our markets in the days to come. The low of sensex 14677.24 made on 18.03.2008 is the last hope for now. How the indices close today will be interesting for technical analysts!

Nifty closed exactly at 4500 inspite of bear pressure! Will there be a relief rally?

After a heavy volatile and selling session on monday, Nifty managed to close at 4500.95 and Sensex closed at 15066.10. Nifty futures closed at huge discount of 35 points indicate that shorts are quite heavy in the outstanding positions, as Nifty made new low for the year 2008 at 4411.60 in yesterday's session. Ever since June series became active, falls are quite larger than gains on indices confirming 'bear grip' on markets. Since markets cannot go in one direction either up or down continuously, there will be bounces and relief rallies intermittantly, due to some positive news flow, and short covering, which cannot be taken as trend reversal as indices are quite below all moving averages as of now. Nifty has closed at the lowest point in 2008, so far and at an important point which will decide the trading band for the remaining week and month, from here. Till date in 2008, Nifty was moving in a band of 4500 to 5000 or 5000 to 5500 range. Now, if it closes below 4500 during this week or by week end, then the bearish ness will deepen and it moves into lower band of 4000 to 4500, which should be kept in mind by investors and traders. Thus, today's trading and closing has important pivot around 4500 on nifty, in my view.

 

US markets were mixed overnight, while Dow closed in positive territory, Nasdaq was weak throug out and closed with losses. Crude cooled off by 5$ from the recent top of 139$ per barrel and trading at 134$ currently. VIX jumped to 32.43 a whopping 22% raise indicates continuation of higher volatility. Singapore Nifty futures indicate 27 points discount currently, while Nikkie has opened with gains. There will be volatility in today's session, and short squeeze can be expected on Nifty futures crossing 4545 levels at any point of time. Thus, it should be the stop loss for nifty futures short position, if one is carrying overnight position.

 

Range for the Day: Nifty might trade in the range of 4400 to 4650.

 

Strategy for the Day: Buy 4700 puts on rallies and 4500 calls on weakness for intrad day trading.

Nifty breaks 2008 low intraday and recovers a bit!

Owing to the huge fall in US markets on friday, due to crude raising to US $138, in the absence of buyers from all categories, and continuing selling from FIIs, n 2008, who have withdrawn close to 5 Billion $ by now, our markets opened with huge downward gap, and selling accentuated in the first one hour of trading itself. While Nifty touched 4411.60(year's new low) Sensex touched 14846.18 intraday, where some short covering and buying emerged as of now. US futures are indicating some positive ness, where as european markets when they open how they trade and move will influence our markets.

 

In my opinion, nifty having broken 4500, it is to be seen whether it can close above it today at the end of the session. If it is able to close above 4500 then there will be a relief rally from there on and the market moves in the band of 4500 to 5000 band during the month. Failing which, nifty shall seek lower levels 4290 or so., in the coming days, and it would move in the band of 4200 to 4500 for sometime, before an upward break out takes place sometime after 27th june'2008 pricing the expectations on the performance of corporates for Q1 whose results shall start pouring in from 10th of July' 2008 onwards.

 

 

Nifty breaks 2008 low intraday and recovers a bit!

Owing to the huge fall in US markets on friday, due to crude raising to US $138, in the absence of buyers from all categories, and continuing selling from FIIs, n 2008, who have withdrawn close to 5 Billion $ by now, our markets opened with huge downward gap, and selling accentuated in the first one hour of trading itself. While Nifty touched 4411.60(year's new low) Sensex touched 14846.18 intraday, where some short covering and buying emerged as of now. US futures are indicating some positive ness, where as european markets when they open how they trade and move will influence our markets.

 

In my opinion, nifty having broken 4500, it is to be seen whether it can close above it today at the end of the session. If it is able to close above 4500 then there will be a relief rally from there on and the market moves in the band of 4500 to 5000 band during the month. Failing which, nifty shall seek lower levels 4290 or so., in the coming days, and it would move in the band of 4200 to 4500 for sometime, before an upward break out takes place sometime after 27th june'2008 pricing the expectations on the performance of corporates for Q1 whose results shall start pouring in from 10th of July' 2008 onwards.

 

 

Crude touches US $ 139 and breaches earlier high on dollar weakness!

Our markets have opened with positive gains initially on friday, on the back of strong overseas cues, and turned volatile, as selling emerged at higher levels. At 12 noon when the inflation data released shown an uptick at 8.24% the highest so far, selling intensified, as the recent measures by government will push it further in the coming weeks, which will invite some more measures from RBI also. European markets opened with gains and traded volatile, and finally Nifty and Sensex have closed with losses on week end profit booking as well as US futures were indicating weakness. VIX closed at 30.32 indicating the volatility to continue next week too. While it is being guessed that the support found on thursday lows will hold for sometime, as indices have fallen during the entire week, US markets have tanked on friday with disappointing economic data indicating that the recession fears daunt the investors again. Crude has cruised to US $ 139.02 an all time high, and finally settled at 138 levels, due to weakening of dollar against euro. The steep raise of crude by 10$ in single session is itself a record of sorts, and the small hope found on its correction to 122 levels two days ago, was a clear 'bear trap'. CBOE has shot up by 20% to 24 levels indicate volaltility for US markets.

On this back drop, the coming week will continue to witness weakness, as corporates will be raising cash levels to meet advance tax committments by 15th june'2008, the rumblings from constituents of left group that they would review the decision to continuing the support to UPA government also is slowly pushing the investor sentiment towards possible 'political instability'. Equity markets never like uncertainity, good or bad news once is out, the investors will look at fundamentals, in uncertain environment, commitment to equities will always be low, thus, the bearishness shall continue. Under these circumstances, at what level support emerges on monday or during the week, could be anybody's guess! Already analysts and channels are predicting touching or breaking of previous lows of 2008. But, markets have their own mind and adjust to the changing environment, during which periods there will be lot of pain to investors, if they start guessing, thus, it is better to allow the markets to settle and then take a view.

Increasing cash levels is the best strategy one need to adopt so that once the dust settles, portfolio building can be started in phases. People already invested need to hedge the portfolios with proper strategies like buying puts of index or individual stocks, to guard against any sudden huge drop in values.

Range for the Week: Nifty might trade in the range of 4450 to 4750.

Strategy for the Day: Buy 4700 puts on rallies and 4500 calls on weakness for intraday trading.

Indices bounce back from crucial supports! Volatility to continue!

Both nifty and sensex have opened in positive territory and traded in small range initially till 12 noon, where sudden selling emerged, which brought the indices to make new lows for the month threatening another day of weakness. Sensex took support exactly at 15300, which is being observed by domestic funds and players as important level to buy beaten down stocks, coupled with positive opening of european markets, US futures indicating positive mood, lead to a strong rally, which forced huge short covering, by intraday traders, finally indices have closed with good gains. Sensex could close above march closing(15644.44) while Nifty could not clear 4700 itself. The volaltility was high, and shall continue further as VIX closed at 30.32 yesterday. US markets have posted substantial gains overnight, on the back of lesser job less claims, raise in retail sales numbers, inspite of Crude cruising by 5$ in a single session, touching US $128 once again now. Singapore Nifty futures are currently quoting at  39 points premium, and asian markets are trading with gains, shall give positive opening for our markets at the opening for certain, what will happen once inflation data is known by 12 noon, can be anybody guess.

 

Our markets are in firm bear grip, and the gains of yesterday, are a bounce in an oversold situation, as indices still trade below all moving averages and the breadth is quite negative. Further gains can be there due to short covering  today, and analysts expect the inflation to be around 8.34% as at the end of week ended 24th may'2008, the effect of petroleum products raise will add another 105 basis points to the inflation, might push the inflation to double digits in the days/weeks to come. Thus, RBI has already indicated that they are prepared to tackle the problem through both 'conventional and non-conventional measures' instantly, to check it, should be kept in mind while dealing with equities.

 

Investors can exit weak long positions and increas cash levels as weakness shall continue next week too, as corporates try to increase cash levels to meet advance tax payments by 15th June' 2008. Government, Expenditure Secretary has announced 'austerity measures' of cut of 10% non-plan expenditure to all ministries, excluding interest payments, wages, and embargo on announcement of new subsidy schemes/packages to tackle the fiscal deficit issue, also confirms that the budgeted fiscal deficit will widen with the various measures announced recently.

 

Range for the Day: Nifty might trade in the range of 4500 to 4800.

 

Strategy for the Day: Buy 4800 puts on rallies and 4500 calls on weakness for intraday gains.

Nifty closes below 4600 after hike in petroleum product prices announced!

Finally Government has pulled up their socks and came with a bold, comprehensive package for saving the PSU oil marketing companies, from the crisis. The hike in prices of petrol and other products is being expected and discounted by the markets for the past one week, which is evident in the strength of 3 PSU majors..viz., IOC,BPCL and HPCL. While central government preferred to take some hit due to reduction in Excise duty, Customs Duty, suggested state governments too to forego some sales tax/VAT to give relief to consumers. The hike of petrol by Rs.5/- Diesel by Rs.3/- and LPG by Rs.50/- will directly affect consumers, goods and services and inflationary. The other measures which widen the fiscal deficit further also will affect the growth of the economy and push inflation. These measures should have been taken some 6 months ago itself, and due to political compulsions of UPA the decision is delayed. This delay neither helped it to gain any strength too, and now reached a 'do or die' situation, where we must appreciate the courage of PM to set right the things.

 

Nifty and Sensex opened in positive territory initially, and as the announcement came around 12 noon by Petroleum Minister, the volatility has set in and there was huge dumping of stocks including oil marketing companies, which are beneficiaries of the decision going forward, as european markets opened weak, and US futures indicated negative opening for those markets. In the process, Nifty broke 4600 and closed below it finally. Sensex too closed at 15514.79 below march closing of 15644.44 which was indicated in yeserday's posting. The markets are now in firm 'bear grip' and every rally will be sold into from now on, by trapped bulls. VIX has closed at 29.82 indicates the volatility to continue further. Singapore Nifty futures are currently quoting at 9 points premium, and Crude has cooled to US $122 should give some comfort for the markets today, which have already posted 5 to 6% losses already during this week by now.

 

Range for the Day: Nifty might trade in the range of 4500 to 4700.

March closing of Nifty & Sensex are the final hopes for bulls!

Our markets opened with negative gap and made new lows for the month for the second day during june already. After considerable bouts of buying  and selling, nifty has finally closed below March(quarterly) closing levels Nifty(4734.50) where as Sensex(15644.44) is still holding as of now. Since the sentiment is completely shattered on breaking important support of 4800 yesterday, it will be difficult for markets to stage a recovery in the immediate future.

 

Once the indices breach the, above mentioned, march quarterly closing levels too on closing basis, with volumes, previous yearly(2008) levels shall be tested without any hesitation. Thus, all long posiitions need to be properly protected with long puts, in this type of environment.

 

US markets were volatile overnight and closed with losses. VIX closed at 28.49 marginally down, where as high was around 42.68 touched intraday, indicates further higher volatility and two way movement as the fight between bulls and bears intensifies. Government is seriously thinking and might consider some price hike in petrol etc., together with other package today or during this week, which is being eagerly awaited by market players, to assess its effect on economy, corporate performance, inflation and consumption behaviour. Auto manufacturers have posted better than expected sales for May'2008 and monsoon has touched Kerala and Andhra Pradesh already as scheduled. Singapore Nifty futures are currently quoting at 5 points premium. Asian markets are trading with gains for the present as crude cooled to US$125, on the strengthening of dollar.

 

Strategy for the Day: Buy 4600 calls on weakness and 4800 puts on rallies for intrad day trading.

Monday blues! Nifty breaks crucial 4750 level and closed below it!

Our markets opened with positive gap, as first day of new month 'June" began initially, however, both the indices have encoutered selling pressure at 50DSMA levels, for about first 3 hours indices have moved in a range between positive and negative basis. PM statement that government cannot protect the consumers anymore as the fiscal deficit is widening, with raise in crude prices, along with the news that RSP a component of left group, supporting UPA government deciding to walk out of co-ordination panel, sent jitters and Nifty came to 4800 levels, where some support emerged from intraday traders expecting a bounce. The same was shortlived, once european markets opened and started trading with losses, in the process 4800 and then 4750 also were breached in the last half an hour as intraday traders had to exit long positions built during the day. Finally, Nifty closed at 4739.60 on adjustment basis and Sensex closed above 16063.18.

 

US markets were down overnight, inspite of some positive economic data, raise in manufacturing index, on the fears that financial sector is still not out of woods. Crude which cooled to 125$ levels again firmed upto 127$ finally. VIX rose by 10% and closed at 29.49 indicates increase in volatility. Asian markets are trading in negative territory, and Singapore Nifty futures are currently quoting at 25 points discount to the last traded price of nifty futures. Our markets will open with downward gap, and whether support comes around 4700 levels is to be seen, one need to be cautious in taking long positions at this juncture since all the important supports are breached in yesterday trade.

 

Range for the Day: Nifty might trade in the range of 4650 to 4850.

Monday blues! Nifty breaks crucial 4750 level and closed below it!

Our markets opened with positive gap, as first day of new month 'June" began initially, however, both the indices have encoutered selling pressure at 50DSMA levels, for about first 3 hours indices have moved in a range between positive and negative basis. PM statement that government cannot protect the consumers anymore as the fiscal deficit is widening, with raise in crude prices, along with the news that RSP a component of left group, supporting UPA government deciding to walk out of co-ordination panel, sent jitters and Nifty came to 4800 levels, where some support emerged from intraday traders expecting a bounce. The same was shortlived, once european markets opened and started trading with losses, in the process 4800 and then 4750 also were breached in the last half an hour as intraday traders had to exit long positions built during the day. Finally, Nifty closed at 4739.60 on adjustment basis and Sensex closed above 16063.18.

 

US markets were down overnight, inspite of some positive economic data, raise in manufacturing index, on the fears that financial sector is still not out of woods. Crude which cooled to 125$ levels again firmed upto 127$ finally. VIX rose by 10% and closed at 29.49 indicates increase in volatility. Asian markets are trading in negative territory, and Singapore Nifty futures are currently quoting at 25 points discount to the last traded price of nifty futures. Our markets will open with downward gap, and whether support comes around 4700 levels is to be seen, one need to be cautious in taking long positions at this juncture since all the important supports are breached in yesterday trade.

 

Range for the Day: Nifty might trade in the range of 4650 to 4850.

Strategy-2 forJune'2008

It is presumed that the markets shall be in trading range on Nifty between 4750 to 5050 till 13.06.2008. To capture the high IVs the following strategy can be looked into by highrisk traders for higher returns.

 

Sell 4800 put option of July at 190.00 and simultaneously sell 4900 call option at 210.00 where margin is required to be maintained...approximately Rs.80,000/- It gives a range of 4400 to 5300 on nifty. One should protect the positions by going  short / long on Nifty futures once nifty breaks either 4750 on lower side or 5050 on upside.

 

 

bkvrkrao

Indices closed at 5DSMA levels at the end of May'2008!

Both the indices have closed postively on the last day week and month, compared to previous day, at and around 5DSMA levels, Nifty(4871.71) & Sensex(16376.26). However, week on week and month on month comparision indices have closed negatively. Inflation data released on last friday has crossed 8% level finally, as feared, inspite of several measures initiated by Government & RBI started showing some effect. GDP data for Q4 was at 8.8% and the overall yearly growth stood at 9% for 2007-2008 was a comforting feature for the governement that the growth momentum and trajectory are not disturbed. Since the growth is on,  to check inflation whether RBI would tinker with the interest rates is being guessed by market players and investors, that is the main reason for interest rate sensitives to face selling pressure during the week. CBOE index is down to 17 indicating lesser volatility for US markets and similarly, VIX closed down at 26.68 indicates further lesser volatility for our markets too.

 

US markets have closed flat on friday night, our markets will focus on monsoon which is likely hit kerala coast, where MET Dept predicts normal rain fall this year, should be good news for our domestic economy. Next week and there after, markets will be trading  in a narrow range, since psychological fear of 'may mahem' and bottom formation in and around may month, as per cycles being talked by many analysts are put to rest. More or less our markets are currently discounting every bad news and not facing deeper cuts, is a positive sign, but the nervous at higher levels is continuing, since FIIs are sellers on most of the days during last month. Thus, devoid of any major news flow, markets will go into trading range till 15th June' 08, by which date advance tax numbers by corporates will be known. The expectations of Q1 performance will be priced in by markets players sector wise, company wise from there on, possibly giving a break out of the range.

 

Range for the Week: Nifty might trade in the range of 4750 to 5050.