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)
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