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.