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.