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)