Helped by strong global cues, and removal of uncertainity 'when left will withdraw support to UPA government at home' helped indices to post substantial gains, pushing "short squeeze" which was quite visible as the discount on Nifty futures reducing from 62 points to 19 points by the end of the trading. Smart guys are closing short futures and going long on options whenever such sudden things happen, thus, unless follow up buying emerges today and tomorrow, one should not read into the yesterday's rally as any sign of bullishness. One positive feature of yesterday's move was both indices have closed above 5DSMA levels Nifty(4023.48) & Sensex(13477.60) and also above June monthly closings Nifty(4040.55) & Sensex(13461.60) too. VIX closed at 34.27 yesterday but intra day high touched was 77.68, the highest so far is disturbing. If indices have to rally it has to happen gradually with slow and steady long build up, till then, the fight between bears and bulls continues, where bears have upper hand right now. One day moves are generally traps unless follow up happens! Sensex has given bullish reversal signal on Japanese Candle Sticks charts with yesterday's move, thus, if one wants to look optimistic should have strict loss at June closing and 5DSMA levels for trading or investing in markets.
US markets have tanked overnight, giving away all gains posted previous day, and Asian markets are trading in negative territory currently. Singapore Nifty futures are currently quoting at 64 points discount, indicate weak opening for our markets, and whether buying support emerges at the levels mentioned above, need to be watched for continuation of rally. However, today, PM would meet President to brief on G-8 summit, Infosys results will be announced tomorrow before market opens and inflation data shall be released at 12 noon tomorrow, thus, nervousness and volatility shall continue to be the part of markets. Caution and preserving the capital and staying in and increase of cash levels will help us to pick up stocks at much lower levels in the days/months to come, as this bear market lasts for 12 months more from now on for certain, according to my reading.
Range for the Day: Nifty might trade in the range of 4040 to 4200.
Strategy for the Day: Buy 4200 puts on rallies and 4000 calls on weakness for intra day trading.
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