Though indices closed positive for 2nd week in a row! All eyes will be on trust vote 22nd!!

With crude cooling further to 128$ US markets rallied on thursday, our indices have traded in flat territory initially, however, short sqeeze coupled with selective buying in index heavies like ICICI BANK etc., helped Nifty and Sesex to post weekly gain for the 2nd consecutive week. The numbers oscillation showing that UPA might comfortably survive crucial 'trust vote' on 22nd also helped the improvement of sentiment. Friday night US markets ended mixed, Dow posting gains and Nasdaq nose diving in to negative territory, this week especially today and tomorrow our Parliament is convened to discuss on 'trust vote' and the end result will be known by tomorrow evening or midnight, if the past trend is to repeat, will influence our markets in general. With such an important event a head, where lots of uncertainity still looming large, intra day swings can be very wild, and small and retail investors are better advised to keep away from markets till wednesday, where clarity emerges, which gives the necessary direction for our markets. VIX closed at 36.25 on friday, Nifty futures discount stood at 15 points to not much shorts existing in futures of stocks or index! The activity is shifted to options for certain, which is less risky, as the premium paid only is put to risk in these uncertain times.

Nifty and Sensex have closed above 20DSMA levels Nifty (4063.94) & Sensex (13552.29) after a long time, augurs well for bulls to continue the fight back, but will they be able to do it today is a big impossibility. The result of trust vote tomorrow, once out and government surviving, without left, is big positive for Power sector stocks, and the focus will then be shifted once again to crude price movement, inflation on week end and the action from RBI a head of policy meet on 29th. Thus, we are in for higher volatility till the expiry of series on 31.07.2008, the range of Nifty is getting wider viz., 3500 to 4500, in my view. Singapore Nifty futures are currently quoting at 61 points premium, and asian markets are trading in positive territory, should give positive opening for our markets too, initially.

Strategy for the Day: Buy Nifty 4100 Straddle and hold till 23.07.2008.