Weak has begun on positive note, amidst volatility!

After posting straight losses for 6 weeks, indices have opened in positive territory, and traded most part of the trading above June monthly closings, Nifty(4040.55) & Sensex(13461.60), gave away most of the gains in the last one hour of trading, fearing the political instability, as PM proceeds to attend G-8 summit, in Japan, and confirming that the government is committed to move a head with Indo-Nuke deal. Left parties have advanced their meeting to 11.30 a.m. today, to take the decision to withdraw the support, and handover the letter to the President, once PM is back in the country, on 10.07.2008. The support extended by Samajwadi Party having 39 MPs, and other small parties might save the government from falling when trust motion is moved in the coming days, as President would advise the government to seek vote of confidence, once left parties handover the withdrawl letter. The nervousness in the markets is on two counts: Mulayam singh yadav is an astute politician, who can change stances very quickly, owing to the situation as it developes, and Mayawathi, is not leaving any stone unturned, in ensuring that Mulayam singh party will not gain any political mileage in this government saving deal, which shall affect her position in the largest state of the country., Uttar Pradesh.

While the political situation is fast developing into likely throwing instability at centre, the talk to tax the private oil producers and refiners with 'windfall gains tax' has hurt Reliance, Essar Oil and Cairn severely in yesterday's trading. Infosys Technogies Q-1 results will be announced on 11.07.2008, and the wekening of rupee should help it to post good performance. Clinching of Nuke deal will help power sector, and crude has cooled to US$141 in yesterday's trade, will give some relief to markets. VIX has closed at 37.29 which indicates volatility to continue. Nifty and Sensex have closed above 5DSMA yesterday, and should these levels hold in any weakness the indices are likely to advance further this week. Nifty futures have closed at a steep discount of 50 points suggests huge short positions built, which will cushion any weakness and turn of positive sentiment, will push 'short squeeze' which can be exploding. Singapore Nifty futures are currently quoting 47 ponts discount, suggest weak opening for certain, as US markets closed negative overnight, after along week end, and asian markets too are trading in negative territory.

Range for the Day: Nifty might trde in the range of 3900 to 4150.

Strategy for the Day: Buy Nifty futures at the opening with a stoploss of 25 points below the purchase price, for intraday trading.