Crude cools to 115$ overnight on strengthening of dollar and US markets rallied!

Well August series settlement is behind us. US markets rallied overnight on the strengthening of dollar, as jobless claims data showed down tick, and crude cooled from 120$ levels to 114$ intraday finally closing at 115$. Asian markets are trading with gains and Singapore Nifty futures are currently quoting at 67 points premium, shall augur well for our markets at the opening. Market wide rollover was 80% where as Nifty roll over was 68% only being the lowest in 2008. Thus, scope for long build up in the new series will be there at the beginning of series, as Nifty futures too closed at a premium of 9 points yesterday. Howver, the mute point is upto what extent the indices especially Nifty can recover the losses of yesterday and this week are to be watched carefully, for signs of trend reversal, since the indices have closed at the lowest point of August month on pernultimate day.

 

In my view, 4200 on Nifty and 14000 on Sensex, would hold today and a relief rally can be expected, which will face resistance and supply from trapped investors as the sentiment too pessimistic for equities, which is evident from high intraday volatility. Higher volatility is some times a sign of bottoming out or topping out of indices. This time around since we are long term down trend with interemediate trend on assault, by bears, I feel that there shall be a bounce today, which anyone can guess and closing above July closing levels Nifty(4332.95) & Sensex(14355.75) today, will strengthen the bulls to push further next week. Some fund buying also can be expected today to prop up NAVs too. September is generally good month for equities in general as the Q2 results will be priced in, tech sector should do well since dollar is strengthening.

 

Insurance Regulatory Authority has revised the premium tarriff down wards on long term insurance policies, which in some cases result in fall of premium by 40% is good news in the hands of policy holders, who can buy higher insurance for the same amount of premia they were paying, or they will be left with some cash in their hands, which also encourages them to look at other avenues.

Inflation is down to 12.40%! Lower roll overs bring long unwinding on Settlement Day!

As feared the indices have cracked in the last one hour on long unwinding, which was quite evident from the difference in premium of August over September. Both indices have breached all support levels. especially, 20DSMA and made new lows for August'08 on the penultimate day of the month, on the fears of further raise in inflation. The good news is that the inflation data has shown down tick to 12.40% over previous week figure of 12.63% for the first time in the last 10 weeks should cheer up rate sensitives tomorrow. US markets opened in positive territory and are currently trading with gains on reduction in jobless claims data and should give some phillip tomorrow, once they close with gains. Crude is hovering around 120$ levels, and further fall in price from here coupled with fall in inflation will improve macroeconomic situation of our economy. GDP data is expected to be released tomorrow, which will decide the trend from there on. VIX has closed at 33.31 but the day's high was at 73.29 suggests wild gyrations. Tomorrow being the last day of the month and week, closing of indices would give the possible trend for the next month.

 

Nifty September futures have closed with premium of 9 points today, as outstanding contracts are lowest for the next month series, with indices having closed at the lowest point of the month, a bounce and long build up can be expected in beaten down stocks like ICICI BANK, RELIANCE etc., A gap up opening can be expected too, and the direction after announcement of GDP data, might strengthen further gains, if the data is flat to positive over previous months.

 

Range for the Day: Nifty might trade in the range of 4180 to 4380 tomorrow.

 

Strategies for September:

 

1. One can go long on Nifty futures at opening price, with a stop loss of 25 points below the purchase price for intraday trading.

2. Buy Straddle of 4200 and hold till expiry.

 

Where will the Nifty close today! Inflation data to be released after market hours hold the key for medium term trend!

Our markets were volatile a head of derivatives settlement today, as European markets opened in negative territory, selling emerged pushing markets to close in negative territory below crucial level of 4300 on Nifty. Roll over of Nifty to September series and other active stocks was muted, as indices have no clear direction for the past few weeks and moving side ways. Global as well as domestic news is unable to give necessary thrust for neither bulls nor bears in a big way. The mood of the market is showing apathy to equities from retailers and traders too. PSU banks offering 10% interest on one year term deposit appears to be a safe bet for most of the investors in such an uncertain environment, which might continue in to next year too, as being assessed many analysts, where capital protection is guaranteed. 

 

BSNL has postponed the discussion on the proposed IPO in recent board meeting. Tatamotors being frustrated with the political troubles being faced at Singur plant of Nano, have decided to shift the factory to other location (states) if West Bengal Government cannot protect its employees working there. The vendors too expressed solidarity with Tatas and decided to move even if they have to suffer losses on their existing investment of 1500 crores. Dollar started strengthening against Euro as European economies faulter on growth, with raising inflation, crude prices. Infosys has bid for acquiring AXON of UK in all cash deal of 737$ millions, shows that indian tech sector's confidence of better performance even in these turbulent times. Inflation data will be released after market hours being expected to  be 12.79% though moderating not showing signs of peaking out. Crude touched 119$ on supply concerns is in sideways band after it has hit 148$ in 2008. Rupee has touched 44 against $ is bad news for FIIs, who are net sellers in 2008 so far, and for indian economy, though it is sweet news for Tech sector and Export oriented industries and business.

 

US markets have posted gains overnight, and asian markets are trading with gains currently. VIX closed at 32.80, but the day's high shot up once again to 76.52, indicating higher volatility. Nifty futures premium has turned into 2 points discount for September, indicating shifting of short positions to next month series. Rollover of Nifty has completed 43% by yesterday, thus, huge positions need to be rolled over today or might be allowed to expire as generally 75% rollovers take place at the end of the settlement. Thus, one can expect wild gyrations today, intra day or in the last one hour of trading, which should be kept in mind by intraday traders. Singapore Nifty futures are currently quoting at 20 points premium should give positive opening for our markets initially. 50DSMA currently placed at 4265.43 should offer support in case of weakness and resistances are at 4315.25(5DSMA); 4327.45(Previous week's closing); 4332.95(July Settlement Price) and 4365 yesterday's high and finally 4398.80 this week's high. The settlement price could be anywhere between 4265 to 4420.

 

Range for the Day: Nifty might trade in the range of 4250 to 4450 today.

 

 

Nifty is range bound between 20DSMA and 50DSMA in volatile trade due to pick up of roll overs!

Taking global cues in their stride, our indices opened in negative territory, and were volatile with two way movement, finally closed with marginal gains due to short covering. The roll overs picked up but lower than previous month, suggesting less enthusiasm for the next month, as there are no important triggeres in the near term, till 15th September'2008, when the advance tax payment numbers from corporates indicate the corporate performance for this quarter, and inturn the fiscal position of the government too. VIX has closed at 33.90 suggests lesser volatility. US markets have closed flat and with marginal gains, as dollar and crude become volatile. Investors are unable to decide the trend of the markets world over, as side ways consolidation phase has set in everywhere.

After a strong bull market and volatile and vicious bear phase, this type of sideways movement is witnessed where consolidation and base building happens for change of trend. Since we are in down trend, if the lows made during this year are held commencement of bull phase may be on cards. Alternatively, this wide range of sideways movement, might bring in further weakness extending the bear phase or turning the markets in to deeper bear markets for prolonged periods. However, a strong clue or an event is required for break out in either direction. The inflation peaking out, interest peaking out, or crash in crude prices below 100$ should happen for an upward break out.

In my view, crude falling below 100$ appears to be remote possibility, as the cost of production with raise in inflation and weakening of dollar, raising demand in emerging economies, which are on growth path, inspite of moderation, will not allow the prices to breach this level. Thus, crude might consolidate between 110$ and 140$ for some months, and break out in upper direction breaching 150$ levels and shoot upto 170$ or even 190$ sometime next year, on some external event which cannot be predicted. Asian markets are trading in positive territory, and Singapore Nifty futures are quoting at 9 points premium which might give positive opening for our markets initially.

Range for the Day: Nifty might trade in the range of 4250 to 4450 today.

Strategy for the Day: Buy 4400 Puts on rallies for intraday trading

Market is range bound as roll overs begun! Expect weakness today as Nifty futures are at discount!

Our indices have opened in positive territory and traded with gains for most part of the day. As roll over to next series began volatility has set in, at one time, Nifty has turned marginally negative but finally both indices have closed with marginal gains. UK markets were closed yesterday, and US markets have tanked once again over night, as dollar weakened and the fears of credit crisis and recession fears daunt the investors. Nifty has held July closing yesterday too, which will be a reference level for this settlement which is to be watched for clues intra day till 28.08.2008. VIX has closed at 45.11 indicating higher volatile times. 50DSMA level of Nifty currently placed at 4277.35 should offer support on weakness where as 20DSMA 4415.36 will offer resistance for today.

Asian markets are trading in negative territory following global cues and Singapore Nifty futures are currently quoting at 49 points discount, indicate weak to negative opening for our markets today.

Range for the Day: Nifty might trade in the range of 4250 to 4450 today.

Strategy for the Day: Buy 4200 Calls on weakness for intraday trading.

Market is range bound as roll overs begun! Expect weakness today as Nifty futures are at discount!

Our indices have opened in positive territory and traded with gains for most part of the day. As roll over to next series began volatility has set in, at one time, Nifty has turned marginally negative but finally both indices have closed with marginal gains. UK markets were closed yesterday, and US markets have tanked once again over night, as dollar weakened and the fears of credit crisis and recession fears daunt the investors. Nifty has held July closing yesterday too, which will be a reference level for this settlement which is to be watched for clues intra day till 28.08.2008. VIX has closed at 45.11 indicating higher volatile times. 50DSMA level of Nifty currently placed at 4277.35 should offer support on weakness where as 20DSMA 4415.36 will offer resistance for today.

 

Asian markets are trading in negative territory following global cues and Singapore Nifty futures are currently quoting at 49 points discount, indicate weak to negative opening for our markets today.

 

Range for the Day: Nifty might trade in the range of 4250 to 4450 today.

 

Strategy for the Day: Buy 4200 Calls on weakness for intraday trading.

Settlement Week might see higher volatility as crude prices also became volatile now!

On friday though the markets have posted gains at the end of the session, week on week indices have posted losses for the second week in a row, amidst volatilitly due to raise in inflation fiigures domestically. However, bulls ensured that July closing levels are held in margin. With US markets rallying on friday, as crude cooled to 114$ our markets will open in positive territory, which is indicated by 80 points premium on Singapore Nifty Futures currently. VIX closed at 35.76, and the day's 79.77 is the highest once again, to be viewed as an indication of return of higher volatile times, that too this being settlement week. Roll overs have to pick up from now on which also causes two way movement. As far as Nifty technical levels concerned 50DSMA was held last week, is the immediate support to be watched in case of weakness. The resistance can come this week at 20DSMA levels currently placed at 4414.19(Nifty) & 14685.06(Sensex) initially. However, 100DSMA level of 4587.55(Nifty) might not be cleared.

Asian markets are trading with gains. The range of Nifty for this week might be 4200 to 4600.

Strategy for the Day: Buy 4500 puts on rallies for intra day trading.

Note: Written on 25.08.2008 at 09.25 a.m.

Crude at 122$ and Inflation at 12.63% all make our markets to crash yesterday steeply!

Our markets have opened week and selling intensified in the later half on long unwinding a head of inflation data, as it was feared to be higher than previous week figure of 12.44%. All technical supports were breached and once indices broke July closing levels, stoplosses must have triggered further fall on indices. Finally, Nifty breached 4300 crucial level and closed below it. In finality both indices broke and closed below 50DSMA levels currently placed at Nifty(4285.22) & Sensex(14292.66). The inflation data came at 12.63%, after market hours, where as crude broke the upper band of 117$ yesterday on New York Mercantile Exchange and reached 122$ lead to weakness in US markets too. The job less claims data shown some improvement, which helped US indices to recover from lows at the end of the session. VIX closed at 36.55, however the day's high reached 73.22 the highest so far after introduction of this index. It points to huge volatility, as roll overs too will pick up from today. Rate sensitives were beaten blue yesterday on the fears that inflation might touch 13% inviting RBI action. The reaction was overdone, as bulls were on back foot to lend support before an event. Nifty futures have closed with a premium of just 3 points on adjustment basis. Actually, they went into 9 points discount if last traded price is to be considered.

Asian markets are trading mixed and Singapore Nifty Futures are currently quoting at a discount of 20 points, which might induce further weakness initially for our markets. Now it is to be watched whether August lows made on 01.08.2008 Nifty(4235.70) & Sensex(14036.57) would offer support for our markets today, on any weakness. However, gains may be made today, on some short covering, a close above previous week's closing Nifty(4430.70) & Sensex(14724.18) today appears to be distant possibility. But markets do have their own mind, thus, if positive closing happens over previous week, then bulls will gain command next week. Today's trading pattern and closing shall offer clues for the next week settlement and the intermediate trend too.

Range for the Day: Nifty might trade in the range of 4240 to 4440 today.

Strategy for the Day: Buy Nifty futures at the opening in case of weak opening, keeping a stop loss of 25 points from the purchase price for intra day trading.

Bounce happened as anticipated! Where to go from here on? Inflation data to hold key!

Our markets opened gap up and traded in the positive territory on long build up coupled with short squeeze, finally closed with gains after 5 days continuous fall. Technically, 5DSMA & 20DSMA are converging around 4430 on Nifty, which offered resistance yesterday, where as bulls ensured that July closing of 4330 is held so far. What happens from now on depends on inflation data to be released after market hours today, which is expected by analysts to show further uptick to 12.62% or so., Last two days trading pattern suggests that the raise in the indices was on account of short covering only. VIX closed at 33.95 registering 11.10 as lowest, suggests lower volatility. Nifty futures closed with a premium of 20 points, will invite creation of shorts once again on any rally today. Since derivatives settlement is close by, roll over of positions too shall commence which will give two way movement from now on. While support on any weakness can be expected at 50DSMA level currently placed at 4290.02(Nifty) and resistance on rallies can be expected at 4450-4480-4500-4540 levels. US markets posted gains yesterday, on account of good results posted by HP, however, crude started raising once again to 115$. It is oscillating between 112$ to 117$ for the past few days. What ever raise or rally happens today / tomorrow should be used as an opportunity to liquidate weak long positions, and portfolio churning, as I presume the August settlement may not be above 4600 from the outstanding positions data as of now.

Asian markets are trading mixed, Singapore Nifty futures are currently quoting with 30 points discount might give negative opening for our markets initially, may be long roll over shall take place from today onwards to next month series. Fertilizer Minister announced release of further subsidy to Fertilizer companies, will keep interest in fertilizer stocks, however, the subsidy burden of Rs.1,19,000 crores will certainly hit the fiscal deficit target, to be noted as negative for the overall economy.


Range for the Day: Nifty might trade in the range of 4320 to 4520 today.

Strategy for the Day: Buy 4500 puts on rallies for intra day trading.

Bounce happened as anticipated! Where to go from here on? Inflation data to hold key!

Our markets opened gap up and traded in the positive territory on long build up coupled with short squeeze, finally closed with gains after 5 days continuous fall. Technically, 5DSMA & 20DSMA are converging around 4430 on Nifty, which offered resistance yesterday, where as bulls ensured that July closing of 4330 is held so far. What happens from now on depends on inflation data to be released after market hours today, which is expected by analysts to show further uptick to 12.62% or so., Last two days trading pattern suggests that the raise in the indices was on account of short covering only. VIX closed at 33.95 registering 11.10 as lowest, suggests lower volatility. Nifty futures closed with a premium of 20 points, will invite creation of shorts once again on any rally today. Since derivatives settlement is close by, roll over of positions too shall commence which will give two way movement from now on. While support on any weakness can be expected at 50DSMA level currently placed at 4290.02(Nifty) and resistance on rallies can be expected at 4450-4480-4500-4540 levels. US markets posted gains yesterday, on account of good results posted by HP, however, crude started raising once again to 115$. It is oscillating between 112$ to 117$ for the past few days. What ever raise or rally happens today / tomorrow should be used as an opportunity to liquidate weak long positions, and portfolio churning, as I presume the August settlement may not be above 4600 from the outstanding positions data as of now.

Asian markets are trading mixed, Singapore Nifty futures are currently quoting with 30 points discount might give negative opening for our markets initially, may be long roll over shall take place from today onwards to next month series. Fertilizer Minister announced release of further subsidy to Fertilizer companies, will keep interest in fertilizer stocks, however, the subsidy burden of Rs.1,19,000 crores will certainly hit the fiscal deficit target, to be noted as negative for the overall economy.


Range for the Day: Nifty might trade in the range of 4320 to 4520 today.

Strategy for the Day: Buy 4500 puts on rallies for intra day trading.

Indices have corrected 5 days in a row! Expect a bounce back as July closing levels held!

Volatility has increased in our markets during the current week, as bears are pressing sales taking advantage of global cues, and bulls are on back foot for valuations to become attractive. After touching July closing levels fund buying emerged around 2 p.m. which lead to short covering by intraday traders, which was quite visible as the premium on Nifty futures rose to 42 points in the last minutes of trading. Nifty futures finally closed with a premium of   points to the spot even on adjustment basis, indicates some positive build up and further short covering can take the indices today higher levels, as the correction is already 5 days old, and indices have closed around technical level 4365 on Nifty is important to watch. VIX has closed at 34.92 finally but the day's high was 61.99 indicates huge volatility in store. Higher volatility is one indication of formation of a top in case the markets are in uptrend and in the present case as markets are correcting it may be an indication of temporary bottom, if held today then bull charge can push for short squeeze in the days to come. US markets witnessed further sell off yesterday, as the economic data was negative, and fears of recession linger in the minds of investors. Crude is trading in a range of 112$ to 117$ currently. Higher crude prices have pushed for lesser demand even in emerging economies like China and India too, thus, it might seek further lower levels, as inflation raises in developed economies too. Japan Central Bank has left interest rate unchanged at 0.5% as the slowdown in exports was hurting the growth.

 

Oil ministry has reviewed the recommendations of the Chaturvedi committee on pricing of petroleum products, and dicided not to implement any recommendation for the present. Since the inflation has already reached 12.44% by last week, any raise in petroleum products will push it further and affect growth of manaufacturing sector. Singapore Nifty futures are currently quoting flat to previous day settlement price and asian markets are trading mixed. 5DSMA placed at 4454.66(Nifty) might offer resistance, as sentiment is weak on any rally, support can be expected at 50DSMA currently placed at 4290.70(Nifty) today.

 

Range for the Day: Nifty might trade in the range of 4300 to 4450 today.

 

Strategies for the Day: 1.Buy 4500 puts on rallies for intraday trading. 2. Go long on Nifty futures at the opening with a stop loss at 4310.

Indices corrected further and closed below 20DSMA levels! Crude corrects to 112$ again but US markets tanked on economy concerns.

Our markets had two way movement yesterday, as anticipated, but finally closed with losses, on profit booking, below 20DSMA levels Nifty(4409.92) & Sensex(14675.37) factoring in the raise of inflation to 12.44% previous week. US markets tanked overnight on the concerns of financials, inspite of crude cooling to 112$ due to which asian markets are now trading in negative territory. The bear grip is tightening over all markets, after the relief rally witnessed simultaneously. The theory of relation of crude prices to equity performance was belied yesterday, as US & European Markets corrected inspite of cooling of crude! Thus, it is very clear that no single factor can either influence the market movement on permanent basis, otherwise investing in equities would have been much easier than investing in fixed income securities. VIX closed at 36.54, but the day's high was 53.83 suggests of higher volatile times once again. Nifty has corrected already 67% of the August range it has formed till now, and should find support on weakenss at 4332.95(July Closing level) or 4293.35(50DSMA level), in my view. Once these two levels are broken there will be steep fall, as 4300 puts are shorted heavily, expecting it to be the floor level for the month. Singapore Nifty futures are currently quoting at 55 points discount, which should give negative opening for our markets initially.

Please recollect that both indices are trading below the January lows Nifty (4448.50) & Sensex (15332.42), which is clear strength for bears to press further sales. Only when these levels are taken out with volumes then resumption of further up trend can be expected. Reliance is expecting to produce oil 10000 to 15000 barrels from its D-6 KG basin from October and Reliance Petroleum is likely to be commissioned in next quarter will be good picks on any steep fall in markets, for long term investment and creation of portfolio.

Range for the Day: Nifty might trade in the range of 4300 to 4500 today.

Strategy for the Day: Buy 4300 Calls on weakness for intrad day trading.

Winning Streak of relief rally for 5 weeks ended in correction last friday! Where to go from here on?

After posting new high for August on 12.08.2008, both indices have gone into correction lead by profit booking as anticipated due to truncated weekend on account of Independence Day Holiday on 15.08.2008. While 100DSMA found to be a heavy supply zone, the indices have breached 5DSMA levels on thursday, a head of inflation data to be released after market hours, but rested on 20DSMA levels. Nifty while found resistance at 4650 level indicated in the posting on 11.08.2008, and it found support or halted at 4420 levels on 14.08.2008, as indicated on that day's posting. Since US markets fared well on Thursday & Friday, last week's correction be termed as reaction after a strong relief rally. Nifty futures closing with a premium of 6 points on thursday, does not indicate creation of shorts in a big way. However, the inflation numbers touching 12.44% last week is in line with RBI expectations, might bring some more nervousness in rate sensitives. VIX closed at 35.24. Now Nifty is currently placed at critical juncture and resumption of uptrend depends on the movement and closing  during this week, where the 50DSMA ...Nifty(4298.05) & 20DSMA...Nifty(4394.88) are to be watched for supports, which if breached with volumes confirm completion of the relief rally, and downward trend resumes once again. It is for this reason I have advised to exit profitable long positions and increase cash levels last week. Crude is oscillating between 112$ and 117$ for the present, and break out in either direction will inversely affect the equities, as a sentiment driver.

 

Asian markets are trading mixed currently, and Singapore Nifty futures are currently quoting flat not indicating any directional move. However, our markets will have initial positive opening and might move in narrow range till cues from European markets emerge and follow the trend thereon later. Volatility might be high from now on, as the fight between bears and new found initiative of bulls intensifies to hold the respective forts.

 

Range for the Week: Nifty might trade in the range of 4300 to 4550 during the week.

 

Strategy for the Day: Buy 4500 puts on rallies for intra day trading.

100DSMA proved to be major supply zone and downward trend shall resume once again on breaking 4450 level of Nifty!

Yesterday's trading pattern clearly suggests that the indices are encountering supply around 100DSMA levels Nifty(4611.98) & Sensex(15411.54). Added to it the indices have closed below 5DSMA level Nifty(4551.01) and Senex(15227.27) itself yesterday! The relief rally is already 5 weeks old, and today being the last day for this week, might give negative closing as global cues suggest. Crude rose to 115$ on supply concerns, US markets closed negative after volatile moves as the problems of mortgage loans are spreading now to credit. Inflation data to be released today shall show an uptick to 12.49% as predicted by some analysts. Dr.C.Rangarajan, ex-chairman of PM Economic Advisory council, expects the GDP growth to be 7.7% as against 8% projected by Government and RBI. He also observes that inflation to cross 13% and achieving 7% target of RBI by march 2009, shall be very challenging. He expects that it might moderate to 9%. If 7% target of RBI is to be achieved then more tightening and moderating consumption and growth is required, which is not good news for equities.

 

Chathurvedi committe appointed by PM on pricing of petroleum products, has submitted its report and Oil ministry is examining the feasibility of implemnting the recommendations in stages. One of the recommendation is to raise Petrol price by Rs.2.50ps every month and similarly other products too, to make the prices of these products, which are heavily subsidised by Government, through Oil Bonds, sharing by upstream companies like ONGC and GAIL etc., to be market determined from next fiscal onwards, so that burden is off from government budgeting. SBI and most of the banks have already raised PLR, following the dictat from RBI, which makes cost of production more dearer to industry and shrinking of margins. Banks profitability also will be hit due to lower credit off take and higher CRR, raise in cost of funds. Period starting from 18.08.2008 to 17.09.2008 is generally devoid of any domestic triggers for markets to rally, thus, either they consolidate in a range or slowly drift downwards. Investors are better advised to exit long positions and sell portfolios and increase cash levels to minimum 50% from now on, so that they get the same stocks much cheaper at a later date. Singapore Nifty futures are currently quoting at 46 points discount and asian markets are trading with losses, our markets also open in negative terriotry and will have two way movement today. VIX has closed at 34.76 suggests return of higher volatility again.

 

Range for the Day: Nifty might trade in the range of 4420 to 4620 today.

 

Strategy for the Day: Buy 4400 calls on weakness for intra day trading.

 

 

IIP numbers indicate slowing of Indian Economy, markets correct after being unable to clear 100DSMA level!

Our markets opened positive, initially and in minutes profit booking brought the indices into negative territory. Since every analyst was suggesting 4740 and 5000 on Nifty in this run, the weakness was bought into buy the traders, who might have been hurt badly on the disappointing IIP numbers released in the afternoon, which confirmed slowing down of our economy due to macro factors viz.,  raising inflation, crude prices(though corrected 20% recently, still they are well above tolerable level of 66$ for our economy) and widening fiscal deficit. Technically our markets and some stocks have reached over bought levels, the 100DSMA level 4612(Nifty) & 15410(Sensex) were breached quite effortlessly. However, both indices have closed around 5DSMA levels Niftty(4548.71) & Sensex(15223.38) at the end of the session, still holding previous week's closing levels. VIX has closed at 33.89 registering 8% gain over yesterday's close, suggests return of volatility. Nifty futures have closed at 8 points premium, and short build up is seen in today's trading. US economic data just released suggests contraction of trade deficit to 56.4Billion$. Crude is currently trading at 115$ after touching 113 recently.

 

NSE has announced introduction of another 39 stocks in Futures & Options category from 21.08.2008. SEBI meets tomorrow and is likely to state the current status on Participatory Notes and the press meet of SEBI Chairman after market hours, will throw more insight on the current FII flows and futuristic view of flows. Nifty shall move sideways tomorrow and rallies might be sold into, as two more trading days are left for the week. 4650 upper band indicated for the week in yesterday's posting has found the resistance exactly today, and might continue for the rest of the week, in my view.

 

Range for tomorrow: Nifty might trade in the range of 4450 to 4650.

 

 

 

Crude cools to 115$ on strengthening of US $ is comforting news for equities and economies world over!

On friday, our markets have posted gains after volatile trade during the day, registering 5th consecutive weekly gains, and more importantly Nifty managed to close above 4500 level fourth day in succession. US markets rallied strongly on friday, due to strengthening of dollar, which pushed crude price further down to 115$, breaching the technical level of 117$ observed by most oil analysts and players. VIX closed at 35.67. Singapore Nifty futures are currently quoting with hefty premium of 70 points and asian markets are trading with gains, augurs well and positive gap up opening for our markets too. However, 100DSMA levels currently placed at 4612.79(Nifty) & 15407.49(Sensex) are proved to be supply zone every time bulls tried to take the rally further, are to be watched for clues today and during this week. This week is a truncated one with 15.08.2008 (Independence day) being a holiday, and the relief rally too recovered 50% of the losses from the top, the indices might consolidate at a higher band during this week, say 4400 to 4650 and move higher later from next week, if the commodity prices continue fall / cool further. Any closing below 4500 today or during this week should be noted as termination of relief rally and indices will resume their down ward journey once again, as the concerns on Indian Economy and global slow down cannot be wiped in days/weeks.

 

Investors holding profitable positions should book profits on rallies from now on, as markets will give ample opportunities down the line, where they can pick up the same stocks at lower prices.

 

Range for the Week: Nifty might trade in the range of 4400 to 4650.

 

Strategy for the Day: Buy 4600 puts on rallies for intraday trading.

 

 

Inflation at 12.01% and weak Global Cues might bring in weakness and profit booking!

Our markets were volatile yesterday due to profit booking by nervous retailers, a head of release of inflation data, but finally closed with marginal gains. VIX closed at 35.67. Nifty futures have closed with 8 points premium finally. Inflation data released yesterday after market hours, has come at 12.01% is in line with analysts and economists expectations. Though the figure is marginally higher than previous week(11.98%) the rate of raise of inflation has certainly slowing down, should be good news. However, US markets tanked overnight due job less claims numbers being the highest in last 6 years, and raise in Crude prices intra day above 120$. Bank of England and ECB left the interest rates unchanged. Asian markets are trading mixed and Singapore Nifty futures are currently quoting at 3 points discount which might give weak opening for our markets too.

 

Domestic news flow is positive for our markets from Government, Telecom Minister Mr.Raja announcing the auctioning of 3G spectrum across country, IPO of BSNL during the fiscal which aims to off load 5 to 10% of 100$ Billiion equity will improve the sentiment. Though the unions have already opposed the move, if it goes through, as being planned by government, the fiscal situation would improve. These IPOs from PSUs would revive the primary market too, which inturn improve the secondary market sentiment. FIIs have turned net buyers during the past few days, and Nifty closing above 4500 for 3rd consecutive day is good news. Today being the last day of the week, if Nifty can close positively above 4500 too, then it would confirm the bottom for the medium term. 100DSMA currently placed at Nifty(4613.73) & Sensex(15409.54) would invite selling and profit booking on week end considerations.

 

Range for the Day: Nifty might trade in the range of 4450 to 4650.

 

 

100DSMA proved to be a supply zone for our markets yesterday! Crude cools further and Inflation will be on watch now!

Our markets opened gap up following global cues and also as crude cooled, after Fed leaving rates unchanged, as anticipated. Exactly 100DSMA proved to be a strong supply zone on both the indices, where selling was noticed, more than twice intraday, finally in a volatile trade, indices have closed with marginal gains. Bull unloading and profit booking by small and retail players was visible as indices have already rallied more than 21% from the lows of 2008 made on 16.07.2008. Now the 100DSMA is to be watched keenly, for clues on furtherance of the rally! Crude continues to fall on the strengthening of the dollar, and also due to the fear that the higher prices are forcing lower consumption of the commodity globally. US markets were volatile overnight, but finally closed in positive territory. VIX has closed at 34.92. CBOE index has closed at 20 in US indicating lesser volatility for now.

 

Nifty futures have closed at premium of 8 points as against 25 points previous day indicates positive bias, after profit booking. The news flow domestically is also positive, as RBI clears the introduction of currency(dollar-rupee) futures trading on bourses, introduction of ETFs allowing individuals too participate is welcome measure. NHPC files DRP for IPO with SEBI. Today's inflation data if doesnot show any ugly raise, devoid of any major news during the month, indices might consolidate in sideways between 4400 to 4600 today. Please note that Nifty closed above 4500 for two successive days after 20.06.2008, when it broke this level to seek lower levels, is an important pivot for bulls to take the new found initiative forward. If Nifty can close above 4500 this week then the trading range will once again shift to 4500 to 5000 band, which will be a bullish sign. Failing which, Nifty shall again seek lower levels to 4332 first and then 4224 later next week, as it would be shortened trading, due to Independence Day holiday on August,15th for our markets. Asian markets are trading mixed and Singapore Nifty Futures are currently quoting flat with 1 point discount, thus, we can expect sideways movement today in our markets.

 

Range for the Day: Nifty might trade in the range of 4450 to 4650 today.

 

Strategy for the Day: Buy 4400 calls on weakness and 4600 puts on rallies for intraday trading.

Crude cools further to 118$ and US FED leaves rates unchanged!

Inspite of asian markets closing with losses, and our markets trading in negative territory till 01.00 p.m. yesterday, the surprising rally from there on cleared number of hurdles on Nifty, thus, registering substantial gains at the end of the session. In my view, this happened due to heavy shorting in banking sector stocks, like ICICI Bank, SBI etc., in the morning by traders, who were expecting weak closing a head of FOMC meet! Larger market players must be having the confidence of Fed 'non-action' unlike RBI inspite of problems in US economy, which warrant raising of interest rates from now on, to check raising inflation. Crude cooled further to 118$ intra day, due to strengthening of the dollar vs euro and also on the fears of lessening demand even globally, due to raising energy costs. Technical analysts expect it to fall further to 110 levels, which in my view, is difficult to happen immediately now, as Fed left the rates unchanged. If the Fed were to raise rates, then the strengthening of the dollar would have forced the commodities to cool further.

 

Back home for indian economy, fall in crude prices, eases the pressure on fiscal situation, and the losses being suffered by oil marketing companies, who have huge under recoveries on all products which has mounted to a level of Rs.2,55,000 crores when crude touched 148$.  Now it is estimated that the same has come down to Rs.2,05,000 crores as the indian crude basket came to 122$ now. The rally in US or our markets is of temporary nature, a relief rally in a long term bear market, and the slowing down of global economy is quite apparent from various data, though some companies and sectors shall be performing well even in bear markets. Investors should be careful in entering the momentum stocks which started moving up on large volumes, where fundmentals do not support the prices, could be a 'bear trap'. VIX closed at 35.66 yesterday. Asian markets are trading with gains and Singapore Nifty futures are currently quoting at 65 points premium, indicates gap up opening initially, where profit booking can be expected. Nifty futures closing with 25 point premium might invite profit booking and initiation of creation of shorts once again as 4620 level is approached, where 100DSMA is currently placed.

 

Range for the Nifty: Nifty might trade in the range of 4420 to 4620 today.

 

Strategy for the Nifty: Buy 4600 puts on rallies and hold till tomorrow.

Crude cools to 120$ again on slowing demand a head of FOMC meet today!

Our markets opened weak, traded volatile during the day and finally closed with losses at the end of the session following global mood. Crude overnight has cooled 5$ to 119$ intra day to finally closing at 120$. This was prompted by the economic data from US confirms slowing demand for the commodity, evident from Highway miles data. The raise in energy prices which has hurt the industrial economy resulting in job losses, lay offs cannot be recouped immediately with falling crude prices, it is believed by economists. FOMC meeting to night has to take an important decision to raise the rates now or atleast confirm that reducing the rates is done with for now, and might indicate the starting of raising some time down the line, will influence the dollar's parity with Euro and other currencies. This will decide the commodity prices and the out look for global economy and trends. For the present entire global markets including ours are in deep bearish trend, and resumption of bullish ness cannot happen in near future, at least during this month. The current stock prices of index stocks are good values to exit on rallies, as the same can be picked up later at much lesser prices. The current relief rally in our markets can maximum go upto 100DSMA currently placed at Nifty(4623.67) & Sensex(15439.19) during this month, in my opinion.

 

VIX closed at 40.24 yesterday. US markets closed mixed after volatile moves over night and asian markets are trading in negative territory currently. Singapore Nifty futures are currently quoting at a discont of 21 points, indicates weak opening initially. Nifty might find support at 4320 levels where confluence of 5DSMA and 50DSMA is placed currently. Breaking July closing level of 4332.95 will invite short build up and triggering of stop losses which can force Nifty to 4185 level too. We may be into some small range sideways movement days/weeks before clear direction emerges, which requires an event or data, as the results season for Q-1 is almost done with.

 

Range for the Day: Nifty might trade in the range of 4320 to 4420 today.

Both Indices close above 50DSMA levels registering 4th Consecutive Week!

Our markets opened gapdown, following global cues, as anticipated on friday, but surprising most of the players and analysts, including me, recovered from lows, and finally closed with substantial gains, to end above 50DSMA levels,  registering for 4th Consecutive Week. FIIs seems to be buyers on the margin during August'2008, inspite of bad news on US economy and our economy continue to pour in from time to time. If these levels are held from now on 'medium term also will turn positive' registering futher gains. The clearance of Indian Nuclear Safe Guards agreement by IAEA board of Governors with consensus on 01.08.2008, must have enthused the markets. The next level is clearance by Nuclear Suppliers Group, and once it is done, then the US Congress will have to pass it, for operationalising it. US markets have closed with losses on friday night, and asian markets are curretnly trading in negative territory. VIX has closed at 38.49 on friday. Singapore Nifty futures are currently quoting at 29 points discount, indicate weak opening at the beginning.

 

FOMC meeting tomorrow and the decision on interest rates by US Fed Chief Mr.Bernarke will influence US markets and global markets in general. Street is divided on expectations as US economy is still not out of woods, for raising interest rates, at the same time inflation the 'silent killer' as economists put it, is also a big challenge to be tackled. Volatility in markets continue for some more months, still the clarity emerges on all these fronts.

 

Range for the Week: Nifty might trade in the range of 4150 to 4650 during the week.

 

Strategy for the Day: Buy 4500 puts on rallies for intraday trading.

Peaceful Derivatives Settlement of year 2008! Inflation raises to 11.98%! Banks raise PLR & Deposit rates!

Our markets traded in a narrow range, for the first time on derivatives settlement day first time in 2008, and Nifty closed around June Settlement price finally. Unlike earlier settlements, Nifty futures roll over was lower than average to August Series, and only long positions are rolled over. Market players might be hedging their portfolios using options rather than futures. VIX has closed at 39.06, falling further from previous day levels. August nifty futures have closed at 2 points premium at the end on adjusted basis. 50DSMA levels of indices continued to be road blocks for bulls to cross currently placed at Nifty (4358.01) & Sensex (14578.92). Inflation has shown an uptick to 11.98%, inching towards 12% levels, and every major bank has decided to raise PLR and Deposit rates in tune with the recent RBI credit policy dictat, to check credit growth and money supply. US GDP growth has shown an uptick to 1.9% but was below economists expectations at 2.4% has made investors nervous and Dow had a sell off. Singapore Nifty futures are currently quoting at a discount of 78 points indicating weak opening for our markets initially. Asian markets are already trading in negative territory.

 

FOMC meet scheduled on 5th August, 2008 will be watched by clues on Fed action on rates in US which will decide the medium trend for global markets. Today being week end profit booking can be expected. The final closing can be lower than previous week's closing on our indices, which were posting weekly gains for the past 3 weeks, after 7 consecutive weeks of fall last month. Investors have to be cautious during this month, where the actual monsoon data over entire india will be known, where it is being feared that the rain fall may be deficient than previous years, which will complicate the inflation and economic growth situation domestically. Trading opportunities exist in plenty, whereas reckless building longs in stocks or derivatives will wipe out people entirely from markets for ever.

 

Range for the Day: Nifty might trade in the range 4200 to 4350 today.