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.