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.
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